Tht corporate annual report 2014

Future Growth

ANNUAL REPORT AND FINANCIAL STATEMENTSYear ended 31st March 2014

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Chair’s Statement 04

Administrative Details 05

Report of Directors 06

Operational and Financial Review

Strategic Report 12

Financial and Operating Performance Review 18

Value for Money 23

Internal Controls Assurance 46

Report of the Independent Auditor 49

Financial Statements

Income and Expenditure Account 50

Statement of Total Recognised Surpluses and Deficits 51

Balance Sheet 52

Cash Flow Statement 53

Notes to the Financial Statements 54

Contents

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While UK GDP started to show modest growth over the last financial year, circumstances for many of our customers remained challenging, reflecting the huge disparity in incomes and prospects between those at the top and the bottom of the opportunity ladders in our society. In this context our focus has remained in ensuring that our rents continue to be affordable to our customers and that we collect the rent which is actually due. Under occupancy has presented a challenge to be managed and one which the business has met well by achieving rent collection rates of 99.95% during 2013/14, while continuing to provide money and debt management advice and support to our customers.

THT’s Money Support Team continues to work closely with those customers most affected by Welfare Reforms to help them balance the need to pay their rent with their other commitments. There is training in place for all our staff to help some of our tenants understand and plan for the impact of Universal Credit, which we know will present some real challenges for people who rely wholly on out-of-work benefits to pay their rent.

The supply of affordable housing remains another significant issue for many people. During 2013/14 the Trust successfully completed an additional 141 affordable homes across the Borough. All these properties were for affordable rent, shared ownership or specialist housing and were funded through the Trust’s own resources and through Homes & Communities Agency funding. This goes some way to reducing the high level of demand for homes and the real social needs that exist within the Trafford area. With less Government funding available for affordable housing, this is likely to be the situation for many years to come. The Trust is looking more creatively

at the housing issue and is including more commercial options in the business plans for the next three years, to generate a surplus that can be used to make a greater impact on the need for housing in the Borough.

During this reporting period there have been changes seen to the Board membership. Alastair Findlay and I joined as co-opted members in spring 2013 taking up formal appointments in September. I took over as Chairman from Bernard Knight, who had a successful five-year stewardship. Alastair Findlay took over from Alan Smith as Independent Board member and Chair of the Audit, Risk and Compliance Committee. Details of appointments in the current financial year are reported in the Governance section.

There is clear evidence of the sound foundations that I inherited as Chairman, and I intend to build on the valuable input of my predecessor by continuing to bring out the potential of the Trust. The Trust will build on what has been achieved to date whilst widening its reach and impact to address real needs of the local communities. We will strengthen engagement with community and tenants. The Trust will continue to increase its portfolio and at the same time grow the range and quality of the services it provides.

Edna RobinsonChairman of the Board Trafford Housing Trust

Chairman’s Statement

I am pleased to present as THT Chairman the report on another successful year for the Trust, with strong financial performance matched by good delivery against the Trust’s Promises to its customers. The financial projections have been updated to reflect the patterns of payment that we are seeing, and we are confident that for the foreseeable future the viability of the Trust is not compromised. This is a view shared by our Regulator.

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Administrative Details

REgISTERED OFFICETrafford Housing Trust Limited Sale Point 126-150 Washway Road Sale Manchester M33 6AG

REgISTEREDA company limited by guarantee, registered in England and Wales No. 04831118

Registered by the Homes & Communities Agency No. L4440

A charity registered with the Charity Commission No. 1106967

INDEPENDENT AUDITORSBDO LLP Temple Square 5 Temple Street Liverpool L2 5RH

INTERNAL AUDITORS

PricewaterhouseCoopers LLP 101 Barbirolli Square Lower Mosley Street Manchester M2 3EB

BANkERSBarclays Bank Plc PO Box 3333 One Snowhill Snow Hill Queensway Birmingham B3 2WN

SOLICITORS Devonshires Salisbury House London Wall London EC2M 5QY

Company information

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The Directors present their report and the Financial Statements for the year ended 31st March 2014.

Information included in the Strategic Report, which is included within the Operating and Financial Review that follows the Report of the Directors, comprises:

• A fair review of the business;

• A description of the principal risks and uncertainties faced by the business;

• A description of the financial risk management objectives and policies;

• An analysis of the development, performance and position of the business;

• Analysis using key performance indicators;

• An indication of future developments

Report of the Directors

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The Directors set out below have held office during the whole of the period from 1st April 2013 to the date of this report unless otherwise stated.

Directors

Edna Robinson(Chairman from 1st September 2013)

Bernard knight(Chairman until 31st August 2013)

Alastair Findlay(Audit, Risk and Compliance Committee Chair from 1st September 2013)

Alan Smith(Audit, Risk and Compliance Committee Chair until 31st August 2013)

Ian Belnavis Joanne Bennett Matt Colledge(resigned 31st March 2014)

Sarah Twibell(resigned 31st March 2014)

John Verbickasgerard Lucas

John Lamb

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Directors joining in 2014/15

Executive Directors (not on the Board)

Elaine Johnson(Managing Director of Localities)

Rodger Cairns(Managing Director of Independent Living Services)

Helen Jones(Managing Director of Corporate Services)

Matthew gardiner (Chief Executive)

David BarrowCommercial Director (died in November 2013)

Jane McCall(Managing Director of Landlord)

Larry goldChief Financial Officer and Managing Director of Developer

Sean Anstee(from 1st April 2014)

Claire Baker (from 16th April 2014)

Angela Bolton(from 16th April 2014)

During the year two Independent Board Members, Bernard Knight (Chairman) and Alan Smith (Audit, Risk & Compliance Committee Chairman) reached the end of their fixed term appointments resigning from the Board on 31st August 2013. Tenant Board Member, Sarah Twibell, stepped down on 31st March 2014 after nearly six years. Matt Colledge also resigned from the Board on 31st March 2014, following his decision to step down as a Councillor, and was replaced by Sean Anstee, Leader of Trafford Council, on 1st April 2014.

Following a transparent and open recruitment process, the Trust appointed Edna Robinson as Chairman and Alastair Findlay as Audit, Risk and Compliance Committee Chairman. Both joined the Board as co-opted members in April and May 2013 respectively and were formally appointed to their roles on the 1st September 2013. In addition, two new Tenant Board Members were recruited following an open recruitment process that resulted in the appointment of Claire Baker and Angela Bolton as Tenant Board Members on 16th April 2014.

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Sadly, November 2013 marked the passing of David Barrow, Trafford Housing Trust’s Commercial Director, aged just 57.

With a career spanning nearly 40 years, David was a popular and well respected housing professional who dedicated his career to helping the people of the North through both his work and volunteering.

His first role was as a trainee housing manager in Pendle. By the early 1980s he was a Housing Officer for Bradford & Northern Housing Association, working in many deprived and depressed communities across East Lancashire and Greater Manchester including Tameside, Burnley and Barrow.

By the end of the eighties he had become Bradford and Northern’s North West Regional Manager, a role he continued until 1996 when he joined Eavesbrook, part of the Harvest Group, as Director.

A decade later he became a housing consultant for Savills, a role he relished and one where he helped deliver a string of significant projects including a major stock transfer in Sedgefield.

David joined Trafford Housing Trust in a business development role in 2010. This he found ideally suited his well-honed operational, commercial and creative skills which helped the Trust develop a range of flagship initiatives including new build projects, extra care provision and a number of social enterprises.

Matthew Gardiner, the Trust’s Chief Executive said:

“David bore a long illness with fortitude and a determination to stay positive and we will all miss the guidance and insight that he gained throughout his distinguished career in both social housing and the private property sector.”

“He laid the foundations for many of the exciting programmes we are currently pursuing including new homes and other non-landlord services, but everything he undertook was always for the benefit of the tenants and local community.”

David leaves a wife, Annetta, and three children Rose, Tom and James.

David Barrow - Obituary

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DONATIONS

The company made charitable donations of £nil (2012/13 - £nil).

EQUAL OPPORTUNITIES

The Trust is committed to an active Equal Opportunities Policy from recruitment and selection, through training and development, appraisal and promotion to retirement. It is the Trust’s policy to promote an environment free from discrimination, harassment and victimisation, where everyone will receive equal treatment regardless of age, gender, gender reassignment, colour, ethnic or national origin, disability, hours of work, nationality, religion or belief, marital or civil partner status, disfigurement, political opinions or sexual orientation. All decisions relating to employment practices will be objective, free from bias and based solely upon work criteria and individual merit. The Trust is responsive to the needs of its employees, residents and the community at large and is an organisation which uses everyone’s talents and abilities and where diversity is valued.

EMPLOYEE INVOLVEMENT

The flow of information to staff has been maintained through Pulse, the Trust’s staff and customer newsletter, a monthly Business Brief cascaded to all employees and through THT’s staff intranet. Members of the company’s management team meet on a monthly basis, with representation from across the business to discuss matters of current interest and concerns, promoting an open exchange of views and consistent messages to the wider business.

DISCLOSURE OF INFORMATION TO AUDITOR

In the case of each of the persons who are Directors of the company at the date when this report was approved:

• so far as each of the Directors is aware, there is no relevant audit information (as defined in the Companies Act 2006) of which the company’s auditor is unaware; and

• each of the Directors has taken all the steps that they ought to have taken as a Director to make them aware of any relevant audit information (as defined) and to establish that the company’s auditor is aware of that information.

AUDITOR

BDO LLP continue in office in accordance with the Companies Act 2006 s487(2).

BY ORDER OF THE BOARD

Approved by the Board on and signed on its behalf by:

Edna RobinsonChairman of the Board

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The Directors are responsible for preparing the Report of the Board and the Financial Statements in accordance with applicable law and regulations.

Company law and social housing legislation require the Directors to prepare Financial Statements for each financial year. Under that law/legislation the Directors have elected to prepare the Financial Statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the Directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the surplus or deficit of the company for that period.

In preparing these Financial Statements, the Directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and accounting estimates that are reasonable and prudent;

• state whether applicable UK Accounting Standards and the Statement of Recommended Practice: Accounting by Registered Social Housing Providers (Update 2010) have been followed, subject to any material departures disclosed and explained in the Financial Statements; and

• prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006, the Housing and Regeneration Act and the Accounting Direction for Private Registered Providers of Social Housing in England from April 2012. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for ensuring that the Report of the Board is prepared in accordance with the Companies Act 2006 and the Statement of Recommended Practice (SORP): Accounting by Registered Social Housing Providers (Update 2010).

Directors’ Responsibilities

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Trafford Housing Trust (the Trust) was formed in March 2005 to receive the transfer of housing stock from Trafford Metropolitan Borough Council (TMBC) and continues to be the leading provider of affordable social housing in Trafford and one of the larger stock transfer associations in Greater Manchester. The Trust is incorporated under the Companies Act and is registered under the Charities Act.

The Trust owns and manages around 9,000 properties that provide homes for current and future generations of Trafford people. It is able to offer a diverse range of housing options including homes for families, couples, single people, supported sheltered housing and extra care housing for older people.

Operating across five areas within Trafford (Altrincham, Old Trafford, Sale, Stretford and Urmston), the Trust has traditionally provided rented housing and community services.

AIMS AND OBJECTIVES

Over the last nine years the Trust’s operating environment has changed, with austerity coupled with policy changes combining to place pressure on those members of society who were already vulnerable.

The Trust’s reputation as a fair and equitable landlord must continue, as part of a more ambitious and more entrepreneurially-minded social enterprise, prepared to strike a new balance between risk and reward. Through realignment of resources to meet business aspirations, development of new properties is being undertaken through the Developer business, focussing on projects that deliver maximum economic and social value. The Trust will also invest in developing its Independent Living Services offer, developing and strengthening communities through the Localities business, and ensuring the continued provision of high quality homes and services to customers through the Landlord business.

Each business, under the leadership of its own Managing Director who sits on the THT Leadership Team, has a well-considered Business Plan for the next three years. As a profit-for-purpose organisation the Trust are including triple bottom line measures in these Business Plans going forward. THT is committed to delivering three types of value:

The Trust is clear about the values staff need to live by in their day-to-day work. These values apply to the way that the Trust expects to do business, about the impact, the way we create change and about the Trust’s intent to collaborate with others.

All at the Trust are expected to build relationships based on the Trust’s values of openness, honesty and respect; to keep their promises and to work collaboratively. The values of the Trust are motivated by creating a fairer world, responding to society’s challenges and aim never to be constrained by past ways of working. THT cares about the difference it makes, aiming to demonstrate accountability, to act responsibly and be innovative in their approach.


Strategic Report

Social value – Created through the Trust’s work to improve lives and life chances

Financial value – Created to sustain the Trust’s impact into the future

Environmental value – Created through the Trust’s contribution to sustainability and carbon reduction

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THE YEAR IN VIEw

Despite the still challenging conditions in the sector, the financial viability of the Trust continues to be strong. 2013/14 has been another difficult year for many customers, with increased inflation and reduced Government spending on some public services. Ongoing Welfare Reforms linked to the Central Government spending review and the introduction of Universal Credit present challenges, but the Board and the Leadership Team remain confident that the Trust remains financially viable and will continue to strengthen and grow. Barclays remain as primary funders, providing an additional £35 million in loan funding in 2012. The additional funding is enabling the Trust to deliver planned development contracts and enable growth and investment in the business going forward.

REgULATORY JUDgEMENT

The outcome of the Homes & Communities Agency Regulatory Judgement in 2013/14 was particularly pleasing and an achievement of which the Board and Leadership Team are very proud. The Trust was again awarded the highest possible rating for both governance (g1) and financial viability (V1).

NEw HOMES – DEVELOPER

Part of the Affordable Homes Programme, administered by the Homes & Communities Agency, the programme provides the residents of Trafford with a combination of homes for rent and shared ownership.

Fiona Gardens, the flagship £9m Extra Care Scheme was completed on time in March 2014 providing 71 extra care apartments in Atkinson Road Sale. This state-of-the-art development includes 24 hour care provision and communal space including a restaurant, hairdresser and wellness area. The scheme was dedicated to police officer Fiona Bone, originally of Sale, who met a tragic death in the line of duty. The first residents moved in, in June 2014 with an official opening involving the Bone family scheduled for October 2014.

The £5.6m Essex Way 62 property scheme, the first new development undertaken within the Old Trafford Masterplan, was completed in August 2013 in line with Homes & Communities Agency contract. The scheme provides houses and apartments, all for affordable rent. A local lettings policy was devised for the scheme, which prioritised families from Old Trafford and people with a connection to Old Trafford i.e. children at school in the area or applications working or volunteering in Old Trafford. Priority was also given to the remaining residents in the tower blocks designated for demolition, and for families in the refurbished Tamworth blocks. The project used local suppliers within Trafford and local residents had input and influenced the design of the community garden.

Highfield House, Stretford, a three apartment scheme created through the restoration of a large derelict Georgian terrace property, was completed on time in March 2014 despite additional work being required. The aim was to provide a high quality modern finish while restoring the property to its former glory. Some local labour was used and the builders John Southworth also made a £1,000 donation to help Stretford Scouts upgrade their scout hut and the Scouts helped with garden planting.

During 2013/14 the Trust delivered 141 affordable homes as part of its commitment to provide 198 new homes over the period from 2011-2015 in response to the demand for good quality housing in Trafford.

DEVELOPER – OLD TRAFFORD MASTERPLAN

The Old Trafford Masterplan aims to regenerate the northern sector of Old Trafford through a mix of new build developments, improved infrastructure, new public realm and the upgrading of existing properties. The first phase of the Old Trafford Masterplan concluded at the end of March 2014 and the Trust’s Developer business can report the following activities as completed and closed.

Four tower blocks were demolished and decant and Masterplan Satisfaction was at 98.5% or higher. A community support officer was in place for the duration of the decant works.

Internal works were completed to all the remaining Old Trafford tower blocks and renovation work completed to four communal areas within the tower blocks. Lifts were replaced in Clifford and Empress Courts.

The following have all been achieved in line with the target and have been rolled into the Developer Promise for 2014/15: the completion of a communications plan for the Masterplan; new build satisfaction ratings at 98.5% and higher, and 1% of the contract value being delivered as social value within the Old Trafford area.

Examples of social value delivered include Essex Way and Stretford Road, which have helped to create a community garden which is managed by local residents, two apprentice places and over 120 hours of volunteering to local projects.

The development narrowly missed the target date for completion of June 2013; however, positively, the survey of residents who moved in has shown 100% satisfaction with the scheme. The scheme provides 29 two-bedroomed houses and 33 two-bedroomed apartments, all for affordable rent. A local lettings policy was devised specifically for the scheme, which prioritised families from Old Trafford and residents with a connection to Old Trafford i.e. children attending school or applicants working or volunteering in Old Trafford.

Design also started in the 2013/14 financial year on an Old Trafford development to be achieved through co-production with local residents to replace the existing community centre on Shrewsbury Street. Local residents have been engaged in the early stages of the design work with actual building work due to start in early 2015.

NEw BUSINESS MODEL FOR DEVELOPER

The new financial year 2014/15 marks the adoption of a new business model and three-year plan for the Trust’s Developer business based on activity in new areas of open market sale and private rental, providing surplus profit to be reinvested into THT priorities such as the delivery of new affordable housing. The approach is now being implemented as evidenced by the approval of several open market sale schemes including developments off Oldfield Brow, Altrincham and Atkinson Road, Sale.

COMMUNITY INVESTMENT AND REgENERATION

2013/14 was the second year of the Trust’s three year relationship as contractor to Pulse Regeneration, delivering support to Third Sector organisations and communities in Trafford. This partnership has developed in the Thrive Trafford service which provides support to the local voluntary and community sector to grow, develop and thrive. 2013/4 saw the first year of delivery of this contract, which included:

• Delivery of the Voluntary Sector Grants programme of £160k funding allocated by local residents through

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Strategic Report

Essex Way, the first new development undertaken within the Old Trafford Masterplan was shortlisted for a Housing Excellence Award in the Affordable Housing category.

public voting. Over 538 Trafford residents attended the summer participatory budgeting events in June 2013 and an additional 220 attended the South locality event in January 2014.

• Support for 158 organisations to access and apply for grant funding, which helped to secure £403k for third sector organisations. The Trust also established the Inward Investment Network, a forum to support groups to develop ambitious, collaborative bids.

• Development of links with local businesses to support community and voluntary sector organisations. Relationships were established with major businesses including L’Oreal and the BBC. This led to a programme of training delivered free of charge by local businesses and community projects delivered by employee volunteers including activity to reduce unemployment.

This work is being developed as the Trust starts year two of contract delivery and forms a key strand of the Localities Business Plan. Building on the success of the first year of delivery the Thrive Trafford service continues to grow in ambition with innovative programmes to support new social enterprises, new ways to engage with the private sector and new ways to support organisations to become sustainable.

COMMUNITY BUILDINg

Each year the Trust invests up to £760k in local neighbourhoods through the five Community Panels. The Community Panels are made up of tenants, residents and partners from each of the five neighbourhoods in which the Trust operates.

The five Community Panels each invested £10k in a Trafford wide initiative to support informal sporting activity through Lancashire County Cricket Club and Salford Red Devils. This has resulted in match funding of £370k being secured from Sport England.

The Old Trafford, Stretford and Urmston panels also invested £150k to deliver ethical loans for start-up businesses.

Other projects supported by the Panels during 2013/14 include:

Urmston Urmston Panel invested £122k, including work to develop the provision of advice and guidance to families affected by high-functioning autism or Asperger’s syndrome. Trafford Music Service and Flixton, Urmston and Davyhulme Carnival were also beneficiaries in 2013/14.

Stretford Stretford Panel invested £104k, including support for dementia patients, developing pathways into employment for local residents and delivering first aid training sessions for adults.

Old Trafford Old Trafford Panel invested £104k, including the funding of a local PCSO to be able to deliver more hours in the community, Youth Mentoring with hard to reach young men and the Old Trafford Fun Day.

Altrincham Altrincham Panel invested £104k, including improvements to local parks, crime reduction advice and security assessments and a range of community events for families across Altrincham.

Sale Sale Panel invested £112k, including Personal Safety awareness sessions, litter picking initiatives and diversionary holiday activities for children and young people.

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In 2013/14, the panels continued to invest £130k in the Trust’s Youth Team, supporting and developing young people in local neighbourhoods with advice and a wide range of activities.

SOCIAL ENTERPRISE ExPANSION

During 2013/14 the Trust continued to expand its Social Enterprise activities.

CleanStart, which employs ex-offenders from the community, has now attracted several external contracts in addition to the Void service that it carries out on behalf of the Trust. The most significant of these contracts was with Wates Living Space, one of the Trust’s major build partners, who appointed CleanStart as preferred supplier for new build cleaning for the North West. The CleanStart Void service for the Trust is also the start point of a flourishing recycling activity in which goods are inspected and those which are in reasonable condition are either made available through the Trust’s furniture recycling business or diverted to other charities.

The Trust’s furniture recycling business The Rainbow Furniture Centre continued to develop over the past year in close association with CleanStart. This social enterprise which opened in November 2012 allows Trafford residents to donate and buy furniture at an affordable price. Through Rainbow around 1,000 items were diverted from landfill finding their way to several hundred Trust customers. Through Trafford Assist and Great Places a further 770 people were helped out through the Rainbow Centre providing affordable furniture and white goods.

wELFARE REFORM

With the continuing roll out of wider Welfare Reforms, the Trust continues to provide a range of services to support its customers in maintaining successful tenancies. Support includes provision of a ‘Positive Starts’ service, helping customers from the start of their tenancies with financial planning and benefits advice and a ‘Positive Solutions’ service for those customers having difficulties in paying their rent. These forms of support are delivered alongside the provision of debt and welfare advice services.

CUSTOMER PROMISES

The Trust continues to develop its progress against its customer Promises and whilst there has been significant in-year improvement, with the Landlord business achieving 90% of Promises and Developer business achieving 92%, there is further work required to achieve 100% delivery. A key element of the Promise delivery is learning from reasons for Promise failure, and structures are in place to embed this learning and avoid repeat failure.

COMPLAINTS

The Trust has worked hard throughout the year to improve its approach to complaints management, recognising the need to respond to customers promptly and prioritise early resolution. The recruitment of two customers to the Trust’s Complaints Panel strengthened the Trust’s approach to complaints management and has helped to ensure customer focus in complaints resolution and to ensure that the Trust learns from identified weaknesses.

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Strategic Report

AwARDS

The Trust enjoyed another exceptional year for external recognition and awards.

The Trust received a national Customer Service Excellence Award for the second year running, reflecting the Trust’s aim to put customers at the heart of everything it does.

Trafford Housing Trust’s Customer Hub was recognised by the UK International Customer Management Institute’s Top 50 Companies for Customer Service awards, beating household names including Tesco, Phones4U, Aviva, Best Western Hotels, Barclaycard, RBS, ITV and Asda.

The Customer Hub won five awards this year and was ranked as one of the top three call centres in the UK, voted best nationally in the public sector category and best newcomer in the email category.

Established only four years ago, the Customer Hub achieved an average score of 95% in customer service satisfaction to secure its 3rd place positioning. The 11.5 advisors, with many years combined experience of working in all sections of the organisation, handle an average of 12,000 calls a month.

The Trust was recognised for the fourth year running in the Sunday Times 100 Best Companies list, ranking 48th in the Third Sector category representing an improvement on its 54th ranking of the previous year, a reflection of the Trust’s values and investment in staff development and wellbeing.

Also, without using any Trust money, but through various fundraising activities chosen by staff, a number of donations have been made throughout the year. The main beneficiaries have been:

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£108 raised for SADS

£736 raised for Children In Need

£2,777 raised for Henshaws Society for Blind People

£231 raised for Macmillan Cancer Support

£97 raised for the Stroke Association

£101 raised for Sport Relief

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Strategic Report - Financial and Operating Performance Review

As the Social Housing Sector continues to respond to the roll out of Welfare Reforms, the Trust is reporting positive financial performance for 2013/14.

The Trust continues to focus on operational improvements and the embedding of a Value for Money culture.

The positive financial result is mainly due to:

• An increase in Social Housing Lettings income of £2.5 million

• Void Rent loss reduced to less than 1%

• An increase in Shared Ownership sales year on year of (£0.5 million, net of costs)

• Control of Operating Costs

• Effective management of the impact of Welfare Reform

• Timing and robust management of Improvement and Development activities

The Trust has outperformed its financial performance targets during 2013/14, with the Operating Margin, which provides an indication of overall operating efficiency, at 50.6%, compared with 50.3% in 2012/13. The financial outperformance has been achieved through the ongoing application of robust financial controls, identification of operating efficiencies across a number of business areas and continued focus and challenge from the Trust’s Board on financial performance.

Income and Expenditure for the year is made up as follows:

Income £m

Rents 38.5

Services Charges 3.1

Sales of Assets 1.6

External Contracts 0.5

Other 0.9

TOTAL 44.6

86%

7%4%1%2%

19

22%

31%

12%

13%

10%

3%3%1%

1%

2%

2%

Expenditure £m

Managment 10.1

Services 3.8

Repairs 4.4

Investing in our homes 3.2

Building new homes 0.9

Community investments 1.1

Customer involvement 0.5

Contracts 0.5

Property Lease 0.6

Bad Debt 0.4

Depreciation 7.2

TOTAL 32.7

Capital Expenditure Capital Expenditure invested in improving and building new homes

25.0

ExPENDITURE - REVENUE AND CAPITAL

The Trust also collected 99.95%

of rent and service charges, equal to £41.6 millionRENT AND SERVICE CHARgES COLLECTED IN %

2013/2014 99.95%

2012/2013 100.50%

2011/2012 99.79%

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CASH FLOw MANAgEMENT

The Cash Flow Statement on page 53 shows that, during the year, the Trust increased its cash balance by £1.96 million. The Cash Flow Statement reports the Trust’s cash inflows generated from its operating activities, property and other asset sales and receipts of Social Housing and other development grants. The principal cash outflows of the Trust, after operating costs were the expenditure on the Improvement and Development Programmes of £11.8 million and £10.7 million respectively, and interest payments of £5.4 million were made in the year, equivalent to an average interest rate for the year of 4.83% (2012/13: 4.54%). The Trust drew a further £6.95 million of the £145 million loan facility during the year.

In accordance with the Trust’s Treasury Policy, the Trust seeks to maximise treasury efficiency through holding low levels of cash and drawing borrowing, as required, to meet its obligations.

TREASURY MANAgEMENT

The Trust is financed through a combination of the loan facility, retained reserves and Social Housing and other grants linked to development activity. At 31st March 2014 the Trust had drawn £115.0 million of the £145 million loan facility, and received £1.9 million in development grant income during the year as part of the Affordable Homes Programme. As a result of the significant investment in improving properties since transfer, the value of the organisation’s assets has increased year-on-year, as shown below:

The Trust is required to undertake annual valuations of its housing stock in order to ensure a minimum of 110% asset cover, as stipulated in the loan agreement. At 31st March 2014 the stock was valued at £208.0 million compared to £194.9 million at 31st March 2013 (based on the Existing Use Value – Social Housing valuation methodology). The value of the properties in comparison to the loan facility has increased during the year from 134.4% at 31st March 2013 to 143.4 % as at 31st March 2014, reflecting the continued investment in the property portfolio.

06/07£000

07/08£000

08/09£000

09/10£000

10/11£000

11/12 £000

12/13£000

13/14£000

Housing Assets cost less dep'n

47,269 74,215 98,280 122,257 131,492 140,530 156,509 170,920

Other Assets NBV 2,417 1,503 1,181 1,073 1,614 1,663 1,390 2,244

Loans drawn 28,500 46,000 75,250 98,000 103,000 100,000 108,050 115,000

SHG/Other Dev't Grants

0 0 0 4,065 4,550 4,728 6,840 8,775

Retained Reserves 11,687 15,863 12,723 3,330 20,838 28,650 31,196 39,172

Working Capital 7,615 12,956 8,277 4,039 1,821 (930) (2,010) (647)

Pension Liability 1,884 899 3,211 13,896 2,897 6,488 9,622 9,570


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As in all previous years, in 2013/14 the Trust has fully complied with all loan covenants and will continue to operate within agreed loan covenant tolerances. The Trust’s approved Treasury Policy is to not hold significant cash balances but to ensure that loan facilities are in place to fund future requirements.

The Long Term Financial Plan remains fully funded, and forecasts available financial capacity of £2.9 million in the existing loan facilities in financial year 2016/17, where debt is currently forecast to peak. The Trust remains in a solid financial position and the robustness of the Long Term Financial Plan means it remains in a position to invest and grow the business further.

INTEREST RATE MANAgEMENT

Current borrowings of £115.0 million are a combination of short-term loans (at variable rates) and long-term loans (at fixed and variable rates). Finance policies and procedures are designed to maintain the ongoing financial stability and viability, whilst managing liquidity and interest rate risks. The current interest profile of the Trust’s debt is as follows:

INTEREST RATE MANAgEMENT

CURRENT BORROwINgS

The loan facility agreement with Barclays incorporates a ‘rollercoaster fix’ arrangement for the management of interest rate risk. As the Trust approaches the predicted £142.1 million peak debt in 2016/2017, the level of fixed rate debt as a proportion of overall drawings is reviewed and adjusted annually to ensure it remains within the parameters set in the Treasury Management Policy.

£24.25m(Variable rate)

£90.75m(Fixed rate)

22


The table below sets out how the Trust has performed against some of its Key Performance Indicators. Services to customers have improved year-on-year, and the Board and Leadership Team are proud of the steady improvement in the majority of performance results, including:

• Investment in providing housing of a good standard to all areas of the Borough has led to no homes failing the Decent Homes Standard by the end of 2013

• Sustained focus on improving efficiency has led to a reduction of seven days in turnaround time for empty properties, thereby increasing the Trust’s chargeable rental income

• The recovery of 99.95% of the rent and service charges due, whilst continuing to support customers experiencing difficulties, is a notable achievement, particularly in times when many customers are struggling with financial hardship

Through the implementation of The Promise to customers, the Trust has also set an appropriate service standard for each area of service provision, taking account of customer expectations and the services customers have stated they most value.

During 2013/14 the Trust carried out 32,466 repairs. The table below shows performance (including both THT & Gas Contractor repairs) against the key repairs completion targets. Repairs will continue to be an area of focus for 2014-15 through the commitment to customers as set out in “The Promise”.

Key Performance Results 2013/14 2012/13 2011/12

% of Tenants satisfied with the overall service provided by THT 92.58% 89.50% 90.15%

% of Tenants feeling their views are listened to and acted upon 73.47% 74.84% 73.98%

% of Tenants satisfied with their neighbourhood as a place to live

89.59% 88.18% 86.23%

Rent and service charges collected as a percentage of total due

99.95% 100.48% 99.79%

Rent lost to voids as a % of rent charged 0.76% 0.78% 0.94%

Average number of days taken to re-let homes 16.7 days 23.90 37.4

Number of homes failing Decent Homes Standard 0 194 315

Repair Completion Targets Completions in Target Time

2013/14 2012/13 2011/12

Emergency repairs – 8 hour target 99.45% 100% 99.80%

Urgent – 7 calendar day target 99.74% 99.63% 99.25%

Routine – 28 calendar day target 99.38% 98.65% 96.97%


23

Value for Money Self-Assessment – Strategic Summary 2013/14

1. THE TRUST’S APPROACH TO VFM

VfM is a cornerstone of financial and resource management at the Trust. The efficient and proper use of the Trust’s resources is fully integrated in the way the Trust is managed. This has become known as Social Value for Money, and incorporates both financial and non-financial resource utilisation and benefits realisation. This self-assessment brings together the various ways in which this aspect of our management can be illustrated, and sets out the Trust’s performance against the requirements of the HCA VfM Standard.

At the Trust, VfM is about delivering customer value, identifying the “sweet spot” of cost, quality and customer satisfaction (or aspiration) levels in setting service standards. The Trust strives to obtain the maximum benefit from all available resources, achieving the right balance between economy, efficiency and effectiveness, but also ensuring equity. As well as measuring financial value, the Trust seeks to recognise the social value it creates, to assess the achievement of ‘Social Value for Money’.

The Trust has undertaken significant work to embed Social Value for Money, in particular focussing on developing a methodology to understand the Social Return on Investment of activities; gaining a better understanding of the relationship between cost and quality of service delivery, and using this to inform decision making and linking efficiency savings achieved to reinvestment decisions.

The VfM Project is ongoing and progressing well, with the following deliverables achieved to date:

• Board-approved VfM Strategy which defines the Trust’s approach to VfM

• VfM & Efficiency Review undertaken by KPMG, identifying c.£500k potential savings opportunities

• Resultant Action Plan formulated to deliver c.£400k efficiency savings

• Formation of a VfM Project Group to drive VfM across the Trust

• Robust benchmarking framework in place, with third-party assurance from HouseMark

• Establishment of a methodology for the measurement of Social Return on Investment

key deliverables for 2014/15 include:

• Production of 2013/14 VfM Self-Assessment (of which this document is a summary)

• Formation of a VfM Delivery Group from across the business, to ensure VfM is embedded and to monitor the implementation of approved initiatives

• Development of a VfM Benchmarking Framework

• Development of an Efficiency and VfM Initiative Implementation Monitoring Framework (assessing the feasibility and impact of staff-generated ideas in support of VfM)

• Implementation of a regular VfM reporting cycle to Audit, Risk & compliance Committee (ARCC)

• Training and engagement of staff, Board members and customers

• Embedding VfM in the existing Customer Involvement Structures

• Project to review Procurement Strategy and Policies across the organisation

The Trust’s full Value for Money Self-Assessment, ‘Delivering Value’, is available online.

SOCIAL VALUE FOR

MONEY

VALUE FOR MONEY

SOCIAL VALUE

http://issuu.com/traffordhousingtrust/docs/tht_vfm_report_2014

24


Value for Money

2. VFM STRATEgY

The Trust’s approach to VfM is outlined in the VfM Strategy, which underpins the Trust’s Business Plans for the next three years. The VfM Strategy defines the principles underpinning the achievement of VfM as being:

• Economy: spending less – delivering services at optimum cost, through minimising the cost of resources.

• Efficiency: spending well – how much is obtained in relation to what is put in.

• Effectiveness: spending wisely – how far the intended outcomes are achieved.

• Equity: spending fairly – ensuring benefits are distributed fairly.

Central to the VfM Strategy is the Strategic Vision for the achievement of customer value, “to deliver our Promise to customers, invest in our neighbourhoods and support our communities maximising Customer Value”. The Strategy sets out five strategic aims to support delivery of this vision:

• To promote and embed a Value Creation culture in everything we do – to deliver Customer Value

• To ensure strong financial management, budgeting and control

• To understand our costs and performance and how they relate to others

• To maximise opportunities for value creation

• To have meaningful monitoring and reporting

The Strategy incorporates an Action Plan setting out what has been done and what will be done to meet the objectives set out in the Strategy:

To deliver the Customer Promise,

invest in our neighbourhoods and support our

communities, maximising Customer Value

Pro

mot

ing

a v

alue cre

ation culture in everything we do

to deliver Customer Value Meaninful m

onit

orin

g

& re

portin

gM

aximising opportunities

for value creation

budg

eting & control

Stro

ng �

nanc

ial m

anagementperformance & how

they

Understanding our costs &

compare to others

25

Key Deliverables Progress

Staff VfM Suggestion Scheme Ideas Unlimited scheme introduced - 35 suggestions to date, of which 11 have been taken forward for consideration and/or implementation

Customer VfM Suggestion Scheme Project team considering how to increase customer involvement in VfM

Launch Customer Value concept and staff suggestion scheme

Launched to all staff at the 2013 Staff Conference

Pilot project to involve employee groups in service improvement

Specific team introduced to support service improvement

Review of supplier payment systems and consideration of new software solution

New electronic invoice processing system introduced

Review of supplier approval process and develop approved supplier list and contract database

Enhanced controls implemented around approval of new suppliers. Project in 2014/15 to review procurement processes, including rationalisation of current supplier list

Budget setting process to ensure alignment with VfM Strategy

2014/15 budget formulated alongside the operational Business Plans, which have considered VfM in detail

Performance framework to evidence VfM and service improvement

Comprehensive performance framework in place. Project team considering how to formulate a register of VfM achievements

Develop approach to SROI SROI methodology has been developed in partnership with NEF

Third party Efficiency Review, with review of recommendations and Action Plan to implement selected recommendations

Review undertaken by KPMG - identified £500k of potential savings, of which £400k were taken forward for implementation

Review of procurement processes, Procurement Strategy and Action Plan

As above - project in 2014/15 to review procurement processes

Reporting framework to monitor and report on service improvements and efficiency gains

As above - project team considering how to formulate a register of VfM achievements

Framework for reporting VfM to customers and stakeholders

2013/14 VfM Strategic Summary Report as part of Annual Report and Financial Statements 2013/14 VfM Self-Assessment Report – ‘Delivering Value’ 2013/14 Customer Infographic Video including VfM

Methodology for reporting SROI from the Trust’s resources

Results of SROI reviews reported to Board and included in VfM Self-Assessment

http://issuu.com/traffordhousingtrust/docs/tht_vfm_report_2014

https://www.youtube.com/watch?v=ZfTUDkljm4o

26


Value for Money

3. RETURN ON ASSETS

Historically, the approach to VfM relating to the Trust’s physical assets has focussed on four elements:

I. Maximising asset value to increase financial capacity Since transfer, the Trust has invested over £170m in its homes – c.120m in Years 1- 5 to bring homes to DHS, and c.£12m each year thereafter. This investment was funded through a combination of secured loans and reserves.

This investment is reflected in the current and projected stock valuation. The Trust has seen growth in its asset value from £55m in Year 1 to £208m currently. Asset value is expected to grow to c.£250m within the next five years; a project will be undertaken during 2014/15 to assess how to maximise borrowing capacity to facilitate new development and investment.

INVESTMENT IN ASSETS VS VALUATION

Valuation (EUV-SH) at 31st March

Cumulative Investment

IMPACT: REMOVAL OF +£2 CONVERgENCE

Current Approved LTFP

Removal of +£2 from 2015

II. Maximising rental income from assets Since transfer, the Trust has maximised rents chargeable under the Government’s Rent Restructuring Regime. Demand remains strong, and rents remain competitive and affordable. Changes to the Rent Regime from 2015 have impacted projected rental income, with estimated reductions of c.£10m over 10 years, increasing exponentially. Whilst this does not affect financial viability, capacity for future development activity is reduced.

Periodic reviews of property values have led to projected increases in rental income of c.£60m over 30 years. In 2014/15 the Trust will explore alternative rent setting models to ensure long term sustainability.

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III. Cost and quality of improvements to existing homes In 2013/14 the Trust achieved 100% of homes at Decent Homes Standard. The Trust uses HouseMark to compare its level of investment and satisfaction achieved against other RPs and benchmarks favourably, with reducing spend and increasing satisfaction year-on-year. When measured as cost per satisfied customer, performance has markedly improved over five years.

The Trust has undertaken an exercise to prioritise future investment spend, releasing £6.0m of capacity to be directed towards development of new homes. The Trust plans to invest £13.4m in its existing property portfolio in 2014/15.

IV. Best value in developing new homes Since 2008 the Trust has developed 276 new homes within Trafford. 2013/14 saw total new homes built overtaking homes sold under RTB. Receipts from sales are used to fund new development, with approx. two sales generating sufficient income to fund one new home. To date c.£36m has been spent on new development, funded through sales proceeds, grant funding and borrowing.

The development portfolio is designed to provide a balance between financial return, long-term sustainable housing provision and social and environmental benefits, with Board deciding the most appropriate balance. Rigorous controls have resulted in programmes being delivered within budget, with shared ownership sales exceeding expectations in terms of demand and proceeds. The Trust has delivered significant social and environmental value through its development programme to date, including provision of employment opportunities and funding for community regeneration projects.

The Trust has ambitions to continue to develop new homes, and has developed a Business Plan with priorities linked to creating financial capacity and investment in Affordable Housing provision. The Plan sets out the Trust’s most ambitious development programme to date, delivering 583 homes over three years of which c.36% will be affordable. The programme is funded through open market sales proceeds, development grant and borrowing, and will incorporate the delivery of social and environmental benefits through the supply chain.

DIRECT MAJOR & PLANNED wORkS COST* PER SATISIFIED CUSTOMER

*Comparative prior year costs have been inflated to 2013/14 levels based on 2.5% inflation p.a.

28


Value for Money

As well as property assets, the Trust recognises that its workforce is a key asset, and invests c.£750 in development per person per year. The Trust is values-driven, with staff satisfaction and motivation recognised as vital to achieve increased productivity, improved service delivery and maximise efficiency.

Demonstrating Value from People

Investors in People: Gold and Health & Wellbeing status since 2011, delivering continuous improvement in services through a happy, healthy, motivated workforce

Management Coaching: programme to enable Managers to realise their potential in supporting the Trust’s objectives

workforce Planning: ensuring structures, roles and individuals are aligned to achieve Business Plan objectives

Times 100: Top 100 Not-For-Profit employer for last five years, committed to providing VfM services through motivated, productive staff who are engaged with the Trust’s vision

Living wage Employer: commitment to being an ethical employer of choice, minimising the adverse financial impact of staff turnover, absence and recruitment

Performance: staff turnover 9.8% (UK average 13%); annual absence per person 8 days (CIPD average 8.7 days) - favourable benchmarking demonstrates the benefits realised through investment in the workforce

CUMULATIVE NUMBER OF HOMES BUILT AND SOLD

05/06 10/11

06/07 11/12

07/08 12/13

08/09 13/14

09/10

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The Trust recognises the need to improve the management of the asset portfolio, to ensure it achieves maximum value from assets employed. During 2014/15, projects will be undertaken to better understand how value is driven from asset utilisation, enabling better understanding of the financial return of individual assets and the social value of assets and activities, both of which are considered as important within the VfM Strategy.

Financial Return on Assets The Trust has reviewed the financial performance of the sheltered housing portfolio, including the NPV of each scheme and the key performance drivers. Analysis showed the portfolio as having a 30-year NPV of £4.4m, which could be increased to over £9.5m if voids and bad debts were reduced to 1% and 0.5% respectively. Targeted interventions were introduced, which led to a reduction in overall voids and bad debts from 7.3% to 3.3% across the sheltered portfolio.

The Board decided to close two schemes and redevelop to provide a better return to the business, increased specialist housing provision and improved services for customers.

In 2014/15 the Trust will explore the benefits of procuring a solution to enable analysis of return on investment for every scheme and property. This will include a review of every void to inform the decision as to whether to invest/re-let or dispose. Board have advised that decisions should not be based solely on financial return, but should also consider social value and potential alternative asset use.

Social Return on Assets Work has begun to understand the social value of a range of activities, including the social value generated through its Sheltered Housing provision. In a SROI project, surveying 154 residents, the project team identified those factors most valued by these customers and the differential impact of living in Sheltered Housing. Through applying established metrics to these results, it was confirmed that every £1 invested in Sheltered Housing creates Social Value of £1.50 for the Trust and £3.20 for the customer. When applied across the Trust’s sheltered portfolio, this equates to c.£6.7m of social value generation per year.

IMPACT OF TARgETED ACTION ON VOIDS & ARREARS

Average Voids March 2014

Average Voids before Intervention

DIFFERENTIAL IMPACT OF LIVINg IN A THT SHELTERED SCHEME

Living at THT

Before THT

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Value for Money

SROI impact assessments scheduled for 2014/15 include:

Shrewsbury Street: A predictive SROI assessment to enable the Board to make an informed decision, balancing significant financial investment against the scale of social value delivered

CleanStart: Evidencing the social value created through the employment of prolific priority offenders

Youth Team: Evidencing the social value of engagement activities with younger Trafford residents

Community Panels: Developing a simple SROI model to better understand the social value deliverables from grants awarded to community groups

Landlord: Scoping of an all-encompassing SROI project around the Landlord business

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4. FINANCIAL CONTROL & PERFORMANCE MANAgEMENT

The Trust has a history of strong financial performance and viability, and in 2013/14 the HCA confirmed that the Trust had retained the highest Regulatory rating for financial viability, V1.

Each year, the Trust’s capital and revenue Budgets are set using a zero-based, bottom-up approach, involving Managers from across the organisation. Robust controls are in place to control budget activity and reforecast financial outturn each month. In 2013/14, as in most years, the Trust outperformed both its Operating Surplus and Net Surplus Budgets.

Performance is reported to Board on a quarterly basis, and includes financial and non-financial performance metrics and commentary within the Performance Framework. Together with an at-a-glance traffic light system, this enables Board to focus on issues of strategic importance to the Trust. At 31 March 2014, performance against KPI Targets showed that the Trust had achieved or outperformed against 76% of targets, with results falling below target for 6 KPIs.

Operating Budget

Net Budget

Operating Outturn

Net Outturn

PERFORMANCE AgAINST ANNUAL BUDgETS

PERFORMANCE AgAINST kPIs 2013/14

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Value for Money

Key performance highlights of 2013/14 were:

Gas Safety: Through process re-engineering, and competitive retendering of the Gas Safety Contract, the Trust has achieved 100% properties having a gas safety

Rent Collection: Despite falling short of the 100% target by just £20k, rent collection of 99.95% is a positive result

New Homes: Securing additional grant funding from the HCA has led to the delivery of an additional 32 homes compared to original programme

Financial Outturn: Through robust cashflow and budgetary management, and an ongoing focus on VfM, the Trust outperformed against Operating Margin and loan covenant targets

Areas identified for improvement activity include:

Customer Involvement: A project will be undertaken during 2014/15 to gain better insight into how customers want to engage with the Trust, and to put in place a wider range of mechanisms to enable customers to share their views and get involved in the co-design of some services

Promises: Whilst performance against Promises is strong and demonstrates significant in-year improvement, there is further work required to achieve 100% delivery

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ONE-OFF EFFICIENCES 2013/14: £4.1M

5. ACHIEVEMENT AND REINVESTMENT OF EFFICIENCY SAVINgS

The Trust has continued to deliver efficiency savings during 2013/14, many of which will have an ongoing benefit into future years. Examples of recurring and one-off efficiency savings achieved during 2013/14 are:

Utilities: £214k through competitive tendering of gas and electricity provision IT Maintenance: £100k through insourcing upgrade work Vehicle Fleet: £32k through procurement of leasing contract and reducing fuel Stores: £57k through retendering stores provision (expect to increase to c.£150k p.a.) Voids: rent loss from voids reduced to less than 1% through process reengineering Voids: £34k VAT costs on labour through utilising the Trust’s CleanStart Social Enterprise

welfare Reform: £163k of unrequired contingency Bad Debts: £200k due to effective rent collection Rent from Development: £219k through the completion of properties ahead of schedule Asset Management: £1.5m capital and £60k interest through deferral of non-urgent works Development: £1.8m savings, of which £1.1m due to timing of activity and £0.7m of true cost savings; securing grant at project commencement has saved c.£39k in interest costs £149k additional sales income on shared ownership homes

RECURRINg EFFICIENCIES 2013/14: £739k

34


Value for Money

Efficiency savings are predominantly utilised to support the Trust’s development objectives and aspirations. Savings delivered are reflected in the Trust’s LTFP and to define capacity for future development of new homes. Other examples of where efficiency savings have been reinvested are:

• Housing Management System: large-scale replacement of housing management, CRM, repairs booking and scheduling legacy systems with an integrated solution (OPENHousing), requiring up-front investment of c.£1.2m. The new system includes functionality to enable mobile working and more efficient service delivery, improving service provision to customers.

• Customer Service Charge Reduction: where efficiency savings relate to services recharged to customers, such as the retendering of gas and electricity contracts, savings are passed on in full to customers through reductions in future years’ service charges.

• Money Support Team: efficiency savings have been used to fund additional resource in response to Welfare Reforms, providing support to customers as well as additional staff to collect rents. Collection for 2013/14 was 99.95%, which reflects the value derived from the additional investment.

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LANDLORD: TARgETED EFFICIENCY SAVINgS

2014-2015

2015-2016

2016-2017

Future efficiency targets and reinvestment priorities are defined through the three-year Business Plans for the four operational area of the business, namely Landlord, Developer, Independent Living and Localities. Surpluses and efficiencies generated through Landlord and Developer non-charitable activity will be reinvested into affordable housing development and set-up costs associated with the expansion of the Independent Living business and community development through the Localities business.

I. Landlord VfM within Landlord focusses primarily on improving efficiency and delivering better quality outcomes. Specific 3-year targets are:

• Handyfix: increase turnover by £85k

• Facilities Mgt: develop offer to third parties to generate £45k revenue

• Insourcing: achieve savings of 513k through insourcing elements of property refurbishment programme

• Improvements: 2% (£240k) savings p.a. through improved procurement

• Assets: £520k p.a. through stock rationalisation

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Value for Money

INDEPENDENT LIVINg - NET CONTRIBUTION BY BUSINESS STREAM (NEw SERVICES)

Care

Personal Service

Membership

Meals

II. Developer The Developer Business Plan is based on two overarching objectives:

• Creating financial capacity: moving into Open Market Sales and Private Rental markets, the Plan sets out an ambitious programme to deliver 221 homes for sale over three years, generating a net return of £9.7m.

• Investment in affordable homes development: including the previously approved programme, the Plan sets out a programme to deliver 282 new homes for Affordable Rent and Shared Ownership, plus and 80 unit Extra Care Scheme in Old Trafford. Through reinvesting sales proceeds, the additional net contribution required from the Trust is just £1.1m.

D E V E L O P E R

TR

AF

FO

RD

HO

US

ING

TR

US

T

OpenMarket

Sale

AffordableHousing

SpecialistHousing

PrivateRental

THT - Capital Investment

THT - Financial Return

Developer - Investment to Generate Capacity

Developer - Investment to Build More Affordable Homes

III. Independent Living The Independent Living Business Plan builds upon the success of the Sheltered Housing and Trust Call services, to expand the offer into a market with ever-increasing demand. New services include domiciliary care, personalised support, membership services and meals provision.

The Independent Living business objective is to become financially self-sustaining within three years (with each service self-sustaining within four years) and to create social value by improving wellbeing. Initial investment is funded through reinvestment of surpluses generated from existing services.

37

Cross-Organisational Priorities

As well as the targets defined within the operational Business Plans, other overarching VfM priorities for the coming year include:

• Realisation of c.£100k p.a. efficiency savings from the Open Housing implementation

• Review of the Trust’s Procurement Strategy to embed a joined-up, efficient approach

• Ongoing delivery of the Value for Money Strategic Action Plan

• Completion of a workforce planning review to ensure structures are aligned to the agreed Business Plans

• Developing the Trust’s approach to understanding the Social Value it creates

• Developing the Trust’s approach to measuring and monitoring environmental impact

IV. Localities The Localities business exists to provide investment, capacity, expertise and networks into local communities, acting as a broker to bring together communities of need and communities of investment. Priority areas for investment are creating employment opportunity; supporting the third sector; targeted support for young people; creating sustainable community spaces, and developing Community Panels to be best practice community funding organisations.

The Localities business represents the reinvestment of a significant proportion of the Trust’s financial surpluses into communities. The 2014/15 expenditure budget is £1.0m, equivalent to 13% of the previous year’s net surplus. To date, the Trust has provided £6.3m funding to the Community Panels, which distribute grants to their local community, with £771k allocated to the Panels in 2014/15.

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6. CUSTOMER SCRUTINY

The Trust recognises that involving customers in service development and decision making is vital to the development of a true VfM and co-regulation culture. The Trust has in place a number of mechanisms to engage with customers, however it is recognised that this is an area where further work is required in order to engage with a wider, more diverse range of customers and to develop more meaningful relationships, moving from an approach based on consultation to one centred around coproduction and co-creation.

Quality & Insight Panel (QIP) In 2011 the Trust established the QIP as an integral part of the Trust’s Governance structure. The QIP comprises a number of tenants and customers; its role is to review and challenge service delivery from the customer perspective, provide recommendations to improve services, and act as the voice of the customer to inform activities.

The QIP has undertaken three detailed reviews (Major Works, Repairs and Trust Website), identifying 151 recommendations for improvement of which 93 have been implemented to date. Future QIP reviews are planned in relation to lettings, management of anti-social behaviour, sheltered housing provision and voids management.

Estate Inspections Trust Neighbourhood Partners carry out regular inspections of all communal areas and estates for which the Trust is responsible. Inspections are advertised through a variety of media, and customers are invited to accompany staff and encouraged to provide views and / or report issues, as well as suggest sites for future inspection. The Trust also works with Block Champions and Estate Champions, enabling tenants to take ownership of issues and report them in a timely manner, enabling the Trust to deal with these promptly and prevent escalation into more costly issues.

Service Development The Trust is developing a range of groups and forums to enable customers to get involved in shaping service delivery and improving VfM:

• Customer Action Groups: meet to discuss specific issues as and when they arise, such as new policy formation.

• Coproduction Focus Groups: formed to inform service improvement and help shape new development projects in their local area, including contributing to the design of buildings and provision of local services.

• We Come To You Initiatives: the Trust is considering new ways to involve customers and hear their opinions, in order to gain quality insight to identify business growth opportunities and improve customer satisfaction and VfM. A series of small-scale events have been organised to meet customers in their neighbourhood at times that suit them.

NoticeboardInforming Our Customers

Come and have‘Chips 4 a Chat’


Value for Money

39

Promises In April 2012, following consultation with customers to understand what services they value and priorities for improvement, the Trust introduced its ‘Customer Promises’. There are 140 Promises around service delivery standards, which were published and distributed to every Trust tenant.

Results for 2013/14 show that the Trust achieved 128 (91.4%) of its Promises over the year. Performance is reported to Board quarterly and shared with customers via the Trust’s magazine, Pulse. Publication of performance against the Promises in an open and transparent way enables customers to hold the Trust to account for its service delivery. It also demonstrates where the Trust has met the service standards agreed with customers; where there is need for improvement and what action will be taken to address underperformance; and enables customer scrutiny of the services being delivered.

Reporting to Customers The Trust shares performance information via the Customer KPI website, which was developed in partnership with the Review Crew, a customer group set up to review communications with customers. It is designed to be user-friendly, easy to understand and navigate, and allows customers to provide comments and suggest improvements.

Each year the Trust produces its Annual Tenant Report, which includes information on performance, Promises delivery, financial results and VfM. This report is provided to every Trust tenant in an accessible, customer-friendly format. The full version documents are made available both via the Trust’s website and in all Trust offices.

PROMISE DELIVERY 2013/14

Partially / Not Achieved

Achieved

http://www.traffordhousingtrust.co.uk/kpi-animation/

https://www.youtube.com/watch?v=ZfTUDkljm4o

www.traffordhousingtrust.co.uk

40


Value for Money

7. UNDERSTANDINg COSTS AND OUTCOMES

The Trust utilises HouseMark Benchmarking Club to compare its services to those of similar housing providers2 . The Trust does not seek to be the lowest cost / highest quality provider in all areas; rather it seeks to understand how its services compare, learn from best practice, adopt the most appropriate strategy and achieve continuous improvement in customer satisfaction and cost effectiveness of services year-on-year.

Repairs & Voids Repairs is consistently identified by customers as a highly valued service. Over the previous five years, the Trust has reduced its average spend per property and falls within the HouseMark Upper Quartile for spend. The Trust has also seen a continued trend of increasing customer satisfaction year-on-year. When measured as a cost per satisfied customer, the Trust has achieved efficiency savings.

The Trust has also reduced Void Turnaround Days over the previous five years, through targeted process reengineering and a focus on efficiency. On average, the Trust currently takes 16.7 days to relet a property, which equates to Upper Quartile performance (based on 2012/13 benchmarks).

DIRECT REPAIRS COST* PER SATISFIED CUSTOMER

VOID TURNAROUND (DAYS)

Upper Median Quartile

Lower Quartile

Lower Median Quartile

Upper Quartile

Benchmarks not yet published

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DIRECT RENT COLLECTION COST* PER UNIT

Rents & welfare Reform Effective rent collection is vital to the Trust’s financial viability. Following analysis of the potential impact of Welfare Reform, the introduction of Universal Credit, and the general economic downturn, the Board took a decision to become a ‘high cost, high performing service’, investing additional resources in financial support for customers to protect income streams and maintain high levels of collection. The Trust has used HouseMark to understand ongoing performance and comparison to other providers’ response to these issues.


Lower Quartile


Upper Quartile


2Northern LSVTs with 5,000-13,000 units *Comparative prior year costs have been inflated to 2013/14 levels based on 2.5% inflation p.a.



Upper Quartile

Lower Quartile

COMPARATIVE RENT COLLECTION AS A % RENT DEBIT 2012/13

42


Value for Money


DIRECT ESTATE MANAgEMENT COST* PER UNIT

Lower Quartile


Resident Involvement Whilst costs in this area have reduced significantly and benchmark favourably, satisfaction with customers feeling their views are taken into account remains below target and benchmarks below performance achieved by peers. Board have given a clear direction that customer involvement should be a key priority for improvement during 2014/15. Customer insight projects have been approved, to understand how customers want to engage with the Trust, and to provide alternative channels of engagement.

Analysis does not indicate a direct correlation between reducing costs and reducing satisfaction. The two years where costs were highest were the years with the lowest satisfaction results. Although satisfaction in this area is below target, dissatisfaction is also reasonably low. This suggests the solution to increasing satisfaction is not just additional investment; many customers have responded as ‘neither satisfied nor dissatisfied’, therefore the key issue appears to be addressing customer apathy through the projects described above.

Benchmarking demonstrates that the Trust’s strategy has been successful; although costs have increased and are currently Lower Quartile when compared to similar organisation, performance in terms of collection is the second highest within the peer group.

It remains the view of Board and Management that investment in customer support, as well as some increase in collections staff, is the appropriate strategy for the Trust. The Trust will continue to adopt this strategy and closely monitor collection results during 2014/15 when the first phases of Universal Credit are to be introduced in Trafford.

Estates Management The Trust manages a diverse range of estates across Trafford and provides a range of services to ensure neighbourhoods are maintained to a high standard and are places in which people want to live. The levels of services to be provided and associated resources are determined through the Promise and Budget each year.

The Trust has reduced spend on estates management, whilst maintaining consistent improvements in customer satisfaction levels. Whilst this is pleasing, Management are also aware that costs are comparatively high. Work is ongoing through the Landlord business to understand

these differences and consider how further efficiencies can be achieved, including revisiting staffing structures and looking at the most efficient delivery model.

SATISFACTION wITH NEIgHBOURHOOD AS A PLACE TO LIVE




43

Lower Quartile

Upper Quartile


DIRECT RESIDENT INVOLVEMENT COST* PER UNIT

SATISFACTION THAT VIEwS ARE TAkEN INTO ACCOUNT Upper Median

Quartile

Lower Quartile



Rents & Service Charges The Trust sets its rents in accordance with the Government Rent Regime, and as such does not benchmark its rent levels with other providers. The Trust also operates a variable service charge, seeking to recover the direct costs of discretionary service provision in line with best practice. The Trust has started to relet properties at an Affordable Rent, as required by the AHP Contract with the HCA, opting to cap all conversions at the Local Housing Allowance level. This was a decision taken by Board after careful consideration of the optimum balance between revenue generation and customer affordability.

SATISFACTION wITH SERVICE CHARgES VALUE FOR MONEY





SATISFACTION wITH RENT VALUE FOR MONEY

44


Value for Money

Overall, it is the view of Management that the Trust benchmarks well against other similar Registered Providers, and provides an appropriate balance between cost and quality of service provision. Continuous improvement and targeted activity to increase service efficiency remain an integral part of the Trust’s culture.


The Trust uses HouseMark to understand how customers feel about whether their rents and service charges provide VfM. Although satisfaction in both cases is above 80%, there are still a significant number of customers who do not feel charges represent VfM. The Trust will seek to improve this in a number of ways:

• Customer insight: as understanding of customers’ views and needs improves, so services can be tailored to reflect those needs

• Service efficiency: as efficiencies in service delivery are realised, savings will be passed on to customers through reduced charges

• Rent review: the Trust intends to undertake a wholesale review of its rent levels to consider alternative approaches to rent setting

Overheads When compared to other organisations, the Trust’s overhead costs appear high. In particular, IT costs fall within the Lower Quartile, due to high costs associated with maintaining and supporting a number of legacy systems. Whilst IT costs are expected to remain high in the short-term, as systems are implemented to support the diversification of the business, the Trust will ensure these costs are appropriate and has commissioned a review of its IT Infrastructure in terms of VfM.

During 2013/14, the Corporate Services Directorate undertook an internal customer satisfaction survey. Overall, customer responses were positive and identified a number of opportunities to further improve services. The feedback from the survey will inform the Corporate Services Business Plan, which will include targets around cost efficiency and service quality.

OVERHEAD COST* PER UNIT

OVERHEAD COST* PER EMPLOYEE 2012/13



Lower Quartile

Lower Quartile


45

8. OVERALL SELF-ASSESSMENT

In completing this self-assessment, achievements to date and current and future plans and objectives have been clearly documented, and demonstrate that the Trust’s approach to VfM is well-defined and will enable achievement of continuous improvement in this area. There is a strong culture of VfM across the Trust, which is embedded within the ambitious plans for growth and diversification into four distinct operating business streams. This, together with challenging efficiency targets, will generate additional financial capacity and increase the provision of affordable housing within Trafford.

This diversification brings new areas of risk, particularly relating to Care & Support and Development, which will require close review and management over the coming year. There are robust risk frameworks in place to ensure both strategic and operational risks within each business area are managed appropriately. Welfare Reform, the economic recovery and impending (limited) implementation of Universal Credit within Trafford remain key risks for the Trust.

Board and Management are of the view that the Trust:

• Has a robust approach to decision-making that considers VfM in the allocation and use of resources, with clear links to the delivery of Trust objectives

• Has a broad understanding of the return on its assets, with further work planned in this area to improve understanding and inform decisions at a more granular level

• Has a robust performance and scrutiny framework that drives VfM and continuous improvement

• Has a clear understanding of the costs and outcomes of services delivered, and makes decisions regarding the most appropriate balance of cost and quality

Consequently, it is the view of the Board and Management that the Trust complies with the current HCA VfM Standard.

It is recognised that there are opportunities for further improvement. Key projects and initiatives for 2014/15 include:

• Implementation of the Business Plans for the four operational businesses, development of the balanced scorecard performance measurement framework and delivery of the Year One financial targets

• Developing mechanisms to measure social and environmental impact to better understand the Trust’s triple bottom line performance

• Implementation of mechanisms to capture and measure VfM achievements to enable more joined-up recognition of capacity creation and reinvestment

• Business-wide review of procurement policies and practices to ensure align with the Trust’s financial, social and environmental aspirations, and to ensure maximum value is derived from the supply chain

• Workforce planning review to ensure staff structures are appropriate and enable efficient service delivery, and that accountability and responsibility is clearly defined throughout the organisation

• Development of mechanisms to strengthen customer involvement in driving VfM to truly embed co-regulation in this area

46


Internal Controls Assurance

The Board has ultimate responsibility for the Trust’s system of internal control and for reviewing its effectiveness. The Audit Risk and Compliance Committee is responsible to the Board for monitoring this system and reporting on its effectiveness.

The system of internal control is based on an ongoing process designed to identify and prioritise the risks to the achievement of the Trust’s policies, aims and objectives; to evaluate the likelihood of those risks being realised and the impact should they be realised, and to manage them efficiently, effectively and economically. The processes in place also assist the Board in identifying whether the Trust has any significant failings or weaknesses in its internal control system.

The system of internal control is designed to manage risk to a reasonable level rather than eliminate all risk, and therefore provide reasonable, but not absolute, assurance that assets are safeguarded against unauthorised use or material loss and that transactions are properly authorised and recorded.

The Trust is regulated by the Homes & Communities Agency. In meeting its responsibilities the Board, through the Audit Risk and Compliance Committee has adopted a risk-based approach to internal controls which is embedded within the management and governance of the Trust. This includes a regular review of the nature and extent of significant risk to which the Trust is exposed.

The process by which the Audit Risk and Compliance Committee, on behalf of the Board, reviews the effectiveness of the system of internal control, together with the robustness of the risk management and control framework, includes:

IDENTIFICATION AND EVALUATION OF kEY RISkS

The Trust has in place a formal risk management framework which incorporates identification and evaluation of risk, and the identification and implementation of related controls and mitigating actions. Risk issues and risk management processes are monitored by the Audit, Risk and Compliance Committee and a rolling programme of review of the Risk Register is in place, with review undertaken quarterly by the Board. This process has been in place throughout the financial year and up to the date of approval of the Annual Report and Financial Statements.

The key business risks identified within the Trust’s Risk Register are used by Internal Audit in developing their annual work programme to verify the effectiveness of controls in place over key risks.

During 2013/14 the Trust’s management have continued to work on embedding a sound framework to assess the effectiveness of the internal controls system. There have been no material losses in 2013/14, which is testament to the strong financial controls that are in place within the Trust.

However, the Trust identified a number of risks to the business including an attempted theft, which provided lessons for the Trust in respect of effective fraud incident policies, whilst recognising where improvements could be made. These have subsequently been implemented.

47

Data compliance represents an area where the Trust recognised a need to broaden understanding, with training rolled out to all staff in order to ensure compliance in this area and detailed assessments undertaken in order to evidence this.

The Trust has also worked closely with its Internal Auditors in order to ensure a strategic oversight and joined up approach to Health and Safety. This resulted in a fundamental review of Health and Safety to ensure a balance of operational and strategic priorities is achieved.

CONTROL ENVIRONMENT AND CONTROL PROCEDURES

Formal Standing Orders and Financial Regulations define responsibilities of the Board, Committees and Management. The Board retains responsibility for a defined range of strategic issues covering strategic, operational, financial and compliance issues. The Board has delegated authority to its Committees under approved Terms of Reference.

There are formal policies, procedures and Terms of Reference in place that cover issues such as delegated authority, segregation of duties, accounting, treasury management, Health & Safety, data and asset protection and fraud prevention, detection and reporting. All key policies are subject to Board approval.

There are robust policies and procedures on recruitment, appraisal and staff management, and a comprehensive performance monitoring framework, to assist in maintaining standards of performance.

All significant new initiatives, major commitments and investment projects are subject to formal authorisation procedures.

INFORMATION AND FINANCIAL REPORTINg SYSTEMS

Financial management and reporting procedures include the production of a Long Term Financial Plan, detailed budgets and financial forecasts, which are intrinsically linked and subject to Board review and approval. Regular management accounts and supplementary financial performance reports are prepared promptly, providing relevant, reliable, up-to-date financial and other information, including variances from budgets which are investigated and reported as necessary.

The Board regularly reviews performance against the set budget and a suite of performance indicators, to assess progress towards the achievement of key business objectives, Board priorities and target outcomes. Comprehensive external benchmarking information is provided where available to enhance performance knowledge and drive continuous improvement.

MONITORINg AND CORRECTIVE ACTION

The internal control framework is subject to regular review by the Trust’s Internal Auditors, who advise the senior management team and report to the Audit, Risk and Compliance Committee. The Audit, Risk and Compliance Committee consider risk and internal control at each of its meetings, meeting with senior management and Internal and External Auditors as required to review

48


Internal Controls Assurance

specific reporting and internal control matters, in order to satisfy themselves that internal control frameworks are operating effectively. The Trust follows formal procedures for taking appropriate action to address weaknesses identified and the Audit Risk and Compliance Committee reviews any follow up action taken to address weaknesses.

The Trust’s Leadership Team regularly reviews the risk management and internal control framework and takes appropriate action to develop and implement best practice improvements to the system of internal control to ensure its continued effectiveness.

The Board is committed to investigating all suspected incidents of fraud, and, where a fraudulent act has taken place, taking the strongest action available against those individuals and/or organisations involved. The Trust has in place a Fraud Response Plan for reporting and managing suspected and actual fraudulent activity.

The Board has received the Chief Executive’s Annual Report on the System of Internal Control and has reviewed the effectiveness of the system of internal control for the year ended 31st March 2014 and up to the date of signing the Annual Report and Financial Statements. No weaknesses have been identified which resulted in material losses or contingencies or other uncertainties which require disclosure in the Annual Report and Financial Statements

STATEMENT OF COMPLIANCE

The Trust’s accounting policies have been prepared with reference to UK Generally Accepted Accounting Principles (GAAP), the (Statement of Recommended Practice: Registered Social Landlords 2010) and The Homes & Communities Agency Accounting Direction 2012 for Registered Providers. The principal accounting policies of the Trust are set out on pages 54 to 83 of the Financial Statements.

This Operating and Financial Review has been prepared in accordance with Reporting Standard 1: ‘Operating and Financial Review’ (RS1).

The Trust has adopted the National Housing Federation’s Code of Governance. During 2013/14 the Trust complied with the provisions of the Code except the provision relating to the maximum term of office of non-executive Board Members, as Alan Smith served on the board for a term of 9 years and one month from his appointment on 27th July 2004 to his resignation on 31st August 2013. The Board approved the extension of Alan Smith’s term of office as part of the succession planning process to recruit both his successor and the Chairman of the Board.

The Operating and Financial Review (including the Strategic Report) was approved by the Board on 20th August 2014 and signed on its behalf by:

Edna RobinsonChairman of the Board

49

Report of the Independent Auditor

We have audited the Financial Statements of Trafford Housing Trust Limited for the year ended 31st March 2014 which comprise the Income and Expenditure Account, the Statement of Total Recognised Surpluses and Deficits, the Balance Sheet, the Cash Flow Statement and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

This report is made solely to the company’s Members, as a body, in accordance with the Housing and Regeneration Act 2008 and Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s Members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s Members as a body, for our audit work, for this report, or for the opinions we have formed.

RESPECTIVE RESPONSIBILITIES OF THE BOARD AND AUDITORS

As explained more fully in the Statement Director’s Responsibilities, the Directors are responsible for the preparation of the Financial Statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the Financial Statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Finance Reporting Council’s Ethical Standards for Auditors.

SCOPE OF THE AUDIT OF THE FINANCIAL STATEMENTS

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

OPINION ON FINANCIAL STATEMENTS

In our opinion the Financial Statements:

• give a true and fair view of the state of the company’s affairs as at 31st March 2014 and of its surplus for the year then ended;

• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

• have been prepared in accordance with the requirements of the Companies Act 2006, the Housing and Regeneration Act 2008 and the Accounting Direction for Private Registered Providers of Social Housing in England from April 2012.

OPINION ON OTHER MATTERS PRESCRIBED BY THE COMPANIES ACT 2006

In our opinion the information given in the Report of the Board for the financial year for which the Financial Statements are prepared is consistent with the Financial Statements.

MATTERS ON wHICH wE ARE REQUIRED TO REPORT BY ExCEPTION

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

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

• the Financial Statements are not in agreement with the accounting records and returns; or

• certain disclosures of Board Member and or Directors’ remuneration specified by law are not made; or

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

Hamid Ghafoor (senior statutory auditor)

For and on behalf of BDO LLP, statutory auditor Liverpool, United kingdom 1/9/2014

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

5050


Trust Income And Expenditure Account

FOR THE YEAR ENDED 31ST MARCH 2014

Note 2014£’000

2013£’000

Turnover 3 44,614 40,715

Cost of sales – Shared ownership 3 (956) (319)

Operating costs 3 (32,680) (30,936)

Operating surplus 3 10,978 9,460

Surplus on sale of fixed assets – housing, land and properties 6 1,608 967

Interest receivable and other income 7 - -

Interest payable and similar charges 8 (5,290) (5,076)

Surplus on ordinary activities before taxation 7,296 5,351

Tax on surplus on ordinary activities 11 - -

Surplus for the financial year 20 7,296 5,351

All amounts relate to continuing activities.

The financial statements were approved for issue by the board on 20/08/2014 and signed on its behalf by:

Edna Robinson Chairman of the Board

Alastair Findlay Chairman of Audit, Risk and Compliance Committee

Christine Little Company Secretary

The notes on pages 54 to 83 form an integral part of these financial statements.

5151

Statement Of Total Recognised Surpluses And Deficits


Note 2014£’000

2013£’000

Surplus for the financial year 7,296 5,351

Actuarial Gain/(Loss) relating to Pension Scheme 9 680 (2,804)

Total recognised surpluses relating to the year 7,976 2,547


5252


Trust Balance Sheet

(COMPANY LIMITED BY gUARANTEE NO 04831118) AT 31ST MARCH 2014

Note 2014£’000

2013£’000

Fixed assets

Housing properties – depreciated Cost 12 170,920 156,511

Social Housing Grants 12 (8,522) (6840)

Other Grants 12 (253) (182)

Other fixed assets 12 2,244 1,390

Total fixed assets 164,389 150,879

Debtors due after more than one year 15 56,656 67,092

Current assets

Shared ownership properties for resale 12b 2,435 1,191

Stocks 13 - 27

Debtors 14 5,732 6,014

Cash at bank and in hand 2,544 587

Total current assets 10,711 7,819

Creditors: Amounts falling due within one year 16 (26,770) (17,880)

Net current liabilities (16,059) (10,061)

Total assets less current liabilities 204,986 207,910

Creditors: amounts falling due after more than one year 17 99,588 100,000

Provisions for liabilities and charges 19 56,656 67,092

Net pension liability 9 9,570 9,622

165,814 176,714

Capital and reserves:

Revenue reserve 20 39,172 31,196

Trust’s Funds 39,172 31,196

204,986 207,910

The financial statements were approved for issue by the board on 20/08/2014 and signed on its behalf by:

Edna Robinson Chairman of the Board

Alastair Findlay Chairman of Audit, Risk and Compliance Committee

Christine Little Company Secretary


5353

Cash Flow Statement


Note 2014£’000

2013£’000

Net Cash Inflow from Operating Activities 22 21,361 16,605

Returns on investment and servicing of finance

Interest received - -

Interest paid (5,414) (4,985)

Net cash outflow from returns on investment and servicing of finance

(5,414) (4,985)

Taxation

Corporation Tax paid - -

Capital expenditure and financial investment

Improvement Programme (11,853) (18,527)

Less Non Repayable Improvement Grant Funding - 2,141

Construction of Housing Properties (10,742) (6,238)

Less Social Housing Grants Received 924 2,294

Less other grant received 71 -

Purchase of Other Fixed Assets (1,396) (271)

Sale of Housing Properties and Land 2,056 1,232

Net cash outflow from capital expenditure and financial investment

(20,940) (19,369)

Financing

Loan advances received 6,950 8,050

Increase in cash in the period 23 1,957 301

Trafford Housing Trust Limited is registered under the Companies Act 2006, with the Homes & Communities Agency as a registered provider and with the Charities Commission.

BASIS OF ACCOUNTINg

The Financial Statements of the Trust are prepared in accordance with generally accepted accounts practice (UK GAAP) and registered Social Housing Providers Update 2010, and comply with the Accounting Direction for Private Registered Providers of Social Housing 2012. The accounts have been prepared on the going concern basis, and the accounting policies adopted have been applied on a consistent basis. The Board is satisfied that the current accounting policies are the most appropriate for the Trust.

TRUE AND FAIR OVERRIDE

Under the requirements of the SORP, capital grants are shown as a deduction from the cost of housing properties on the balance sheet. This treatment is not in accordance with the Regulations made under Companies Act 2006 which requires fixed assets to be shown at cost and grants as deferred income. The treatment has been adopted in order to show a true and fair view as, in the opinion of the Board; this is a relevant accounting policy, comparable to that adopted by other Registered Providers.

TURNOVER

Turnover represents rental income receivable in the year (i.e. rent due less loss of rent due to voids), service charges receivable, any revenue grants from local authorities and the other bodies and other income.

Rental Income is recognised from the point when properties under development reach practical completion or otherwise become available for letting. Revenue grants are receivable when the conditions for receipt of agreed grant funding have been met.

5454

Notes to the Financial Statements

1. Legal Status

2. Accounting Policies

OTHER FIxED ASSETS

Other fixed assets are stated at historical purchase cost less accumulated depreciation or valuation. Cost includes the original purchase price of the asset and the costs attributable to bringing the asset to its working condition for its intended use. Staffing costs directly attributable to bringing the asset to its working condition are capitalised.

HOUSINg PROPERTIES

Housing properties are accounted for under the historical cost basis. All known and planned demolitions have been recorded at land value only. Housing properties under construction are stated at cost less related capital grants. Costs include costs of acquiring land and buildings, development, improvement costs and interest.

Housing properties are depreciated over 50 to 100 years, in accordance with the depreciation policy, based on the cost of the property excluding land and any grants received. Freehold land is not depreciated. The useful life of the housing stock is reassessed annually.

IMPROVEMENT COSTS

Improvements are works which result in an increase in the net rental income, a reduction in future maintenance costs or a significant extension of the life of the property. The Trust’s repairs programme expenditure on housing properties is capitalised in accordance with FRS15 and the SORP. Only the direct overhead costs associated with improvements are capitalised (i.e. professional fees and related staff costs). Depreciation will commence at the date of capitalisation and will be over the useful life of the improvement.

All other expenditure incurred in respect of general repairs to its housing stock is charged to the income and expenditure account in the year in which it is incurred.

DEVELOPMENT COSTS

Development costs are those costs incurred in the construction of new properties. This expenditure is capitalised in accordance with FRS15 and the SORP where it relates to properties held for rent or second and subsequent shared ownership. Where expenditure relates to properties held for first tranche shared ownership these are held as current assets in accordance with the SORP.

CAPITALISATION OF INTEREST AND ADMINISTRATION COSTS

Interest costs associated with the financing of housing construction contracts are capitalised. The interest rate used is the average borrowing rate in the year and this rate is applied to the expenditure during the course of construction of the property, up to the date of practical completion.

Associated professional fees and development staff costs are capitalised to the extent that those staff are working on development schemes.

DEPRECIATION

Fixed assets are depreciated in accordance with FRS15 at rates calculated to write down the net book value after deducting Social Housing Grant to their estimated residual value, on a straight line basis, over their expected remaining useful economic life.

5555


5656


Assets Depreciation

Housing Properties:

Housing properties (new build) Over 100 years

Housing properties (acquired/transferred) Over 100 years

Housing properties of non-traditional construction Over 50 years

Tower blocks Over 50 years

Improvements to Housing Properties:

Door entry systems, warden call systemsOver 15 years or remaining life of the property, whichever is shorter

Modernisations, door replacements, bathrooms, kitchens, internal works, heating

Over 20 years or remaining life of the property, whichever is shorter

Lifts, walling, rewiring, communal areas, fire protectionOver 30 years or remaining life of the property, whichever is shorter

Windows, drainageOver 35 years or remaining life of the property, whichever is shorter

Structural, external works Over 50 years or remaining life of the property, whichever is shorter

Environmental Over 60 years or remaining life of the property, whichever is shorter

Roofing Over 65 years or remaining life of the property, whichever is shorter

Other Fixed Assets:

Leasehold premises To the break clause in the lease

Office refurbishment To the break clause in the lease

Computer hardware and software Over 3 years

Computer equipment infrastructure Over 5 years

Furniture, equipment and vehicles Over 4 years


5757

IMPAIRMENT

The Trust undertakes annual impairment reviews where the life of the housing properties exceeds 50 years. In addition, assets are reviewed for impairment if there is an indication that impairment may have occurred. Where there is evidence of impairment, fixed assets are written down to the recoverable amount. Any such write down is charged to the Income and Expenditure Account.

Schemes earmarked for demolition are impaired once the tenants of the scheme have been decanted and the scheme is vacant for redevelopment.

gRANTS

Where developments have been financed wholly or partly by grants, the cost of those developments has been reduced by the amount of grant received. If a property is sold, Social Housing Grant may be repayable. Grants are treated as revenue at the point where funds are received.

Other grants received for items treated as revenue expenditure are credited to the Income and Expenditure Account in the same period as the expenditure to which they relate.

SALES OF HOUSINg PROPERTIES

Sales of housing properties are taken into account on completion of contracts. Due to the nature of the Transfer Agreement with Trafford Metropolitan Borough Council (TMBC), it is not possible to identify separately the original value of each property sold. Instead, an average value is used and is charged to the Income and Expenditure Account.

Surpluses or deficits arising from the disposal of properties under Right-to-Buy legislation are disclosed on the face of the Income and Expenditure Account. The surpluses or deficits disclosed are net of any sums payable to TMBC under the terms of the Transfer Agreement dated 14th March 2005.

SHARED OwNERSHIP PROPERTIES

The Trust disposes shared ownership homes on a long lease to persons who occupy them at a share equal to between 25% and 75% of value. Shared ownership development

expenditure is split between current and fixed assets on initial recognition. The proceeds from the sale of the current asset element (“first tranche”) are included in turnover and the related asset expensed through the Income and Expenditure Account as a cost of sale. The remaining element of the property (“staircasing element”) is accounted for as a fixed asset and any subsequent tranche sale treated as a part disposal of a fixed asset. Social Housing Grant in respect of shared ownership properties is allocated against the retained element of shared ownership property and is treated as a deduction from fixed asset costs.

LEASINg COMMITMENTS

In accordance with SSAP 21, assets held under finance leases are capitalised in the balance sheet and are depreciated over the term of the lease. The interest element of the rental amount is charged to the Income and Expenditure Account over the period of the lease and represents a constant proportion of the balance of capital repayments outstanding.

Rentals paid under operating leases are charged to the Income and Expenditure Account on a straight-line basis over the lease term.

PROPERTY MANAgED BY AgENTS

Should the Trust carry the financial risk on property managed by agents, all the income and expenditure arising from the property will be included in the Income and Expenditure Account. Should an agency carry the financial risk, the Income and Expenditure Account will include only that income and expenditure that relates solely to the Trust.

LOAN ISSUE COSTS AND INTEREST PAYABLE

The cost of raising loans is amortised over the period of the loan. The deferred cost is offset against the liability and included within creditors: amounts falling due after more than one year, in accordance with FRS4 Capital Instruments.

Loan interest payable is charged to the Income and Expenditure Account at the relevant rates based on the carrying amount of the debt.

PROVISIONS

Provisions are made to the extent that there is a high likelihood that the Trust will incur an expense as a result of a past event.

STOCkS

These items are included in the accounts at the lower of cost and net realisable value as specified in SSAP 9.

PENSIONS

The Trust participates in the Greater Manchester Pension Scheme and the Social Housing Pension Scheme, both of which are defined benefit final salary schemes. The assets of the schemes are held separately from those of the Trust.

gREATER MANCHESTER PENSION SCHEME (gMPF)

Pension scheme assets are measured using fair values. Pension scheme liabilities are measured using a projected unit method and discounted at the current rate of return on a high quality corporate bond of equivalent term and currency to the liability.

The pension scheme surplus (to the extent that it is recoverable) or deficit is recognised in full. The movement in the scheme surplus/deficit is split between operating charges, finance items and, in the Statement of Total Recognised Surpluses and Deficits, actuarial gains and losses.

SOCIAL HOUSINg PENSION SCHEME (SHPS)

The Trust is unable to identify its share of the underlying assets and liabilities of the scheme on a consistent and reasonable basis and therefore, as required by FRS17 ‘Retirement Benefits’, accounts for the scheme as if it were a defined contribution scheme. As a result, the amount charged to the Income and Expenditure account represents the contributions payable to the scheme in respect of the accounting period.

BAD DEBTS AND wRITE-OFFS

Bad debts are charged to the Income and Expenditure Account in the year in which they are incurred. A provision for bad and doubtful debts is made on an estimation of those debts that will not be recovered at the Balance Sheet date.

In respect of rental debtors provision is made on the following basis:

(a) Current customers: Varying percentages on the size or age of the debt.

(b) Former customers: 100% of the debt.

In respect of other debtors, provision is made at varying percentages based on the age and nature of the debt.

VALUE ADDED TAx (VAT)

The Trust’s main income stream is rent, which is exempt from VAT. The majority of expenditure is subject to VAT and so is shown inclusive of VAT. For some activities VAT can be reclaimed under the partial exemption method and this is credited to the Income and Expenditure Account.

The Trust has an approved VAT Arrangement which commenced on the 14th March 2005 and lasts for ten years from that date. As a result, VAT incurred on the Improvements Programme can be recovered from Her Majesty’s Revenue and Customs (HMRC). The balance of VAT recoverable at the year-end is included as a current asset in the Balance Sheet.

Two thirds of the VAT recoverable under this VAT Arrangement is payable to TMBC in accordance with the terms of the Transfer Agreement dated 14th March 2005. The balance of recovered VAT payable to TMBC is shown as a current liability in the Balance Sheet.

5858



5959

CURRENT ASSET INVESTMENTS

Investments comprise short-term loans to approved banks and building societies meeting strict credit rating criteria. They are readily disposable and include money market deposits held for more than 24 hours that can only be withdrawn without penalty on maturity or by giving notice of more than one working day.

Investments are stated in the Balance Sheet at historic cost including accrued interest.

LIQUID RESOURCES

Liquid resources are readily disposable current asset investments. They include some money market deposits, held for more than 24 hours that can only be withdrawn without penalty on maturity or by giving notice of more than one working day.

SUPPORTINg PEOPLE INCOME

Charges for services funded under Supporting People are recognised as they fall due under the contractual arrangements with Trafford MBC.

2014

Turnover £’000

Cost of Sales £’000

Operating Costs£’000

Operating Surplus

£’000

Social Housing Lettings 41,578 - (30,662) 10,916

Other Social Housing Activities

Supporting People Contract Income 190 - (19) 171

Tenants Involvement 93 - (473) (380)

ASB - - (103) (103)

Social Enterprise 187 - (440) (253)

First Tranche Shared Ownership Sales 1,635 (956) - 679

Financial Inclusion - - (68) (68)

Pendant Alarms 434 - (172) 262

Community Regeneration - - (545) (545)

Non-Social Housing Activities

Lettings 335 - - 335

Services 162 - (26) 136

Youth Service - - (172) (172)

Totals 44,614 (956) (32,680) 10,978

6060

3. Turnover, Cost of Sales, Operating Costs and Operating Surplus


2013

Turnover £’000

Cost of Sales £’000

Operating Costs£’000

Operating Surplus

£’000

Social Housing Lettings 39,004 - (29,285) 9,719

Other Social Housing Activities

Supporting People Contract Income 409 - (24) 385

Tenants Involvement 44 - (277) (233)

ASB - - (124) (124)

Social Enterprise 90 - (277) (187)

First Tranche Shared Ownership Sales 436 (319) - 117

Financial Inclusion - - (57) (57)

Pendant Alarms 265 - (96) 169

Community Regeneration - - (600) (600)

Non-Social Housing Activities

Lettings 339 - - 339

Services 128 - (34) 94

Youth Service - - (162) (162)

Totals 40,715 (319) (30,936) 9,460

6161

PARTICULARS OF INCOME AND ExPENDITURE FROM SOCIAL HOUSINg LETTINgS

General Housing

Supported Housing

Temporary

Social Housing

Shared Ownership

2014 Total

2013 Total

£’000 £’000 £’000 £’000 £’000 £’000

Turnover from Social Housing Lettings

Rent receivable net of voids 28,015 10,193 206 95 38,509 36,205

Service charges receivable – net of voids

974 2,006 40 49 3,069 2,799

Net Rental Income 28,989 12,199 246 144 41,578 39,004

Other revenue grants - - - - - -

Turnover from Social Housing Lettings

28,989 12,199 246 144 41,578 39,004

Expenditure on Social Housing Lettings

Management (7,089) (2,952) - (108) (10,149) (8,927)

Services (1,231) (2,523) (22) (5) (3,781) (3,761)

Routine maintenance (3,850) (552) - - (4,402) (4,468)

Planned maintenance (1,323) (582) - - (1,905) (2,271)

Major repairs expenditure (1,021) (284) - - (1,305) (2,139)

Development expenditure (441) (224) - (266) (931) (387)

Bad debts (246) (102) - - (348) (140)

Depreciation of housing properties (5,085) (2,118) - (41) (7,244) (6,720)

Property lease charges (419) (174) - (4) (597) (472)

Operating Costs on Social Housing Lettings

(20,705) (9,511) (22) (424) (30,662) (29,285)

Operating Surplus (Deficit) on Social Housing Lettings

8,284 2,688 224 (280) 10,916 9,719

Void Losses – Rents (215) (83) - - (298) (274)

Void Losses – Service Charges (9) (20) - - (29) (35)

Void Losses – Total (224) (103) - - (327) (309)

6262

3. Turnover, Cost of Sales, Operating Costs and Operating Surplus


This is arrived at after charging:

2014 £’000

2013 £’000

Depreciation of Housing Properties 7,241 6,624

Depreciation of Other Tangible Fixed Assets 542 536

Operating lease rentals

- Land and buildings 597 472

- Vehicles 180 180

Auditor’s remuneration (excluding VAT)

- for audit services 18 18

Impairment Charge 3 96

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

2014Number

2013Number

Social Housing

Total General Housing Owned 6,236 6,193

Sheltered 2,597 2,582

Temporary Social Housing 55 40

Total Owned and Managed 8,888 8,815

All the above properties are for letting and in management

2014Number

2013Number

In Development:

Social Housing

Total general housing owned 50 72

Low cost housing 11 16

Total In Development 61 88

6363

4. Operating Surplus

5. Accommodation in Management and Development

2014 £’000

2013 £’000

Housing Properties and Land

Disposal Proceeds 2,056 1,402

Payments made to TMBC - (170)

Carrying Value of Fixed Assets – Housing (448) (265)

Total Surplus on Disposal 1,608 967

2014 £’000

2013 £’000

Interest receivable and similar income - -

2014 £’000

2013 £’000

Loans and Bank Overdrafts (5,377) (4,943)

Capitalised Interest 395 26

Pension Fund Funding Costs (271) (124)

Pension Bond (37) (35)

Total interest payable and similar charges (5,290) (5,076)

6464

6. Surplus on Sale of Fixed Assets

7. Interest Receivable and Other Income

8. Interest Payable and Similar Charges


AVERAgE MONTHLY NUMBER OF EMPLOYEES:

2014

Number2013

Number

Administration 88 78

Development 12 12

Housing support and care 261 256

Total 361 346

AVERAgE MONTHLY NUMBER OF EMPLOYEES ExPRESSED IN FULL TIME EQUIVALENTS:

2014

Number2013

Number

Administration 80 72

Development 12 12

Housing support and care 250 242

Total 342 326

EMPLOYEE COSTS:

2014£’000

2013£’000

Wages and Salaries 10,219 9,494

Social Security Costs 857 788

Other Pension Costs 1,844 1,391

Total 12,920 11,673

The Employee costs shown above include £547k capitalised on implementing the new Housing Management system in the year.

The Trust’s employees are eligible to be members of the Greater Manchester Pension Fund (GMPF) or of the Social Housing Pension Scheme (SHPS). Further information on each scheme is given on page 66.

6565

9. Employees

THE SOCIAL HOUSINg PENSION SCHEME (SHPS)

Trafford Housing Trust Limited participates in the Social Housing Pension Scheme (SHPS). SHPS is funded and is contracted-out of the State Pension scheme.

It is not possible in the normal course of events to identify on a consistent and reasonable basis the share of underlying assets and liabilities belonging to individual participating employers. This is because SHPS is a multi-employer scheme where SHPS assets are co-mingled for investment purposes, and benefits are paid from total Scheme assets. Accordingly, due to the nature of SHPS, the accounting charge for the period under FRS17 represents the employer contribution payable.

The Trustee commissions an actuarial valuation of SHPS every three years. The main purpose of the valuation is to determine the financial position of SHPS in order to address the level of future contributions required so that SHPS can meet its pension obligations as they fall due.

The last formal valuation of SHPS was performed as at 30 September 2011 by a professionally qualified Actuary using the Projected Unit Method. The market value of SHPS’s assets at the valuation date was £2,062 million. The valuation revealed a shortfall of assets compared with the value of liabilities of £1,035 million, equivalent to a past service funding level of 67.0%.

SHPS Actuary has prepared an Actuarial Report that provides an approximate update on the funding position of SHPS as at 30 September 2013. Such a report is required by legislation for years in which a full actuarial valuation is not carried out. The market value of SHPS’s assets at the date of the Actuarial Report was £2,718 million. The Actuarial Report revealed a shortfall of assets compared with the value of liabilities of £1,151 million, equivalent to a past service funding level of 70%.

In order to eliminate this funding shortfall, the Trustee and Trafford Housing Trust Limited have agreed that additional contributions will be paid to SHPS. The total amount which Trafford Housing Trust Limited has committed to is forecast to be £1.3 million in scheduled monthly payments between April 2014 and September 2026.

THE gREATER MANCHESTER PENSION FUND

The Greater Manchester Pension Fund (GMPF) is a multi-employer scheme with more than one participating employer, which is administered by Tameside MBC under the regulations governing the Local Government Pension Scheme (LGPS), a defined benefit scheme. The latest triennial actuarial review of the fund was undertaken as at 31st March 2010 and this was used as the basis for FRS 17 calculations. Triennial actuarial valuations of the pension scheme are performed by an independent, professionally qualified actuary.

The employers’ contributions to the GMPF by the Trust for the period were £1,027k at a contribution rate of 18.0%. Estimated employers’ contributions to the GMPF during the accounting period commencing 1 April 2014 are £1,287k.

6666

9. Employees


ASSUMPTIONS

The major assumptions used by the GMPF actuary in assessing scheme liabilities on an FRS 17 basis were:

31st March 2014% per annum

31st March 2013% per annum

Rate of increase in salaries 3.9 4.6

Rate of increase in pensions in payment 2.8 2.8

Nominal discount rate 4.3 4.5

Expected return on assets 5.9 5.1

FAIR VALUE AND ExPECTED RETURN ON ASSETS

The expected rates of return were:

Expected return31st March 2014

%

Expected return31st March 2013

%

Equities 6.6 5.7

Bonds 3.8 3.5

Property 4.8 3.9

Cash/Liquidity 3.7 3.0

2014 £’000

2013 £’000

Actual return on scheme assets for the year 2,016 3,486

6767

Amounts recognised in the Trust’s balance sheet:

2014£’000

2013£’000

Present value of funded obligations (39,856) (37,566)

Fair value of plan assets 30,286 27,944

Net deficit in the scheme (9,570) (9,622)

Amounts in balance sheet

Liabilities (9,570) (9,622)

Assets - -

Net Liability (9,570) (9,622)

ANALYSIS OF THE AMOUNT CHARgED TO OPERATINg SURPLUS

2014£’000

2013£’000

Current Service Cost (1,375) (958)

Past Service Gain - (83)

Curtailment and Settlements (9) (63)

Total Operating Charge (1,384) (1,104)

6868

9. Employees


RECONCILIATION OF OPENINg AND CLOSINg BALANCES IN THE FAIR VALUE OF SCHEME LIABILITIES

2014£’000

2013£’000

Opening defined benefit obligation 37,566 30,123

Current service cost 1,375 958

Interest cost 1,712 1,470

Contributions by members 376 328

Actuarial losses (458) 4,941

Past service costs - 83

Losses on curtailments 9 63

Estimated benefits paid (724) (400)

Closing defined benefit obligation 39,856 37,566

RECONCILIATION OF OPENINg AND CLOSINg BALANCES IN THE FAIR VALUE OF SCHEME ASSETS

2014£’000

2013£’000

Opening fair value of employer assets 27,944 23,636

Expected return on assets 1,441 1,346

Contributions by members 376 328

Contributions by employer 1,027 898

Actuarial gains/(losses) 222 2,136

Benefits paid (724) (400)

Closing fair value of employer assets 30,286 27,944

6969

ANALYSIS OF THE AMOUNT CREDITED TO OTHER FINANCE INCOME

2014£’000

2013£’000

Expected return on pension scheme assets 1,441 1,346

Interest on pension scheme liabilities (1,712) (1,470)

Net (charge)/credit (271) (124)

ANALYSIS OF AMOUNT RECOgNISED IN STATEMENT OF TOTAL RECOgNISED SURPLUSES AND DEFICITS (STRSD)

2014£’000

2013£’000

Actual return less expected return on pension scheme assets 3,457 4,832

Experience gains and losses arising on scheme liabilities 640 28

Changes in assumptions underlying the present value of scheme liabilities (3,417) (7,664)

Actuarial gain/(deficit) recognised in STRSD 680 (2,804)

Cumulative actuarial loss recognised in STRSD (8,321) (9,001)

MOVEMENT IN DEFICIT DURINg THE PERIOD

2014£’000

2013£’000

Deficit at beginning of year (9,622) (6,488)

Movement in year :

Current service cost (1,375) (958)

Loss on curtailment 9 (63)

Past service cost - (83)

Employer Contributions 1,027 898

Other finance income (271) (124)

Actuarial loss 680 (2,804)

Deficit at the end of the period (9,570) (9,622)

7070

9. Employees


HISTORY OF ExPERIENCE gAINS AND LOSSES

2014£’000

2013£’000

Difference between the expected and actual return on share of scheme assets 3,457 4,832

Value of share of scheme assets 30,286 27,944

Difference as a percentage of share of scheme assets 11.4% 17.3%

Experience gains/(losses) on share of scheme liabilities 640 28

Total present value of share of scheme liabilities 39,856 37,566

Experience gains/(losses) as a percentage of present value of share of scheme liabilities 1.6% 0.1%

Total amount recognised in statement of total recognised surpluses and deficits 680 (2,804)

Total present value of liabilities 39,856 37,566

Total amount recognised in statement of total recognised surpluses and deficits as a percentage of the present value of share of scheme liabilities

1.7% (7.5%)

FIVE YEAR ANALYSIS OF SCHEME LIABILITIES AND ExPERIENCE ADJUSTMENTS

2014£’000

2013£’000

2012 £’000

2011 £’000

2010 £’000

Present value of scheme liabilities (39,856) (37,566) (30,123) (25,504) (34,592)

Fair value of scheme assets 30,286 27,944 23,636 22,607 20,696

Surplus/(deficit) on scheme (9,570) (9,622) (6,487) (2,897) (13,896)

Experience adjustment on plan liabilities 640 28 (210) 3,036 -

Experience adjustment on plan assets 222 2,136 (1,185) (400) 4,388

7171

BasicSalary£’000

Benefits in kind

£’000

Pension contributions

£’000

2014 Total£’000

2013 Total£’000

Chair of BoardBernard KnightEdna Robinson

4 6

- -

- -

4 6

10 -

Board MembersIan Belnavis John Lamb Robert KingJoanne BennettMatthew ColledgeAlan SmithSarah Twibell John Verbickas Helen Brzozowski Gerard Lucas Alastair Findlay

4 5 - 4 4 3 4 4 - 4 3

- - - - - - - - - - -

- - - - - - - - - - -

4 5 - 4 4 3 4 4 - 4 3

4 5 4 4 4 7 4 4 1 3 0

Chief ExecutiveMatthew Gardiner

125 13 19 157 151

CFO & Managing Director of DeveloperLarry Gold

100 10 15 125 121

Managing Director - LandlordJane McCall

96 10 14 120 115

Commercial DirectorDavid Barrow

58 3 8 69 102

Managing Director - Corporate ServicesHelen Jones

82 6 14 102 -

Managing Director - LocalitiesElaine Johnson

78 6 11 95 -

Managing Director - Independent LivingRodger Cairns

55 6 8 69 -

Aggregate emoluments 639 54 89 782 539

Expenses paid during the year to Board Members amounted to £14,330 (2012/13 £8,508).

The Executive Directors do not have a company car provided by the Trust and instead receive a car allowance as part of their basic salary. The emoluments of the highest paid director, the Chief Executive, excluding pension contributions, were £137,590 (2012/13 £134,790).

7272

10. Board Members, Executive Directors and Senior Staff


The Chief Executive is a member of the Social Housing Pension Scheme. He is an ordinary member of the Fund and no enhanced or special terms apply. The Trust does not make any further contribution to an individual pension arrangement for the Chief Executive The following full time equivalent number of staff including Directors whose remunerations (including compensation for loss off office) payable in relation to the year fell within the following bands are;

2014Number

2013Number

£60,000 - £69,999 7 4

£70,000 - £79,999 1 -

£80,000 - £89,999 2 3

£90,000 - £100,000 2 1

£100,000 - £109,999 1 2

£110,000 - £119,999 - 2

£120,000 - £129,999 2 -

£130,000 - £139,999 - -

£140,000 - £149,999 - -

£150,000 - £159,999 1 1

Total 16 13

7373

2014£’000

2013£’000

United Kingdom Tax

Current tax on income for the year - -

Adjustments in respect of prior years - -

Deferred taxation

Net origination (reversal) of timing differences - -

Tax on surplus on ordinary activities - -

2014£’000

2013£’000

Current tax reconciliation

Surplus on ordinary activities before tax and interest on tax 7,296 5,351

Theoretical tax at UK corporation tax rate 24% (2012/13: 26%) 1,751 1,284

Effect of: - Charitable income not chargeable to tax

(1,751)

(1,284)

Actual current taxation charge - -

7474

11. Tax on Surplus on Ordinary Activities


Social housingproperties held

for letting £’000

Housing property under

construction £’000

Shared ownership completed

£’000

Shared ownership

under construction

£’000Total £’000

Cost

At 31st March 2013 177,580 5,942 1,814 1,803 187,139

Additions 455 8,189 - 1,143 9,787

Schemes completed 12,709 (12,709) 1,893 (1,893) -

Improvements made to existing assets

12,328 - - - 12,328

Disposals (675) - (58) - (733)

As at 31st March 2014 202,397 1,422 3,649 1,053 208,521

Social Housing Grant

As at 31st March 2013 (3,700) (1,939) (970) (231) (6,840)

Additions (1,126) (334) (198) (44) (1,702)

Schemes completed (1,943) 1,943 (227) 227 -

Recycled Capital Grant - - 20 - 20

As at 31st March 2014 (6,769) (330) (1,375) (48) (8,522)

Depreciation and Impairment As at 31st March 2013

(30,549) - (79) - (30,628)

Charged in year (7,189) - (52) - (7,241)

Impairment (3) - - - (3)

Released on disposal 267 - 4 - 271

At 31st March 2014 (37,474) - (127) - (37,601)

Other grants As at 31st March 2013

(182) - - - (182)

Additions (71) - - - (71)

As at 31st March 2014 (253) - - - (253)

Net Book Value At 31st March 2014

157,901 1,092 2,147 1,005 162,145

At 31st March 2013 143,149 4,003 765 1,572 148,489

7575

12. Tangible Fixed Assets - Housing Properties

AMOUNTS SPENT ON wORkS TO ExISTINg PROPERTIES SPLIT BETwEEN CAPITAL AND REVENUE

2014£’000

2013£’000

Capitalised improvement works 12,328 17,255

Revenue works 1,305 2,139

Total at 31st March 2013 13,633 19,394

The £12.3m Capitalised improvement works relate wholly to the replacement of existing components.

Included within the costs of housing properties is £424k (2013: £29k) of capitalised finance costs. During the year a total of £395k (2013: £26k) has been capitalised out of the total finance costs incurred for the year of £5,377k (2013: £4,943k) with the remaining interest being recognised in the income and expenditure account.

The net book value of housing properties for both 2013 and 2014 comprise only freehold properties (there are no long term leasehold or short term leasehold properties)

The Impairment charge of £3k relates wholly to properties scheduled for demolition.

Leasehold

offices £’000

Furniture fixtures

& fittings £’000

Computers

& office equipment

£’000Total £’000

Cost At 31st March 2013 2,181 1,093 3,780 7,054

Additions 35 104 1,257 1,396

As at 31st March 2014 2,216 1,197 5,037 8,450

Depreciation and Impairment As at 31st March 2013

(1,551) (805) (3,308) (5,664)

Charged in year (100) (94) (348) (542)

At 31st March 2014 (1,651) (899) (3,656) (6,206)

Net book value At 31st March 2014

565 298 1,381 2,244

At 31st March 2013 630 288 472 1,390

7676

12. Tangible Fixed Assets

12a. Tangible Fixed Assets - Other Costs


Cost2014£’000

2013£’000

At 31st March 2013 1,191 319

Movement during the year 1,244 872

At 31st March 2014 2,435 1,191

As at 31st March 2014, £2,170k relates to completed developments ready for sale, and £265k relates to properties that are currently under construction, with the intention to sell as shared ownership at completion.

2014 £’000

2013 £’000

Raw materials and consumables - 27

2014£’000

2013£’000

Due within one year

Rent and service charges receivable 2,952 1,962

Less: Provision for bad and doubtful debts (719) (692)

Net rent and service charges receivable 2,233 1,270

Other debtors 712 1,364

Prepayments and accrued income 2,306 1,852

Other taxation & social security 481 1,528

Total Other debtors 3,499 4,744

Total debtors due under one year 5,732 6,014

Due after more than one year (Note 15) 56,656 67,092

Prepayments and accrued income includes £777k of new development grants claimed on 28th March 2014.

7777

12b. Shared Ownership Properties for Resale

13. Stock and Work in Progress

14. Debtors

A debtor of £56.7 million representing Trafford Metropolitan Borough Council’s remaining obligation to have refurbishment work carried out to the properties transferred to the Trust. Trafford Metropolitan Borough Council entered into a contract with the Trust for the Trust carry out these improvement works on its behalf. Essentially, the ‘benefit’ (commitment owed) to the Trust under the contract has created a debtor which is effectively offset by the creditor provision stated in Note 19. The debtor reduces as the Trust completes the contracted work.

2013£’000

2013£’000

Trade creditors 4,913 4,294

Rent and service charges received in advance 1,043 753

Bank Loans 15,000 8,050

Other creditors - -

Accruals and deferred income 5,568 4,546

Other Taxation and Social Security 246 237

Total creditors falling due within one year 26,770 17,880

2014£’000

2013£’000

Bank Loans 100,000 100,000

Loan Arrangement Fees (432) -

99,568 100,000

Recycled Capital Grant Fund (see Note 17a) 20 -

99,588 100,000

All loans are secured on a single facility with Barclays Bank and are secured by a fixed charge over the housing properties. Valuation as at 31st March 2014 of the housing properties was £208m.

7878

15. Debtors due after more than one year

16. Creditors: Amounts falling due within one year

17. Creditors: Amounts falling due after more than one year


2014£’000

2013£’000

Grants Recycled 20 -

Recycling of grant - -

20 -

Due after more than one year2014£’000

2013£’000

Bank Loans 100,000 108,050

Less: Loan arrangement fees (432) -

99,568 108,050

2014£’000

2013£’000

Debt is repayable as follows

Within one year 15,000 8,050

After five years 100,000 100,000

Less: Loan arrangement fees (432) -

Total as at 31st March 2014 114,568 108,050

The £15 million is repaid and rolled over on a month to month basis.

Of the £100 million due after 5 years:

£45 million is due for repayment in instalments between the Trust’s maximum peak debt loan position, identified in the most recent Long Term Financial Plan and payable by March 2026.

£35 million is due for repayment in instalments between the Trust’s maximum peak debt loan position, identified in the most recent Long Term Financial Plan and payable by March 2031.

Of this £80 million, at 31st March 2014 £70.7 million was held at a fixed rate of 5.4%, with the remaining £9.3 million held at variable rate.

£20 million at a rate of 5.6% per annum is repayable in equal annual instalments of £2 million between the years of 2039 to 2048.

At 31st March 2014, the Trust had undrawn loan facilities of £30 million.

7979

17a. Creditors: Analysis of recycled capital grant fund

18. Debt Analysis

2014£’000

2013£’000

At 31st March 2013 67,092 79,402

Reduction in Development Agreement Liability (10,436) (12,310)

At 31st March 2014 56,656 67,092

On the transfer of properties from Trafford Metropolitan Borough Council, the Trust was contracted by Trafford Metropolitan Borough Council to carry out improvement works to those properties. A provision has been made in respect of the Trust’s outstanding commitment to Trafford Metropolitan Borough Council to carry out the refurbishment work. This provision is effectively offset by the associated debtor stated at Note 15 and will reduce as the Trust completes the contracted work.

Revenue Reserve 2014£’000

2013£’000

At 31st March 2013 31,196 28,648

Surplus for the year 7,296 5,351

Actuarial gain/(loss) relating to pension scheme 680 (2,803)

At 31st March 2014 39,172 31,196

8080

19. Provision for Liabilities and Charges

20. Reserves


Capital expenditure commitments were as follows:

2014£’000

2013£’000

Capital expenditure

Expenditure contracted for but not provided in the accounts 3,133 9,334

Expenditure authorised by the Board, but not contracted 100,797 8,730

Total 103,930 18,064

In March 2014 the Board approved three year Business Plans, including £100.8m of capital expenditure, which includes costs approved to deliver 583 new homes and a three year improvement programme. A £92m increase compared to 2012/13 is in relation to the scale of the works to be delivered in the Business Plan and £8.7m shown above for 2013, is in relation to one financial year. The spend above is financed as follows; £5.7m Homes & Communities Agency grant funding, £35.2m sales income from Open Market and Shared Ownership properties and utilisation of £63.0m from secured facilities provided by Barclays Bank loan facility and reserves.

OPERATINg LEASES

The payments, which the Trust is committed to make in the next year under operating leases, are as follows:

2014£’000

2013£’000

(i) Land and buildings, leases expiring

Under one year 24 31

Beyond five years 318 248

ii) Vehicle/Fleet leases expiring

Two to five years 180 180

Total 522 459

The £318k is made up of £148k relating to Urmston and Stretford Office leases and £170k which relates to the service charge of £163k (floors 3, 4 and 5 at Sale point) and landlord insurance of £7k. Land and buildings leases exclude costs relating to Sale Point due to a negotiated rent free period.

8181

21. Financial Commitments

2014£’000

2013£’000

Operating Surplus 10,978 9,460

Depreciation & Impairment of Tangible Fixed Assets 7,786 7,256

Costs of Sales for 1st Tranche Shared Ownership 956 319

Pensions Operating Charge 1,384 1,104

Pensions Contributions Paid (1,027) (898)

20,077 17,241

Working Capital Movements

Decrease/(Increase) in Stock 27 3

(Increase)/(Decrease) in Debtors 627 544

(Increase)/(Decrease) in Properties under construction (1,244) (872)

Increase/(Decrease) in Creditors 1,874 (311)

Net Cash Inflow from Operating Activities 21,361 16,605

2014£’000

2013£’000

Increase in cash 1,957 301

Cash (inflow)/outflow from (increase)/decrease in debt (6,950) (8,050)

Movement in the net debt for the year (4,993) (7,749)

Net debt at 31st March 2013 (107,463) (99,714)

Net debt at 31st March 2014 (112,456) (107,463)

31st March 2013 Cash Flow 31st March 2014

£’000 £’000 £’000

Cash at bank and in hand 587 1,957 2,544

Bank Loans (108,050) (6,950) (115,000)

Changes in Net Debt (107,463) (4,993) (112,456)

8282

22. Net Cash Inflow from Operating Activities

24. Analysis of Changes in Net Debt

23. Reconciliation of Net Cash Flow to Movement in Net Debt


At 31st March 2014, the Trust had two tenant Board Members, one of whom was a leaseholder. The tenancy and lease are held on normal commercial terms. Three Members of the Board at 31st March 2014 were nominated councillors at Trafford Metropolitan Borough Council (TMBC). THT undertakes activities with TMBC on normal commercial terms, and Board Members cannot use their position for their own personal or the council’s advantage.

The table below shows the Related Party transactions in respect of Board Members who have made declarations of interest

OrganisationTransactions

Sales £

Value Purchases

£

Creditors

£

Debtors

£Type of Transaction

Trafford MBC 159,610 279,093 - - See below

Procure Plus - 260,529 - - Procurement services

Related Party Transactions between the Trust and Trafford Metropolitan Borough Council covered a variety of contracts and services during the period including:

• Payment of Right to Buy Proceeds per Sharing Agreement

• Out of Hours Repairs Service

• Payment of VAT Shelter monies per Sharing Agreement

• Environmental Services

• Dispersed Alarms Services

• Homeless Agency Services

• Supporting People Grant

• Rechargeable Repairs

• Adaptation Services

• Garden Maintenance

• Offices Licenses

• Community Support Services

• Legal Services

• Community Support Call Out

• Legal Services

Joanne Bennett, John Lamb and Matthew Colledge are all members of Trafford MBC.

Jane McCall is a Director of Procure Plus Limited.

Please see Note 9 Employees re SHPS, the Social Housing Pension Scheme contingent liability.

8383

25. Related Parties

26. Contingent liabilities

Trafford Housing Trust Head OfficeTrafford Housing Trust, Sale Point,126 -150 Washway Road, Sale M33 6AG

Customer Hub Number:

0300 777 7777www.traffordhousingtrust.co.uk

Registered in England No: 04831118 • Charity Registration No: 1106967

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Tht corporate annual report 2014

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