FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2016

Transcription

1 FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2016 ONE HOUSING GROUP LIMITED Registered under the Industrial & Provident Societies Act 1965 (number 20453R) Registered with the Homes and Communities Agency (number LH0171). 1

2 CONTENTS Section Page Executives and advisors. 3 Report of the Board of management Strategic report Independent auditor s report. 30 Consolidated and Association statement of comprehensive income. 31 Consolidated and Association statement of financial position 32 Consolidated and Association statement of changes in reserves Consolidated statement of cash flows. 35 Notes forming part of the financial statements

3 Executives and advisors for the year ended 31 March 2016 Board members Chair Ordinary members Anthony Mayer Vijay Sodiwala Carol Yarde Mike Taylor Nigel Fee Kevin Brush Roger Davies Mick Sweeney Martin Heys (resigned 23 May 2016) Paul Rickard (appointed 23 May 2016) Alan Williams John Gregory Kevin Beirne Executive Team Chief Executive Mick Sweeney Group Director Finance & Resources Martin Heys (resigned 23 May 2016) Paul Rickard (appointed 23 May 2016) Group Director Development Group Director Housing Services Group Director of Housing Care & Support Director of Citystyle and Housing Operations Director of Housing Operations One Direct Maintenance Limited Managing Director (ODM Ltd) Alan Williams John Gregory Kevin Beirne Matthew Saye (appointed 1 September 2015) Catherine Kyne Trevor Lawrence Company Secretary Louisa Loizou Principal solicitors Trowers & Hamlins LLP 3 Bunhill Row Registered office 100 Chalk Farm Road London EC1Y 8YZ London NW1 8EH Principal bankers Auditors Barclays Bank PLC 1 Churchill Place London E14 5HP BDO LLP 2 City Place Beehive Ring Road Gatwick West Sussex RH6 0PA Devonshires Solicitors Salisbury House London Wall London EC2M 5QY Lewis Silkin LLP 5 Chancery Lane Clifford s Inn London EC4A 1BC 3

4 Report of the board of management for the year ended 31 March 2016 The Board presents its report and the Group s audited financial statements for the year ended 31 March Review of the business One Housing Group Limited (OHG) is a charitable social landlord administered by a board of directors. We have a number of subsidiaries and joint ventures - a full list of which is listed in note 18 and note 19 to the financial statements respectively. When we refer to the Group we mean the consolidated Group inclusive of all subsidiaries. OHG is regulated by the Homes and Communities Agency (HCA). One Housing Group Limited is the parent company responsible for the strategic planning and direction of the Group, along with central and development services. Subsidiaries of OHG are: TPHA Limited (TPHA) - a wholly owned subsidiary formed in 1988 to manage low cost home ownership and the sale of outright units. It is a non-charitable housing association. Citystyle Living Limited (CSL) - a company limited by shares which owns and manages market rented properties. East End Lettings (2) Limited (EEL) - a company limited by shares which owns and manages market rented properties. CHA Ventures Limited (CV) - a company limited by shares and a commercial subsidiary which lets all development contracts on behalf of the Group. Arlington Futures (AF) - a company limited by guarantee and also a registered charity. It was formed to fundraise on behalf of the Group. One Direct Maintenance Ltd (ODML) - a company limited by shares which was incorporated on 7 March 2014 to provide repair and maintenance services on behalf of the Group. Pembury Road Care Limited (PRC) - a company limited by shares which was incorporated on 1 April 2015 to provide private care homes and facilities for older people. There are also another 15 subsidiary companies that develop properties for outright sale.profits from each scheme are gift aided to OHG. All such subsidiary companies are listed in note 18 to the financial statements. The Group has investments in the following joint ventures that have been formed to develop property: New Ladderswood LLP, formed in 2011, is a 50% joint venture between CV and Mulalley and Company Limited. New Granville LLP, formed in May 2013, is a 50% joint venture between CV and Mulalley and Company Limited. Dollar Bay Developments LLP, formed in June 2013, is a 50% joint venture between CV and Mount Anvil Group Limited. Principal activities One Housing Group Limited helps thousands of people live better across London and the South East. We manage over 15,000 homes in 27 boroughs and surrounding counties and own a further 929 homes managed by other social providers. We re also London s largest care provider to people with complex needs, giving care and support to 11,500 people to help them live independently through our One Support and other housing, care & support services. 4

5 Report of the board of management for the year ended 31 March 2016 We are a not for profit that loves to make a profit. In practice this means that we take a commercial approach to reduce our reliance on state funding and maximise the benefit to our customers. We use our 50 years of experience to design and build high quality homes for rent and private sale and use the proceeds to deliver more affordable homes. We are proud to be ambitious. People across London and the South East struggle to afford a decent home, so we are committed to doing everything we can to help make their aspirations a reality. Land and construction are both expensive and properties cost money to run, which is why we are committed to delivering our value for money aims to provide more homes and improve services. We aim to build 3,600 new homes by 2019 to help meet the housing shortage. We currently have 844 units under construction and are constantly searching for new opportunities. Next year we plan to handover over 420 homes at affordable rents and will sell over 200 privately developed homes in London and the South East. We offer a wide range of housing options including homes for social rent in partnership with local councils as well as homes for affordable rent, shared ownership, private rent and private sale. We work hard to make a positive difference to our residents lives by promoting aspiration, independence and well-being through a range of training and support services. The Group is diverse and operates in the following key business areas: Property development. Developing and delivering new high quality homes for people at every income level to meet the urgent housing need across London and the South East and raise income through private sales. Social housing general needs. Providing rented housing primarily for families who cannot afford to rent or buy at open market rates. General needs properties include newly built homes as well as housing transferred from local authorities. Social housing intermediate. Providing housing for families who may only be able to afford to rent a home for less than the typical market rent. This includes key worker rent and rent to home-buy. Social housing low cost home ownership (LCHO) and leasehold. Providing shared ownership homes, where residents purchase a share in the equity of their homes and pay rent to the Group on the remainder. Housing care and support. Providing support for people who need additional housing related support or extra care. Care is extended to include specialist housing support to; young people, the elderly within retirement homes and people with complex mental health needs. We offer personalised support tailored to our customers individual needs, choice and control. Market rent. Providing housing aimed at the private market which includes rented accommodation. Commercial. Providing local shops and a medical centre let to commercial users which contribute to the social and economic regeneration of the communities we work in. Community investment programmes. Involving residents through a combination of consultation and participatory projects and schemes. Social mobility and aspiration. Providing a focus on employment and training schemes, including volunteering opportunities, to build skills and promote employment opportunities in the areas where we work and beyond. One Direct. Providing an in-house repair and maintenance service. Hospitality. We run a very successful backpackers hostel and café in Soho. We are expanding the café offer to Tottenham. 5

6 Report of the board of management for the year ended 31 March 2016 Qualifying third party indemnity provisions The company has no qualifying third party indemnity provisions in place for the directors of OHG Ltd and TPHA Ltd Registered Social Housing Provider. Value for money (VfM) Our five-year corporate plan ( ) sets out a range of key objectives against our six core strategic themes. It gives us a clear sense of direction as well as clear targets that together provide a strong framework within which to assess our value for money achievements. Building affordable homes is in our DNA and we aim to build 1,500 more by 2019 in some of the most desirable areas of the country. As large grants are no longer available for housing associations we have found alternative ways of funding them. We do this primarily through building and selling new private homes to pay for new affordable housing. This model has proven to be more successful than expected. Our initial projections suggested that we would have to build and sell three homes to fund each new affordable one. However, although soaring house prices generally make it harder for people to get on the housing ladder, the surge in value of new homes has helped us exceed our initial target for providing affordable housing. We re now funding two new affordable homes for every three new-builds we sell on the open market. In terms of our overall strategy, this is a great, overarching value for money achievement that shows huge returns on the investment we make in developing new homes. There are a number of major programmes and projects underway that will significantly improve our value for money performance. The most substantial of these is the development of our own in-house repairs and maintenance service, One Direct, which is increasingly taking over our repairs work from external suppliers. We also expect this to raise the quality of the work carried out, which will deliver reliability and value for years to come, as well as improve quality of life for our residents. Our longer term intention is to save 20% each year, leading to potential savings over the next decade of over 30m. There are lots of other initiatives that show how we deliver value for money, from our strategic approach down to the day-to-day decisions our staff make. Our VfM self-assessment report is available on our website and is designed to give both an overview and case studies to bring all of our VfM achievements to life as well as explain some of the future work we will be doing to further improve value. Our strategic approach to value for money We define value for money (VfM) as the best use of our resources to achieve our objectives and organise our VfM work under four themes: economy managing costs efficiency how well we use our resources to deliver objectives effectiveness doing what we set out to do environment improving our sustainability and reducing our impact. Our VfM strategy is reviewed regularly, and sets out our commitment to value and shows how we respond to significant changes in the external environment. It takes other key policies into account including our corporate plan, service performance plan, business plan and procurement strategy. Our approach to VfM is structured around: understanding our costs, benchmarking them internally and with our industry peers 6

7 Report of the board of management for the year ended 31 March 2016 ensuring that we deliver value for money through service, team and individual action plans making sure that quality is an essential element in value for money decisions actively involving residents in decisions that affect front line services reinvesting financial savings into improving current and future services challenging how we deliver services and get value for money ensuring that our staff become value for money champions continually quantifying efficiencies to monitor cash savings, quality improvement and to comply with regulation buying goods and services more effectively. The corporate plan includes a specific strand around value for money setting out how we will: ensure a strong and effective role for our value for money steering group with a target of 500k per annum savings through doing more for less seek opportunities to expand our commercial operations in a number of areas, aiming to raise 25% net profit pursue our ambitious growth plans without incurring additional costs wherever possible monitor value for money developments to ensure that we do not incur disproportionate costs in the drive for efficiency. We check and challenge our VfM performance regularly in several ways, including: benchmarking our performance against peers comparing unit costs against key services areas of the business monitoring and challenging key financial margins across the organisation. How value for money fits into our structure Our Group Board has both executive and non-executive members with a wide range of expertise in finance, development, social housing and commercial activity. The Board recognises and embraces its role in delivering value for money. It is not only important to our customers but necessary to meet our financial obligations and loan covenants. We have also embedded VfM in our workforce. Our Executive Team regularly delivers a series of presentations to staff to increase understanding of our commercial for a social purpose ethos. A core message throughout has been the importance of delivering value for money. Management development programmes have also sought to increase skills around efficiency and financial awareness with managers evidencing how they are delivering VfM. Our VfM steering group incorporates senior managers from across the business. It is led by our Group Finance Director representing the Group Board. The VfM steering group is responsible for performance management scrutiny to help to drive and monitor VfM and to improve awareness, compliance and reporting. How we measure and improve our work Our policies underpin our services. We regularly check and monitor our performance to make sure we are meeting our services standards and financial targets. Sound financial management Financial performance reports are published and sent to senior management within five working days (Day 5) of the period end. Performance reports are available by company, business area and expense/income type. We report operating margins against targets and returns on investments for all business areas are reported monthly. All budget managers receive detailed financial statements reporting results for the period. The timely production of financial information 7

8 Report of the board of management for the year ended 31 March 2016 improves the time required to achieve effective decision making and minimises financial risk, enabling more time for corrective action where necessary. Benchmarking We benchmark regularly against similar organisations in the housing sector so that we can share and learn from best practice. We are a member of the following benchmarking groups: HouseMark. Tower Hamlets Housing Forum. London and Kent PIE Benchmarking Group. Housing Quality Network. Monthly key performance indicator (KPI) reports Monthly KPI reports show how we perform against our KPI indicators. KPIs measure important aspects of our services and show how well we perform in customer service, repairs and in tackling anti-social behaviour. We encourage our recognised resident scrutiny groups such as Area Boards to comment on our KPI reports and feedback helps us to continuously improve our service delivery. Performance in People Performance in People (PiP) specialise in customer experience improvement and PiP has been working with us to improve how we manage and deliver customer service and provides us with independent quality assurance audits. PiP works with some of the world s leading brands, carrying out on-site audits, telephone accessibility checks and mystery shopping exercises. PiP also carries out continuous customer satisfaction polling. On-site audits take place every six months while telephone surveys and assessments are ongoing throughout the year. The audits cover ten key service areas including estate management, resident involvement, repairs and maintenance. Service standards We review our service standards regularly to make sure they meet priorities. We encourage our tenants and stakeholders to give us feedback on our current service standards and suggest improvements. Financial performance against peers for social homes We compare our financial performance against a selected group of peer organisations to help to give us a more objective perspective. We have identified eight similarly-sized registered providers of social housing that operate in a similar geographic area. We calculate the average peer group results from financial data taken from the published audited financial statements for each of the selected companies. We compare ourselves against these results and rank our performance within the group for each of the measures. We think this is an effective way to get an objective point of view on our performance, to plan and take remedial action where necessary. 8

9 Report of the board of management for the year ended 31 March 2016 The table below shows the performance of our major social costs against our peers. Key benchmarking performance indicators for social homes Ranking Actual Actual Peers out of 9 Operating costs per unit 5,345 5,032 4,929 7 Management costs per unit 1,436 1,202 1,509 6 Service costs per unit 1,174 1, Maintenance costs per unit 1,597 1,780 1,454 4 Void losses per unit Bad debts per unit Operating margin (%) social housing 31% 24% Staffing *Average staffing costs per head 39,448 38,261 Board and Executive cost per unit (social and non-social) Corporate overheads as a % of total income 4.38% 4.47% Corporate overheads as a % of social housing income 10.41% 10.70% (*) This includes employer s costs, one-off costs for pension deficit payments, and nonconsolidated pay awards. We no longer make consolidated pay awards and reward high performance through discretionary payments like this. We believe our approach to pay and reward helps to stimulate further performance improvements and as a result impacts on our VfM performance. Financial performance trends: Actual Actual Actual Actual Actual Cost per social housing unit Management 1,436 1,202 1,099 1,002 1,148 Service charges 1,174 1, Routine maintenance (**) Planned maintenance (**) Major repairs expenditure (**) Bad debts Depreciation and other 1, Total 5,345 5,032 4,521 4,109 4,364 This table shows the total cost of the major groups of services we provide compared with the previous four years. This information, alongside our key performance data, enables us (and our external stakeholders) to identify and monitor our financial performance. (**) We continue to invest in maintaining our properties and this year we are starting to see the benefits of setting up our internal maintenance service; One Direct. We have also invested in more health and safety compliance works in bringing our entry phones, lifts and fire alarm systems up to a high standard. While service charges are an important cost to benchmark, they 9

10 Report of the board of management for the year ended 31 March 2016 also reflect the type of properties we manage and the range of chargeable services we offer. Where such charges appear higher than those of our peers, we are confident that this is partly due to our efforts to ensure that all service costs are captured and accounted for. Return on asset The table below shows our annual operating return on asset from 2011 to the present. We calculate this by dividing the gross book value (GBV) of our properties by the operating surplus they generate. We are continually doing more work to identify how our portfolio of properties affects our returns to ensure that we are using our assets efficiently ,000,000,000,000,000,000 Fixed assets cost less depreciation 1,723 1,504 1,486 1,421 1,350 1,255 Operating surplus Return 2.2% 2.0% 2.2% 2.3% 1.8% 1.9% The table below shows the same information subdivided by tenure. Return on asset by tenure Social housing 1.9% 1.6% 1.9% 1.9% Shared ownership 3.2% 3.7% 4.0% 3.5% Investment properties 3.1% 3.3% 3.2% 4.7% Total 2.2% 2.0% 2.2% 2.3% We are working hard to ensure that we improve on the returns we receive from the assets we manage. Our market rented and commercial properties (investment properties) are re-valued by an external source every year. This year we saw further investment in SoHostel, the central- London backpacker s hostel we created to repurpose an otherwise empty property. A new, on-site café has just opened to guests and the public serving all day snacks. This is making a big impression in Soho and is projected to generate greater return following this year s set-up costs. Property analysis is carried out according to the type and location of our properties. We believe this helps us to identify how to maximise the returns we get from our properties and deliver our objectives more effectively. We are continuing to improve on our asset management strategy, which is currently being reviewed. Asset management appraisals allow us to assess the financial viability of our stock, as well as the social sustainability of the local area. This helps us identify properties that could create a financial risk, for example through disproportionate maintenance costs or shortfalls in rental income. Following the first stage assessment of the financial viability of all our properties, we have now conducted stage 2 option appraisals covering many of our homes. These appraisals identified the best way to use these properties to maximise financial return and avoid abortive expenditure. As a result we made the decision to decant residents from two former properties used for communal living that were transferred to us by another housing association, Patchwork, when it dissolved several years ago. These properties no longer met statutory accommodation standards and there were also serious concerns about the way in which the residents selfgoverned. We established that refurbishment under current use was not viable and despite considerable opposition from residents, the work to place them in more suitable alternative 10

11 Report of the board of management for the year ended 31 March 2016 homes is ongoing and in some cases already resolved. When vacant we intend to carry out a more thorough appraisal of these properties to ensure that we use them for the maximum social value. We are also consulting with residents on the Isle of Dogs, as many of the properties across the four major estates transferred to us from the local authority are proving to be unviable to be retained as social housing in the long term in some cases due to intrinsic design and construction faults. We re now seeking to engage residents in discussion about how best to ensure that we can continue to provide high quality, affordable accommodation for them and for generations to come. Our One Direct asset management team has been grown to increase the provision of in house stock surveys, asbestos and fire risk assessments. For we project a 90,000 saving, as all asbestos risk assessments will be delivered in-house. Return on investment properties developed for market sale Return on investment 39.2% 14.6% 31.5% 25.7% Number of sales During the year we sold 101 shared ownership homes and 247 for outright ownership; the latter delivered a 39% return on investment. We have a reputation for delivering high quality, affordable housing and continue to be recognised with award wins for several schemes. All profits generated are retained with the Group and are used to further invest in our initiative to build more homes in London to help meet demand. Increasing the supply of homes is a top priority for government and we have been seeking to build bridges with the government to demonstrate how we can contribute as well as seek reforms to help further increase our capacity to build. People We depend on our staff to use common sense and good judgement to find smart, efficient ways of working, putting our customers needs first and, of course, ensuring best value. This helps us to show the small savings and efficiencies that they make every day but also the bigger picture - how we design value and quality into our systems, processes and governance. It also helps us to understand how our efforts compare with others and change over time. That, in turn, helps us to identify problems so that we can address them. Delivering social value Our Employment & Partnerships team is almost exclusively focused on providing social benefit to our residents and customers. At the year-end, the team was exceeding all its targets. Major achievements included: 831 residents registered with and used the employment & training service last year. helping residents into work and providing apprenticeship positions across the Group, within our supply chain and on external contracts. more than 200 (2015; 101) One Housing residents signed up as volunteers and are now being trained and placed within external organisations. We also have a growing band of resident energy champions passing on specialist knowledge and energy saving tips to their family, friends and neighbours. delivering youth service sessions at five community venues. The team evaluates the social return on investment (SROI) for their work using industry standard techniques. Our investment of 1.04m in the year into employment, training and volunteering generated a social return on investment of 3.77m; a 362% return. The value delivered during 11

12 Report of the board of management for the year ended 31 March 2016 the year is set out below: social value generated by Employment & Partnerships team Social value multiplier people supported people supported Training for over-25s 2, , ,254 Training for under-25s , ,120 Training for housing care & support customers Employment services for housing care & support customers , ,740 1, , ,456 Over-25s helped into work 11, ,202, ,260,468 Under-25s helped into work 6, , ,940 Sub-total 831 2,996, ,973,978 Volunteering 3, , ,871 Total 1,037 3,773, ,354,849 The Housing Care & Support team also promotes and supports volunteering in 31 services contributing many hours of work. While we do not estimate the commercial value of this to One Housing, the social value to volunteers overall quality of life benefits is significant. Delivering future value: We remain committed to delivering value for money services to our customers and this year our Group Board requested a five year budget plan to be prepared from , inclusive of VfM targets. The budget plan shows how we will cut our costs or increase income by 5% of our controllable operating costs for , and deliver a 10% recurring reduction, or income generation, by Our five year target of 51 million gives an indication of the comprehensive and strategic approach we are undertaking to ensure that VfM is being delivered across all resources. We have a range of projects and programmes of work to deliver future value, most of which are already underway. We have set ourselves some high targets over the next five years and success will be regularly monitored against quantifiable targets, being savings, income generation, quality and growth. We intend to build on the commercial success we are currently achieving on initiatives such as SoHostel, embarking on SoHostel phase 2, which we estimate will generate additional profits of over 2 million. We continue to build on the success of our new internal maintenance company, One Direct. As it scales-up its work, we are increasingly confident that we will achieve our forecast VAT and efficiency savings. Savings for future years through One Direct are projected at 1.6m for , 3.3m for and 4.2m for Beyond that, savings will at least continue at the level and may increase as the service reaches peak efficiency. We are in the process of setting up a new facility management joint venture, Renovo, which is expected to achieve savings of 420k pa from Income from five new Extra Care schemes in and a further five Extra Care schemes from 2017 to 2021 will increase contract income by 6 million. Our private care units are expected to increase income by a further 11 million by Next year we aim to deliver 196 homes for private sale and 95 for shared ownership. All profits will used for our social purpose. This includes building more urgently needed affordable homes in London and the South East. In we plan to continue to use these profits to support our social aspiration initiatives and we will again gift 1.3 million to Arlington Futures to support 12

13 Report of the board of management for the year ended 31 March 2016 employment and training, and our other charitable purposes including helping our tenants into work where this is needed. Board assurance: The Board contains executive and non-executive members with expertise in finance, development, social housing and commercial activities. It regularly reviews management reporting reports and receives feedback from the VfM steering group. The Board is satisfied that this VfM selfassessment is a fair reflection of VfM within the Group. A comprehensive report is available to all of our stakeholders on our website. Compliance with Governance and Financial Viability Standard OHG and its subsidiaries meet the required outcome of the Regulator in considering compliance with all relevant law and common law (case law) in accordance with the HCA s Governance and Financial Viability Standard Code of Practice. The Board has taken all reasonable measures to be assured of compliance. This Code is issued by the Homes and Communities Agency, as the regulator of social housing, under section 195(1) of the Housing & Regeneration Act 2008 (as amended) (the Act). It relates to the Governance and Financial Viability Standard set by the regulator under section 194(1) of the Act (the Standard). The Code applies to all registered providers who are subject to the Standard (ie registered providers and not local authority providers of social housing). UK Corporate Governance Code The Board is committed to a high standard of corporate governance and seeks to adhere to the principal recommendations of the UK Corporate Governance Code. Going concern The Board has made enquiries and examined significant areas that could give rise to financial exposure and is satisfied that no material or significant exposures exist other than as reflected in these financial statements and that the Group has adequate resources to continue its operations for the foreseeable future. For this reason the going concern principle has been applied in preparing these financial statements. Assessment of the effectiveness of internal controls We are committed to high standards of corporate governance. The Board recognises and accepts that it is responsible for the Group s system of internal control and for reviewing its effectiveness. The system of internal control is designed to manage, rather than eliminate, the risk of failure to achieve business objectives. It can only provide reasonable, and not absolute, assurance against misstatement or loss. The Board believes that our system of internal controls is proportionate, and provides reasonable assurance that we are not exposed to material misstatement or loss. The Board confirms that the key processes for identifying, evaluating and managing the significant risks faced by the Group have been in place throughout the year under review up to and including the date of approval of the annual report and financial statements. Some of the key policies and processes that the Board has established to provide effective 13

14 Report of the board of management for the year ended 31 March 2016 internal control include: clear delegated powers to Board sub committees, the subsidiary company Boards, the Chief xecutive and directors robust strategic and business planning processes with detailed financial budgets and forecasts regular reporting to the Board and appropriate committees on key business objectives, targets and outcomes an annual Group Board review of risk management processes documented policies and procedures for all key operational areas establishment of a fraud register and related processes including the review of the register at Group Audit and Controls Committee (GACC) meetings adoption of an internal audit programme monitored by the GACC Board review of the external audit management letter, and GACC members interview with BDO LLP without directors present review of the performance standards return and review of all regulatory reports staff being fully conversant with key controls and procedures relating to financial operational systems. We have an anti-fraud policy designed to tackle fraud, corruption, theft, cybercrime and breaches of regulations. We also have a fraud response plan to help ensure that we respond quickly to fraud or fraud allegations and can recover our assets where necessary. The Board cannot delegate ultimate responsibility for the system of internal control, but it can delegate authority to the GACC to regularly review the effectiveness of the system of internal control, which it has done. The Board receives minutes from the GACC meetings. The GACC reviews the effectiveness of the system of internal control by considering risk reports, internal audit reports, management assurances, the external audit management letter and specialist reviews. The GACC has received and reviewed assurance on the effectiveness of the system of internal control for the Group, together with the annual report of the Internal Auditor. It has reported its findings to the Board through an annual report to the Board and the minutes of its meetings. The Board can confirm that there are no significant problems in relation to internal controls and which require disclosure in the financial statements. The Board confirms that there have been no regulatory concerns which have led the Homes and Communities Agency to intervene in the affairs of the Group neither are there significant problems in relation to failures of internal controls which required disclosure in the annual report and financial statements. Any weaknesses identified by the Board are being acted on. Donations The Group made no political donations during the year (2015: nil). 14

15 Report of the board of management for the year ended 31 March 2016 Post statement of financial position events There have been no significant events between the year end date and the date of approval of these financial statements which would require an adjustment to the financial statements. There has been a non adjusting event between the year-end date and the date of approval of the financial statements which has required a disclosure in the financial statements as seen in note 40. Board members responsibilities The Board members are responsible for preparing the Report of the Board and the financial statements in accordance with applicable law and regulations. Co-operative and Community Benefit Society law and social housing legislation require the Board members to prepare financial statements for each financial year for the Group and association in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). In preparing these financial statements, the Board members 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 association will continue in business. The Board members are responsible for keeping adequate accounting records that are sufficient to show and explain the Association s transactions and disclose with reasonable accuracy at any time the financial position of the Association and enable them to ensure that the financial statements comply with the Co-operative and Community Benefit Societies Act 2014, the Housing and Regeneration Act 2008 and the Accounting Direction for Private Registered Providers of Social Housing They are also responsible for safeguarding the assets of the association and hence for taking reasonable steps to prevent and detect fraud and other irregularities. The Board is responsible for ensuring that the Report of the Board is prepared in accordance with the Statement of Recommended Practice: Accounting by registered social housing providers Update 2010 ( SORP 2010 ). We publish our financial statements on our website in accordance with UK legislation governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Group s website is the responsibility of the Board members. The Board members responsibility also extends to the on-going integrity of the financial statements contained therein. Annual general meeting The Annual General Meeting will be held on 15 July

16 Report of the board of management for the year ended 31 March 2016 Auditors All of the current Board members have taken all the steps that they ought to have taken to make themselves aware of any information needed by the Association s auditors for the purposes of their audit and to establish that the auditors are aware of that information. The directors are not aware of any relevant audit information of which the auditors are unaware. BDO LLP have expressed their willingness to continue in office. A resolution for the re-appointment of BDO LLP as auditors of the Association is to be proposed at the forthcoming annual general meeting. By order of the Board Anthony Mayer Mike Taylor Louisa Loizou Chair Board member Secretary Date: 15 July

17 Strategic Report for the year ended 31 March 2016 Objectives and strategies to achieve those objectives One Housing s corporate plan for sets out our key objectives and growth strategy. It recognises the important influence of the political and economic operating environment. We will continue to review the corporate plan at the Group Board s annual July seminar, and on an on-going basis in response to significant changes in the operating environment. The Board is currently undertaking a mid-term review to the strategy to ensure that it is relevant. The Government has recently passed a new Housing and Planning Act that makes profound changes to the environment in which we operate. The Act has bought in measures that directly affect our business, including Starter Homes and Pay to Stay. The Act also seeks to further deregulate the sector, which we believe is needed to maximise the value of our work. We have actively engaged as the Bill went through Parliament and we are considering how we can adapt to maximise any benefit from changes in both operations and strategy. The Act will require significant secondary legislation and when it comes out it will give the detail we need on how many of these schemes will operate; we will continue to monitor and influence this process for the benefit of our business and our customers. Our mission We define ourselves as a modern social enterprise providing high quality homes and care to help people live better. This is echoed in the strapline living better which now forms part of our logo. Our values Our social purpose is at the heart of all we do. Our priority is people not profit. High standard, good value services to all our customers. Quality design and delivery of new homes. Building long term partnerships, innovating to meet new challenges. Valuing and respecting our staff, rewarding, recognising and celebrating our achievements. Core principles The corporate plan is designed to strengthen the Group s financial position. We will take all reasonable steps to achieve top regulatory rankings for governance and financial viability. We will continue to develop our services to residents, in partnership with them through our Area Boards and resident involvement framework. We recognise how difficult it is for a growing number of people to afford a decent home at market prices so we are committed to build homes and make them available for people on a broader range of incomes than we have in the past. We will increase the range of health care and aspirational senior living opportunities that we provide for older people, those who use the NHS and the most vulnerable in society. We will continue to invest in employment projects that help our residents to become more self-reliant, more aspirational and less dependent on benefits. We will remain free-standing but open to opportunities for growth through manageable takeovers of other housing associations. Our corporate plan sets out a range of key objectives against six core themes as set out in the table below. This is the overarching framework we will use against which to assess our value for money achievements to the year

18 Strategic Report for the year ended 31 March 2016 Core themes Corporate plan key objectives Growth strategy Financial strength New homes Our landlord services Housing care and support We will increase our annual profitability year on year to 40.4m by We will protect One Housing from downside risks by risk management and delivery of capital programmes. We will aim to maximise the number of new rented homes we can deliver, through cross-subsidy from market housing, letting at up to 80% of market rents, and using grant where available on acceptable terms. We will aim to build new shared ownership homes to meet the aspirations of those who seek to own their own home. We will review and develop a long term plan for our housing stock on the Isle of Dogs. We will tailor the services we provide to meet the different requirements of social renters, affordable renters and leaseholders. We will invest in our stock to ensure that our assets are managed cost effectively and maintained to achieve agreed levels of customer satisfaction. We will maintain our existing tenancies on existing terms and make new lettings on five year renewable tenancies. We will expand health care and support services and preventive services - subject to acceptable commissioners terms. We will aim to provide 800 new senior living units in a mix of affordable and private sale extra care schemes as well as modern care homes providing the highest quality in design, accommodation and care standards. We will develop joint ventures with NHS organisations to provide integrated aspirational supported housing to transform care pathways for older people and those with a long term condition. 99 We will ensure adequate security for new lending as identified in the business plan. 99 Maintain interest costs at a manageable level. 99 We will generate 180m profit by committing to a private sale programme of 300 units a year to give us the capacity to deliver an affordable homes programme of 3,600 units, over two development cycles, to By 2019 we will be managing 19,500 homes comprising 50%, traditional general rented and supported housing and 50%, market and leasehold housing. 99 By 2019, our property maintenance company, One Direct, will be delivering the full range of maintenance services, saving over 10m by We will invest 74m over five years in our property stock via the asset management strategy. 99 We will deliver our local offers with residents. 99 We will centralise our ASB and Tenancy Fraud team 99 We will establish and deliver a annual service audit. 99 We will increase turnover from 42m to 70m by 2019, of which registered care and older people will grow from 6m to 33m. 99 The focus for growth will be on the expanding self-payer, senior living market and through developing partnerships with the NHS to transform care pathways towards integrated services in aspirational specialist housing. 18

19 Strategic Report for the year ended 31 March 2016 Core themes Corporate plan key objectives Growth strategy Employment and partnerships People We will deliver cost effective initiatives to help residents into work. We will use our supply chain to create opportunities for training and employment for our residents. We will facilitate volunteering to help strengthen neighbourhoods, challenge isolation and build financial awareness. We will improve our recruitment processes to deliver high calibre appointments. We will build staff capacity to deliver great services, growth and commercial success. We will improve staff engagement leading directly to improved performance. We will attract a wider variety of skills through tailored remuneration. 99 We will invest 6.5m over the corporate plan period to help residents into training and employment. 99 We will help more than 1,000 tenants into work over the same period. 99 We will invest a total of 2.5m into supporting the residents involvement framework. 99 Our headcount will rise from 1,400 to 2,000 by We will maintain an organisational culture that embodies our core behaviours and engenders a can do, commercial, customer focused work ethos; Our core behaviours are: collaboration ambition respect excellence engagement Business model We are a modern social enterprise that provides high quality homes and care to help people live better. One of our key aims is to maintain long term financial viability so we may continue to provide our principal activities (which are set out on page 4). We seek to do this by optimising a return from our commercial activities and by minimising our operating costs, including our overheads. This year has seen a sector-wide slowdown in the development pipeline, although we are confident we will continue to deliver strongly, we are looking to diversify and expand profitable services. We are expanding our commercial lettings and property management offer, using our expertise to raise funds for our social purpose. We believe this to be a key factor in which we can maximise future investment for the further development of homes and enrich communities. A key element of our funding model is the way we finance our affordable homes. With significantly reduced grants for social housing, we continued to generate profits of 35m (2015: 14m) from private sales, including first tranche shared ownership sales, to cross-subsidise the development of affordable homes. This model is proving key to delivering our corporate plan goal of expanding our affordable homes programme. We cross-subsidise social housing activities by developing properties for outright sale and continue to work, where appropriate, in joint venture arrangements with key partners. We currently have three joint venture (JV) arrangements to develop private homes for sale and have invested 21.7m to date to achieve our aim of developing more homes for people to live in. The Group is structured so that we can Gift-Aid profits from the non-charitable subsidiaries into the charitable parent company. At the end of the financial year 30m (2015: 15.3m) was Gift-Aided for reinvestments to develop more affordable homes or through Arlington Futures to support people in living better. 19

20 Strategic Report for the year ended 31 March 2016 Accounting policies The accounting policies are set out on pages 36 to 46. Development and performance during the financial year and financial position at the year end The financial statements reflect the introduction of FRS 102 ( The Financial Reporting Standard applicable in the UK and Republic of Ireland ) and the Statement of Recommended Practice 2014 ( SORP ) for the first time. Comparative figures have been restated for 2015 under FRS financial review and highlights We are pleased to report a record year with turnover increasing by 21.5m to 244.9m (2015: 223.4m) generating a surplus before tax of 54.4m. The increased turnover was largely driven by private property sales, with the increased annual surplus including a surplus on fixed asset property sales of 16.5m (2015: 14.9m). Our operating surplus of 69.4m produced an operating margin of 28.3% (2015: 48.4m and 21.5%). A significant adjustment of 62.8m, relating to the fair value movement of financial instruments, saw our 2015 surplus before tax of 31.0m ( 60m when considering a movement in investment properties) reduce to a loss of 1.2m under FRS 102. Revenue and cost highlights We must generate sufficient income to meet our operating costs, loan interest payments and investment in our homes. We have continued to generate sufficient surpluses before sales to cover interest costs. Other key highlights include: surplus on first tranche sales of 10.6m (2015: 3.6m). surplus on properties developed for outright sale of 24.1m (2015: 10.0m). surplus on staircasing sales of shared ownership properties and RTB s of 16.5m (2015: 14.9m). surplus on non-social housing lettings of 2.2m (2015: 3.2m). surplus on commercial properties of 3.4m (2015; 2.3m). a total of 30m was gifted aided from subsidiaries (2015: 15.3m). Our policy is to Gift-Aid surpluses from subsidiaries at a level that minimises their corporation tax liability. We will continue to use our unrestricted surpluses to ensure that we achieve the objectives of our corporate plan. Statement of financial position highlights We maintain a robust financial position, reflecting a strong statement of financial position and cash reserves. These reserves will provide funds for future growth plans. Under FRS 102 we opted for transition relief and revalued 1,000 of our properties at EUV-SH. A prior period adjustment was made increasing our properties at historical cost by 43.9m in the 1 April 2014 opening statement of financial position. This is reflected in our tangible fixed asset total of 1.78 billion as seen in the statement of financial position on page 32 of the financial statements. 20