EKAYA HOUSING ASSOCIATION LIMITED AND IT S SUBSIDIARY COMPANY

Transcription

1 EKAYA HOUSING ASSOCIATION LIMITED AND IT S SUBSIDIARY COMPANY The Homes and Community Agency Registration No.LH3940 Industrial and Provident Society Registration No R GROUP FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 st MARCH

2 EKAYA HOUSING ASSOCIATION LIMITED FINANCIAL STATEMENTS YEAR ENDED 31ST MARCH 2013 CONTENTS Page Legal and Administrative Details 3 4 Report of the Board of Management 5 9 Board s Statement on Control Effectiveness Independent Auditors Report Income and Expenditure Account 15 Balance Sheet 16 Cash Flow Statement 17 Notes to the Financial Statements

3 EKAYA HOUSING ASSOCIATION LIMITED LEGAL AND ADMINISTRATIVE DETAILS YEAR ENDED 31st MARCH 2013 Directors who served as Members of the Board of Management to the date the Financial Statements were signed were as follows: - BOARD OF MANAGEMENT AND SHAREHOLDERS Minal Goswami BA MBA Chairperson (Appointed as Chair on 15/04/09) Ade Oke BSc, MBA Board Member since 30/07/08 (Appointed as Vice Chair 31/10/11) Patrick Horgan Board Member as of 30/07/08 Peter Coley Shareholder Fitzgerald Corbin Shareholder Anne Breithwaite Shareholder Melvina Powell Board member as of 23/07/08 Maggie Scarlett Board member as of 26/09/07 Gordon Mattocks Board Member as of 19/12/11 (Appointed as Treasurer from 02/10/12) Michelle Nelson Board Member as of 14/11/11 (Appointed Vice Chair 20/03/13) John Barry Board Member, 04/04/12 (Appointed as Chair of Policy & Performance Committee 02/10/12) Veronica Lindsay Board Member (Appointed 4 April 2012, resigned 20 June 2012) Nusula Lunkuse Tenant Board Member as of 01/09/09 Barbara Grant Board Member as of 04/04/12 Justine Wharton Board Member as of 04/04/12 Marion Schuman Co-optee Board Member as of 07/12/12 None of the Board of Management members had any interest in any contract or arrangement with Ekaya Housing Association except the tenant board member and Veronica Lindsay who was appointed as Interim Director of Finance and Resources following resignation from the Board of Management. The tenant board member s arrangement is disclosed in more detail in note 10 of the accounts. CHIEF EXECUTIVE AND SECRETARY Jackie Adusei BSc (Hons) AUDIT & FINANCE COMMITTEE POLICY & PERFORMANCE COMMITTEE Gordon Mattocks (Chairperson) John Barry (Chairperson) Nusula unkuse Minal Goswami BA, MBA Ade Oke BSc, MBA Patrick Horgan Nusula Lunkuse-Tenant Board Member Melvina Powell Barbara Grant Maggie Scarlett Adeola Oke Justine Wharton Patrick Horgan Barbara Grant 3

4 EKAYA HOUSING ASSOCIATION LIMITED LEGAL AND ADMINISTRATIVE DETAILS YEAR ENDED 31st MARCH 2013 BANKERS National Westminster Bank plc 504 Brixton Road, London SW9 5EB Lloyds TSB Bank plc 25 Gresham Street London EC2V 7HN SOLICITORS Devonshires, Salisbury House London Wall London EC2M 5QY AUDITORS Beever and Struthers Chartered Accountants 15 Bunhill Row London EC1Y 8LP REGISTERED OFFICE 1-3 Brixton Road London SW9 6DE PATRONS Dr. J. Roberts QC DCL FCArb. Doreen Lawrence OBE Registered under the Industrial and Provident Societies Acts No: 25683R Registered by The Homes and Community Agency No: LH3940 formerly Tenant Services Authority 4

5 EKAYA HOUSING ASSOCIATION LIMITED REPORT OF THE BOARD OF MANAGEMENT YEAR ENDED 31st MARCH 2013 The Board of Management (the Board) is pleased to present the financial statements for the year ended 31st March LEGAL STATUS Ekaya Housing Association is registered under the Industrial and Provident Societies Act 1965 to 2002 and is a Registered Provider under the Housing & Regeneration Act 2008 with the Homes and Communities Agency (HCA) formerly Tenant Services Authority. Ekaya subscribes to the NHF model rules adopted in Ekaya is administered by a voluntary Board of Management. Its subsidiary Happy Nursery Days is a company limited by guarantee, governed by its memorandum and articles of association. In the year it registered as a charity with the Charity Commission. As at 31 March 2013 Happy Nursery Days is a 100% subsidiary of Ekaya Housing Association. PRINCIPAL ACTIVITIES The principal activities of the Association are the provision, management and maintenance of permanent rented housing and temporary hostel accommodation to black-led households and black single mothers who are in need of affordable accommodation. Ekaya also owns a subsidiary, Happy Nursery Days which provides a community nursery for children under 5. GOVERNANCE The Board is required by the new regulatory framework introduced by the TSA (now HCA) from April 2010 to adopt a Code of Governance. The Board has adopted the NHF Codes on Governance and Standards. The Board of Ekaya consists of 12 non-executive directors including one tenant member who are responsible for the overall strategic direction of The Group. There have been three new appointees to the Board as well as changes in senior management with the appointment of a Head of Finance and Resources in January REVIEW OF THE YEAR Ekaya s consolidated retained surplus for the year to 31 st March 2013 was 564,596 compared to 137,403 in The operating surplus was 1,159,296 in 2013 compared to a surplus of 840,082 for 2012 and reserves totalled 2.6m. Turnover for the Group was 4.1m in 2013 an increase of 0.1m when compared to 4.0m in This was mainly due to an additional week in income (53wks instead of 52 weeks) plus additional income gained from a secondment arrangement for an Employability officer. FIXED ASSETS Housing properties additions for the year were 24,825 which originated from capitalised components. Details of the Association s fixed assets are given in Notes 11 and 12. 5

6 EKAYA HOUSING ASSOCIATION LIMITED REPORT OF THE BOARD OF MANAGEMENT YEAR ENDED 31st MARCH 2013 Operating Costs were 3.0m in 2013 a decrease of 0.2m from 3.2m in 2012 primarily due to reduction in support costs. Loan interest costs were 0.65m in 2013 a reduction of 110k compared to 0.76m in All lender covenants continued to be met during the year. At year-end Ekaya and it s subsidiary had cash holdings of 3.74 million (2012: 3.21 million) and loans of million. Rent Arrears The trend in reducing current rent arrears as a percentage of income seen in recent years reversed slightly in 2013 as shown in the following table: Year End Rent Arrears as % of income 8.29% 7.8% 11.3% 13.2% 11.5% 12.9% 13.4% Void management has improved slightly resulting in void losses of 2.55% in 2013 compared to 2.7% in This improvement was due to shorter re-let times. This was driven by maintaining up-to-date waiting lists and the fact that these properties did not require major remedial works before re-let. Ekaya senior management continues to work closely with the local boroughs to inorder to make further improvements. Performance Indicators The following table reflect the Key Performance Indicators of Ekaya between 2013 and 2012 performance: Category Target Result Result 1. Customer satisfaction overall 90.0% 80.0% 81.0% 2. Customer satisfaction with repairs 85.0% 70% 71.0% 3. Rent arrears 6.5% 8.2% 7.8% 4. Rent collected 100.0% 99.2% 95.0% 5. Emergency repairs completed on time 95.0% 100% 100.0% 6. Urgent repairs completed on time 95.0% 99.3% 97.0% 7. Routine repairs completed on time 90.0% 99.3% 99.10% 8. Gas inspections completed 100.0% 100% 100.0% 9. Decent Homes compliance 100.0% 100% 100.0% Ekaya has not acquired any new stock during the year under review. 6

7 EKAYA HOUSING ASSOCIATION LIMITED REPORT OF THE BOARD OF MANAGEMENT YEAR ENDED 31st MARCH 2013 FUTURE DEVELOPMENT The Association continues to pursue its objectives to acquire housing stock in line with its 5 year Business Plan. RESPONSIBILITIES OF THE BOARD The Industrial and Provident Societies Act and Registered Social Landlord legislation requires the Board to prepare financial statements for each financial year, which give a true and fair view of the state of affairs of the Association and of the surplus or deficit of the Association for that period. In preparing those financial statements, the Board are required to: Select suitable accounting policies and apply them consistently; Make judgements and estimates that are reasonable and prudent; State whether applicable accounting standards have been followed, subject to any material departures being disclosed and explained in the financial statements; Prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Association will continue in business. The Board is responsible for maintaining an adequate system of internal control and keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Association and to enable them to ensure that the financial statements comply with the Industrial and Provident Societies Act 1965 to 2002, the Housing and Regeneration Act 2008 and the Accounting Direction for private registered providers of social housing in England The Board is also responsible for safeguarding the assets of the Association and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. POLICY ON EMPLOYMENT The Association has an active equal opportunities employment policy, which covers promotion and monitoring by the Board of Management. The Association has adopted an equal opportunities employment policy, which covers recruitment, development and retention of staff. An assessment of performance against the policy is carried out on an annual basis. We also have in place an Equality and Diversity policy, which cover equality as well as diversity in all our activities. TREASURY MANAGEMENT POLICY The Association s Treasury Management Policy has been prepared to cover the general banking facility, short-term and long-term borrowings as well as the investment of surplus funds. The Board was satisfied that the existing policy and practice are appropriate in so far as meeting current financial requirements. 7

8 EKAYA HOUSING ASSOCIATION LIMITED REPORT OF THE BOARD OF MANAGEMENT (Continued) YEAR ENDED 31st MARCH 2013 RENT POLICY & SUPPORTING PEOPLE The Association reviewed its rent setting and arrears policy. The main aim of the policy is to ensure that rent charged is affordable, fair and contributes to the financial viability of the organisation. Ekaya like other Housing Associations operating in London is affected by the rentrestructuring regime. Ekaya s rents remain comparatively moderate. RESERVES POLICY AND TRANSFER TO RESERVES Ekaya s overall financial strategy is to build a moderate reserve as a measure to cope with risks. The aim is to designate reserves for identified risks and specified requirements in order to ensure that the organisation s long-term objectives are met. Key risks for Ekaya include the availability of a sinking fund for major repairs and maintenance of buildings, particularly in it s supported housing properties, unexpected employment costs, welfare reform and other contractual liabilities A transfer of 15,919 was made from designated reserves in 2013 ( 11, ) as shown in Note 18. VALUE FOR MONEY POLICY Ekaya s Board of Management approved a Value for Money Policy (VfM) in 2013 to supports it s strategic objectives. The first of these objectives is Being providers of good quality, value for money services through continuous improvement and listening to our customers. Ekaya recognises that quality is important not just the lowest price and this is embedded in our Policy. The Key objectives of the Value for Money Policy (VfM) include: Promotion with staff and embedding VfM within the culture of the organisation. Review of the procurement process, minimising wastage and encourage Green initiatives Improvements in stock condition Engaging in partnerships to promote and deliver VfM including benchmarking performance. Improving IT services to make us more efficient and cost effective in providing services Engaging residents in the Value for Money process and reporting of achievements Ensuring financial controls support the delivery, measurement and reporting of VfM During 2012/13 our Value for Money initiatives included: Entering into new contract cleaning, maintenance and repairs contracts Partnering with other organisations for IT, training and tendering services. Improving occupancy at Happy Nursery Days Providing a handyman service for repairs and maintenance Reducing void turnaround times and associated rent losses Reducing overhead costs including embedding staff restructure Partnering with other housing associations to offer employability services Negotiating savings on utilities Saving interest costs on Ekaya s loans Regularly monitoring performance and measuring against internal and external benchmarks 8

9 EKAYA HOUSING ASSOCIATION LIMITED REPORT OF THE BOARD OF MANAGEMENT (Continued) YEAR ENDED 31st MARCH 2013 VALUE FOR MONEY POLICY (cont d) During 2013/14 we will review our internal processes and how services are delivered, focussing on joint working, IT infrastructure and income generation as well as savings through efficiencies. The Board will continue to monitor performance on Value for Money initiatives and ensure compliance with the regulator s VFM standard. PROVISION OF INFORMATION TO AUDITORS The Board members who held office at the date of approval of this Board report, confirm that, so far as they are each aware there is no relevant audit information of which the Association s auditors are unaware; each Board member has taken all steps that ought to have taken as a Board member to make themselves aware of any relevant audit information and to establish that the Association s auditors are aware of that information. AUDITORS Beever and Struthers have expressed their willingness to continue in office. BY ORDER OF THE BOARD JACKIE ADUSEI SECRETARY Date: 31 July

10 EKAYA HOUSING ASSOCIATION LIMITED BOARD S STATEMENT ON THE ANNUAL REVIEW OF THE EFFECTIVENESS OF THE ASSOCIATION S INTERNAL CONTROL SYSTEMS FOR THE YEAR ENDED 31st MARCH 2013 The Board has overall responsibility for maintaining a sound system of internal control and for reviewing its effectiveness. The Board recognises that such a system can provide only reasonable and not absolute assurance against material misstatements or loss or eliminate all risks of failure to achieve business objectives. The system of internal control is designed to manage risk and fraud and to provide reasonable assurance that key business objectives and expected outcomes will be achieved. It also exists to give reasonable assurance about the preparation and reliability of financial and operational information and the safeguarding of the Association s assets and interests. The process the Association follows for identifying, evaluating and managing the significant risks it faces is on-going, has been in place for the year under review and up to the date of approval of the annual report and accounts. The process is regularly reviewed by the Board. In order to fulfil its responsibility, the Board has a separately designated Audit & Finance Committee. It engaged the services of an Internal Audit function and has adopted a strategic approach to risk management and performance improvement. Assurances are therefore gained from the following sources: Audit & Finance Committee This committee is responsible for reviewing the adequacy and effectiveness of the Association s systems of internal controls and reporting its conclusions to the Board. This committee receives reports from both the internal and external auditors. The Head of Finance attends this meeting, supported by the Chief Executive and other senior staff as required. The Audit & Finance Committee and Board reviewed the risk management process throughout the year with the last review held in March The Audit & Finance Committee provide an annual report to the Board regarding the work of the Committee and overall opinion on the control environment within the Association. Internal Audit Function The Association commissions an externally provided internal audit service. This work is carried out in accordance with our Code of Audit Practice and the Institute of Internal Auditors Standards and Guidelines. 10

11 EKAYA HOUSING ASSOCIATION LIMITED BOARD S STATEMENT ON THE ANNUAL REVIEW OF THE EFFECTIVENESS OF THE ASSOCIATION S INTERNAL CONTROL SYSTEMS (Continued) FOR THE YEAR ENDED 31st MARCH 2013 The Internal auditors report annually to the Audit & Finance Committee on the system of internal controls, with an opinion as to the adequacy and effectiveness of key internal control systems. The internal auditors attend the Audit Committee to present reports and to report on management progress in implementing agreed recommendations. The work of the internal audit is planned, based on the results of an audit needs assessment, which is derived from a review of the Association s main risks. A rolling programme is undertaken to cover the whole of the Association s system of control. Any material weaknesses in internal controls identified are reported to the Board and an action plan to address the weakness is agreed. External Audit The external auditors, in arriving at their audit opinion on the financial statements, assess whether a satisfactory system of control over the books of account and transactions has been maintained. Risk Management The Board has produced a risk map, identifying and evaluating the key risks threatening the achievement of the business objectives. The risks have been ranked in relation to probability and impact and the Association s response to these risks has been structured. Risks are classified under the headings of financial, governance, reputational, management and health & safety. The map has been reviewed during the year by the Board in March 2013, being updated as circumstances change. The strategic risk map is now extended to provide an overall assurance framework, where controls are mapped against risks and the corporate objectives they prevent being achieved. All controls are then assessed for effectiveness and the source of assurance for this effectiveness is recorded. Reports from Homes and Community Agency In accordance with guidance issued by the regulators, limited assurances are taken from reports issued by the regulators. During the year, reports have been received and action plans implemented to address the issues raised. Quality Management Systems/Performance Indicators The Association has a best value strategy. Work has also been undertaken to introduce a performance management framework following the principles of the best value. We still have some development work on this system to achieve the full functionality of performance reporting. The Board meets four times per year to consider key business performance indicators and instigate appropriate actions. The purpose of the Board is to provide an efficient, effective and equitable service to its residents, aiming for the highest standards through its strategy for continuous improvement. 11

12 EKAYA HOUSING ASSOCIATION LIMITED BOARD S STATEMENT ON THE ANNUAL REVIEW OF THE EFFECTIVENESS OF THE ASSOCIATION S INTERNAL CONTROL SYSTEMS (Continued) FOR THE YEAR ENDED 31st MARCH 2013 Training and Personal Development Training plans and personal development are key objectives within the management of Human Resources encompassing both staff and Board Members training. Fraud The Association complies with the regulatory requirements on fraud. Separate policies for Fraud and Whistle Blowing exist and a register is maintained of all actual and attempted fraud. Conclusion of the Board The Board has received the annual report on internal controls and considered the effectiveness of these systems. The Board confirms that the process for identifying, evaluating and managing significant risks faced by the Association is on-going and has been in place in the year under review & to the date of this report. There is sufficient evidence to confirm that adequate systems of internal control existed and operated throughout the year. No weaknesses were identified which would have resulted in material misstatement or loss and which would have required disclosure in the financial statements. On behalf of the Ekaya Housing Association Board MINAL GOSWAMI CHAIR Date: 31 July

13 INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF EKAYA HOUSING ASSOCIATION We have audited the financial statements of Ekaya Housing Association for the year ended 31 March 2013, which comprise the Group and Association Income and Expenditure Accounts, the Group and Association Balance Sheet, the Group Cash Flow Statements and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). This report is made solely to the Association s members, as a body, in accordance with the Housing and Regeneration Act 2008 and Section 9 of the Friendly and Industrial and Provident Societies Act Our audit work has been undertaken so that we might state to the Association s members those matters we are required to state to them in an auditor s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Association and the Association s members as a body, for our audit work, for this report, or for the opinions we have formed. Respective Responsibilities of the Board and the Auditor As explained more fully in the Statement of Board s Responsibilities, the Board is responsible for the preparation of the financial statements which 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 Auditing Practices Board s (APB s) Ethical Standards for Auditors. Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Association s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Board; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Board Report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. 13

14 Independent auditors report (continued) Opinion on financial statements In our opinion the financial statements: Give a true and fair view of the state of the group s and parent association s affairs as at 31 March 2013 and of the group s and parent association s income and expenditure for the year then ended; and have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and have been properly prepared in accordance with the Industrial and Provident Societies Acts, 1965 to 2002, the Industrial and Provident Societies ( Group Accounts) Regulations 1969, the Housing and Regeneration Act 2008 and the Accounting Direction for private registered providers of social housing in England Matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Industrial and Provident Societies Acts, 1965 to 2002 require us to report to you if, in our opinion: a satisfactory system of control over transactions has not been maintained; or the association has not kept proper accounting records; the financial statements are not in agreement with the books of account; or we have not received all the information and explanations we need for our audit. Date: Beever and Struthers Statutory Auditor Chartered Accountants 15 Bunhill Row London EC1Y 8LP 14

15 EKAYA HOUSING ASSOCIATION CONSOLIDATED INCOME AND EXPENDITURE ACCOUNT FOR THE YEAR ENDED 31st MARCH 2013 Notes Group Association Group Association Turnover 2 4,167,314 3,798,180 4,058,512 3,689,577 Operating costs 2 (3,008,018) (2,659,033) (3,218,430) (2,879,207) OPERATING SURPLUS 1,159,296 1,139, , ,370 Interest receivable and other income 5 36,222 36,129 45,492 45,403 Interest payable and similar charges 6 (646,841) (646,841) (759,428) (759,428) SURPLUS/(DEFICIT) ON ORDINARY ACTIVITIES 7 548, , ,146 96,345 Net transfer (to)/from reserve 19 15,919 15,919 11,257 11,257 RETAINED SURPLUS/(DEFICIT) FOR THE YEAR 564, , , ,602 Revenue reserve at 01 April ,874,957 1,827,498 1,737,554 1,719,896 REVENUE RESERVE 31 MARCH ,439,553 2,371,852 1,874,957 1,827,498 There were no recognised gains and losses other than those included in the Consolidated Income and Expenditure account. The surplus for the year represents the only movement on the Group s funds. All of the Group s operations are classed as continuing. The above surpluses/deficits are the historic costs surpluses/deficits. 15

16 EKAYA HOUSING ASSOCIATION BALANCE SHEET AS AT 31st MARCH 2013 Notes Group Association Group Association TANGIBLE FIXED ASSETS Housing Properties at depreciated cost 11 40,781,546 40,781,546 40,940,351 40,940,351 Less: Social Housing Grant 11 (27,703,206) (27,703,206) (27,703,206) (27,703,206) 13,078,340 13,078,340 13,237,145 13,237,145 Other Tangible Fixed Assets 12 69,739 60,374 95,976 91,171 TOTAL FIXED ASSETS 13,148,079 13,138,714 13,333,121 13,328,316 CURRENT ASSETS Debtors , , , ,763 Cash at Bank and in Hand 3,725,258 3,625,359 3,280,763 3,197,398 4,022,266 3,902,499 3,544,445 3,443,161 CREDITORS: Amounts falling due within one year 15 (554,179) (492,748) (599,551) (541,274) NET CURRENT ASSETS 3,468,087 3,409,751 2,944,894 2,901,887 TOTAL ASSETS LESS CURRENT LIABILITIES 16,616,166 16,548,465 16,278,015 16,230,203 CREDITORS: Amounts falling due after more than one year 16 13,960,212 13,960,212 14,170,741 14,170,741 CAPITAL AND RESERVES Share Capital Designated Reserves , , , ,304 Revenue Reserves 18 2,439,553 2,371,852 1,874,957 1,827,498 16,616,166 16,548,465 16,278,015 16,230,203 These financial statements were approved by the Board on the 31 July 2013 and signed on its behalf by: Minal Goswami Gordon Mattocks Jackie Adusei Chair Treasurer Secretary 16

17 EKAYA HOUSING ASSOCIATION CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH Operating Surplus 1,159, ,082 Depreciation 242, ,863 (Increase)/Decrease in Arrears (73,193) 41,164 (Increase)/Decrease in Other Debtors 37,955 (161,737) Increase/(Decrease) in Creditors (28,387) (182,242) Net Cash Flow From Operating Activities 1,338, ,130 Return On Investment and Servicing of Finance: Return from investments 36,222 45,492 Servicing of finance (646,841) (759,428) Net cash flow from returns on investment and servicing of finance. (610,619) (713,936) Capital Expenditure and Financial Investments: Acquisition and construction of properties (24,775) (47,933) Purchase of other fixed assets (32,759) (17,704) Capital Grants Received Net Cash Flow From Capital Expenditure (57,534) (65,637) Financing: Share capital 3 (12) Loan advances received - - Loan principal repayment (225,602) (199,378) Net cash flow from financing (225,599) (199,390) Change in cash in the period 444,495 (243,833) Cash brought forward 3,280,763 3,524,596 CASH CARRIED FORWARD 3,725,258 3,280,763 17

18 1. ACCOUNTING POLICIES EKAYA HOUSING ASSOCIATION NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31st MARCH 2013 The following accounting policies have been applied consistently in respect of material items in the Association s financial statements. a. Basis of Accounting The Financial Statements have been prepared under the historical cost convention and in accordance with United Kingdom Generally Accepted Accounting Practice, the Industrial and Provident Societies Act 1965 to 2002, the Housing and Regeneration Act 2008, the Accounting Direction for private registered providers of social housing in England 2012 and the Statement of Recommended Practice Accounting by Registered Social Housing Providers (Update 2010) published by the National Housing Federation. b. Turnover Turnover represents rental and service charge income and Supporting People contract income receivable from local authorities, the Housing Corporation and other funding sources. Turnover arises solely within the United Kingdom. Contract income is credited to the Income and Expenditure account in the same period as the expenditure to which they relate. c. Pension Costs The cost of contributions made to a defined contribution scheme is charged to the Income and Expenditure account on the basis of the amount of contributions payable to the scheme in the accounting period. d. Recycled Capital Grant Fund Following certain relevant events, primarily the sale of dwellings, the Housing Corporation can direct the association to recycle social housing grant (SHG) or repay the recoverable grant back to the Corporation. Where the grant is recycled the recoverable capital grant is credited to a Recycled Capital Grant Fund where it can remain for up to three years. e. Supported Housing The treatment of income and expenditure in respect of hostels depends on whether the Association carries the financial risks. Where the Association carries the financial risk, for example, for losses from voids and arrears, all the hostel s income and expenditure is included in the income and expenditure account. f. Housing Properties Housing properties are stated at cost less depreciation. Where properties are financed wholly or in part by Social Housing Grant (SHG), the amount of SHG is deducted from the depreciated cost. Cost includes the cost of acquisition of land and buildings, development costs, interest charges incurred during the development period and expenditure incurred on existing properties that has served to enhance their economic benefits in excess of the standard of performance anticipated when originally constructed or acquired. Depreciation on the buildings is charged so as to write down the cost, net of social housing grant, to their estimated residual value at the end of their useful economic lives. Housing land is not depreciated. Depreciation on housing buildings is calculated on a straight-line basis over a life of 150 years 18

19 EKAYA HOUSING ASSOCIATION NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 1. ACCOUNTING POLICIES (Continued) g. Works to Existing Properties We have now fully incorporated component accounting legislation. As per the generally prevalent industry wide norms and broadly in line with Savills report we adopted the depreciation rates shown below in this note. The works to existing properties are capitalised if the costs relate to major components of the unit concerned. These major components are written off over the expected economic life of the component. Components are written off on a straight line basis thus: Refurbishment components Re-roofing components Kitchen Components Bathroom components Window components Boiler components Flooring components 20 years (straight line) 60 years (straight line) 15 years (straight line) 30 years (straight line) 30 years (straight line) 15 years (straight line) 15 years (straight line) h. Social Housing Grant Social Housing grant (SHG) is paid by the Housing Corporation to reduce the cost of development and is, therefore, shown as a deduction from the cost of housing properties on the balance sheet. SHG is repayable under certain circumstances, primarily following the sale of a property, but will normally be restricted to net proceeds of sale. i. Other Tangible Fixed Assets and Depreciation Tangible fixed assets except housing properties are stated at cost less accumulated depreciation. Depreciation is charged over the expected useful economic lives of the assets as follows: Office Furniture and equipment Motor vehicles Property equipment Leasehold improvements 25% (straight line) 25% (reducing balance) 25% (straight line) over period of lease j. Impairment For all properties, impairment reviews has been carried via an independently stock condition survey in 2011 on an annual basis in accordance with FRS11. Where there is evidence of impairment, fixed assets are written down to the recoverable amount, and write downs would be charged to operating surplus. This is a new accounting policy. k. Taxation The Association s activities are charitable and therefore are not liable to corporation tax. l. Major Repairs Reserve The Association s commitment to fund major repairs is recognised by the transfer from accumulated surpluses to the designated major repairs reserve. Annual contributions are made to the reserve and take into account the expected future liabilities arising from the results of the Association s latest stock condition survey. Transfer from this reserve is shown in note 18 to the financial statements. m. Group Accounts The Association is required by the Friendly and Industrial and Provident Societies Act 1968 to prepare group accounts, these accounts consolidate the results of Association and its subsidiary Happy Days Ltd in accordance with FRS 2. n. Loan Issue Costs Costs in respect of raising loan finance are deferred and amortised over the period of the loan. 19

20 EKAYA HOUSING ASSOCIATION NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 2. PARTICULARS OF TURNOVER, OPERATING COSTS AND OPERATING SURPLUS BY CLASS OF BUSINESS Income and Expenditure from lettings Operating Operating Operating Operating Turnover Cost Surplus Turnover Cost Surplus General Needs 2,239,294 (1,293,118) 946,176 2,041,019 (1,404,412) 636,607 Supported Housing 1,391,848 (1,274,466) 117,382 1,443,802 (1,377,429) 66,373 3,631,142 (2,567,584) 1,063,558 3,484,821 (2,781,841) 702,980 Other Income and Expenditure Floating Support 95,009 (91,096) 3, ,985 (118,951) 29,034 Nursery 419,596 (349,338) 70, ,221 (317,638) 78,583 Other 21,567-21,567 29,485-29,485 4,167,314 (3,008,018) 1,159,296 4,058,512 (3,218,430) 840, PARTICULARS OF INCOME AND EXPENDITURE FROM LETTINGS Income from Lettings General Housing Supported Housing Total 2013 Total 2012 Rent receivable 2,134, ,770 2,532,750 2,306,704 Services charges receivable 116, , , ,078 Gross Rent Receivable 2,251, ,353 3,133,541 2,815,782 Less: Rent losses from voids (11,894) (68,084) (79,978) (76,074) Net Rent Receivable 2,239, ,269 3,053,563 2,739,708 Add: SP Contract Income 577, , ,113 Total Income from Lettings 2,239,294 1,391,848 3,631,142 3,484,821 Expenditure on Letting Activities Services 255, , , ,909 Support costs 238, , , ,014 Management 272, , , ,041 Routine maintenance 149,333 37, , ,352 Planned maintenance 111,755 7, , ,587 Major repairs 77,518 13,401 90,919 86,257 Rent losses from bad debts (7475) 43,425 35,950 21,585 Rent payable 18,513 17,498 36,011 40,403 Depreciation of housing properties 177,444 6, , ,693 Total Expenditure on Lettings 1,293,118 1,274,466 2,567,584 2,781,841 Operating Surplus on Letting Activities 946, ,382 1,063, ,980 Void losses 11,894 68,084 79,978 76,074 20

21 EKAYA HOUSING ASSOCIATION NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 4. ACCOMMODATION IN MANAGEMENT AND MANAGED ON OTHERS BEHALF No No Social Housing Accommodation General Needs Supported Housing Accommodation Total Managed on behalf of others General Needs 5 5 Supported Housing Total Total Units in Management INTEREST RECEIVABLE AND OTHER INCOME Group & Association Interest receivable on the investment of funds 36,222 45, INTEREST PAYABLE AND SIMILAR CHARGES Group & Association On bank loans and other loans repayable 646, , SURPLUS/ (DEFICIT) FOR THE YEAR Surplus/(deficit) for the financial year is stated after charging: Group Deprecation: Tangible owned fixed assets 242, ,152 Disposal of fixed assets: Loss on disposal of fixed assets (630) ( 1,693) Auditors remuneration (including VAT): External Auditors (audit services) 15,000 15,000 Internal Auditors 12,557 12, Association Deprecation: Tangible owned fixed assets 239, ,318 Disposal of fixed assets: Loss on disposal of fixed assets (630) (1,693) Auditors remuneration (including VAT): External Auditors (audit services) 17,492 15,034 Internal Auditors 12,557 12,900 21

22 EKAYA HOUSING ASSOCIATION NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31st MARCH EMPLOYEES Group Association Staff Costs: Wages and Salaries 1,283,625 1,426,975 1,034,718 1,202,015 Social Security Costs 109, ,613 94, ,441 Pension Costs 62,995 54,184 56,148 50,998 Other Costs 53,696 45,966 52,129 45,061 1,509,947 1,651,738 1,237,237 1,407,515 No. No. No. No. The average weekly number of persons employed by the Group during the year was: Housing and Support Staff Administration Remuneration of Senior Management Team (including pension contributions and benefits in kind) 110,363 94,136 Remuneration of Chief Executive who is the highest paid Director (including pension contributions and benefits in kind) 69,200 64,200 The Chief Executive has the same pension arrangements provided by the Association as other members of staff. Salary bandings for all employees earning over 60,000 including salaries and bonuses excluding pension contributions paid by employer : Salary Bands ,000-69, PENSION COSTS Staff participated in defined contribution pension schemes. Employer s contributions are based on 7% of salaries. However, with effect from 1 July 2011 this has changed for new employees and rates are ranged between 4 and 8 percent. The assets of the scheme are invested and managed by each individual staff s chosen pension company and are independent of the finances of the Association. 22

23 EKAYA HOUSING ASSOCIATION NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31st MARCH COMMITTEE MEMBERS AND EXECUTIVE OFFICERS No fees or other remuneration was paid to Board Members during the year. Expenses paid to Board Members including those who resigned during the year amounted to 3,274 (2012: 1,561). The members of the Board of Management are members of the Association and each holds a onepound share in the Association. One board member is also tenant of the Association under a tenancy agreement that is common with other tenancies agreements of the Society. The same arrears management procedures apply to board members as to other tenants. The tenant board member s rent account is not materially different from other tenants. 11. HOUSING PROPERTIES GROUP AND ASSOCIATION General Housing Supported Housing TOTAL 2013 TOTAL 2012 Cost At 1 st April ,386,946 5,228,660 41,615,606 41,570,298 Additions 24,825 24,825 47,933 Additions to existing properties - Disposal (965) (965) (2,625) Balance at 31st MARCH ,410,806 5,228,660 41,639,466 41,615,606 Depreciation At 1 st April ,549 24, , ,930 Charged in the year 177,160 6, , ,018 Disposal (630) - (630) (1,693) At 31st MARCH ,079 30, , ,255 Depreciated Cost 35,583,727 5,197,819 40,781,546 40,940,351 Social Housing Grant At 1 st April ,279,664 4,423,542 27,703,206 27,703,206 Received during the year -- Disposal -- At 31st MARCH ,279,664 4,423,542 27,703,206 27,703,206 NET BOOK VALUE AT 31st MARCH ,304, ,277 13,078,340 Net Book Value at 31 st March ,456, ,412 13,237,145 Housing Properties comprise: Freeholds at Cost 36,410,806 5,228,660 41,639,466 41,615,606 Properties costing 11,344,109 are mortgaged as security for loans (See Note 16). These have been valued on an MV-STT basis by independent valuers in August 2010 at 17,857,

24 EKAYA HOUSING ASSOCIATION NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31st MARCH OTHER TANGIBLE FIXED ASSETS GROUP Leasehold Improvement Furniture & Equipment Computer & IT Total Cost At 1 APRIL , , , ,192 Additions - 23,246 9,513 32,759 At 31 MARCH , , , ,951 Depreciation At 1 APRIL , , , ,216 Charged in year 8,346 32,670 17,980 58,996 At 31 MARCH , , , ,212 Net Book Value At 31 MARCH ,129 31,914 69,739 At 31 MARCH ,042 46,553 40,381 95,976 - ASSOCIATION Leasehold Improvement Furniture & Equipment Computer & IT Total Cost At 01 April , , , ,345 Additions - 15,965 9,513 25,478 At 31 MARCH , , , ,823 Depreciation At 01 April , , , ,174 Charged in year 8,025 30,270 17,980 56,275 At 31 MARCH , , , ,449 Net Book Value At 31 MARCH ,854 27,851 60,374 At 31 March ,694 46,159 36,318 91,171 24

25 EKAYA HOUSING ASSOCIATION NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31st MARCH INVESTMENT IN SUBSIDIARY Happy Nursery Days Ltd is a subsidiary of Ekaya Housing Association. The nursery is a company limited by guarantee and is controlled through a procedure agreement with Ekaya. Happy Nursery Days Limited is registered in England and Wales and the results and net assets of the subsidiary company are reflected in these consolidated 14. DEBTORS: Group Association Group Association Due Within One Year Arrears of Rent and Service Charges 381, , , ,462 Less: Provision for Bad and Doubtful (184,243) (172,136) (169,619) (153,510) Debts 196, , , ,952 Deposit held in Escrow/Rent Deposit Other Debtors and Prepayments 100,211 98, , , , , , , CREDITORS: Amounts Falling Due Within One Year Group Association Group Association Loan Principal and Interest Due 204, , , ,427 Rent Payable to Partner Associations Tax and Social Security 29,745 25,842 31,192 26,930 Local Government Grant 2,335 2,335 2,335 2,335 Provision for office dilapidation Other Creditors and Accrued Liabilities 181, , , ,059 Restructuring provision Prepayments for Rent and Service Charges 136, , , , , , , ,274 25

26 EKAYA HOUSING ASSOCIATION NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31st MARCH CREDITORS: GROUP AND ASSOCIATION Amounts falling due after more than One Year Housing Loans (Gross) 14,049,864 14,264,468 Analysis of Loans Due in more than one year: Between one and two years 221, ,354 Between two and five years 732, ,932 After five years - Loan 13,095,020 Arrangement fees (89,652) 13,005,368 13,270,455 Total 13,960,212 14,170,741 Ekaya s housing loans are from the Lloyds TSB Bank plc and are repayable at fixed rates of interest with the exception of the tranche due in between one and two years which is at a variable rate of interest. The fixed rate element of the loan is in six tranches that mature at dates between September 2011 and September The weighted average cost of borrowing on the loans is 3.93%. Housing loans are secured on the housing properties which they are used to finance. The remaining arrangement fees of 89,652 have been added back to the loan and are being written off over the life of the loans. 17. SHARE CAPITAL GROUP AND ASSOCIATION Shares of 1 each issued and fully paid At 1 st April Issued during the year 3 2 Surrendered during the year - (14) Balance 31 March Shareholders do not have a right to any dividend or distribution in a winding-up, and shares are not redeemable. Each Shareholder has full voting rights. 26

27 EKAYA HOUSING ASSOCIATION NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31st MARCH REVENUE RESERVES GROUP AND ASSOCIATION Group Association Balance 01 April ,874,957 1,737,554 1,827,498 1,719,896 Surplus/Deficit for the period 548, , ,435 96,345 2,423,634 1,863,700 2,355,933 1,816,241 Transfer to/from designated reserves 15,919 11,257 15,919 11,257 Balance 31 March ,439,553 1,874,957 2,371,852 1,827, DESIGNATED RESERVES GROUP AND ASSOCIATION Group Association Balance 01 April , , , ,561 Provision for repairs 75,000 75,000 75,000 75, , , , ,561 Less: Actual expenditure (90,919) (86,257) (90,919) (86,257) Balance 31 March , , , ,304 Net transfer (to)/from designated reserves 15,919 11,257 15,919 11, RELATED PARTY TRANSACTIONS At the 31 st March 2013, Ekaya Housing Association has a subsidiary (Happy Nursery Days Ltd) and has full controlling powers over it. The subsidiary affairs are managed by Ekaya. In the course of normal operations, related party transactions entered into by the Group have contracted on an arms-length basis Loan to subsidiary at 01 April ,000 Management charge in the period 32,000 19,816 Total 32,000 58,816 Balance as at 31 March ,816 1,904 27

28 EKAYA HOUSING ASSOCIATION NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31st MARCH SOCIAL HOUSING GRANT 2013 Group Association Balance 01 April ,703,206 27,703,206 Additions in the period - - Disposals in the period - - Balance at 31 March ,703,206 27,703, CONTROLLING PARTY The Association is controlled by its members in a general meeting who elect the Board of Management each year. 23. CONTINGENT LIABILITIES The Association has no contingent liabilities. 24. Post Balance Sheet Events The association has approved the purchase of Lewisham Development, at 1.4 million subject to contract for 2013/14). The general needs came into Ekaya s Management on 24 April 2013, with the shared ownership schemes coming shortly thereafter. 25. OTHER COMMITMENTS As at the 31 st March 2013 the Association had an operating lease which was due to end on the 5 May This has now ended and there is no other contract in place. This is being charged at the previous contract rates. On this basis the anticipated charges are stated below: Expired on : 5 May ,609 44, RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT Increase / (decrease) in cash in the period 457,176 (243,833) Cash outflow from movement in debt 216, ,971 Change in net debt resulting from cash flows in the 674,172 (118,862) period Net Debt at 01 April ,203,132 11,084,270 Net Debt at 31 March ,528,960 11,203,132 28