Board members, executive, advisors and bankers... Independent auditor s report to the members of Habinteg Housing Association Limited...

Transcription

1 Financial statements Year ended 31 March 2015

2 Contents Board members, executive, advisors and bankers... 3 Report of the Board... 4 Introduction from the Chair and CEO... 4 Governance... 6 Operating and financial review Value for money... 9 Operating and financial review - Finance Operating and financial review Services Operating and financial review Customer Operating and financial review People Operating and financial review Society Statement of the Board responsibilities for the system of internal controls Independent auditor s report to the members of Habinteg Housing Association Limited Income and expenditure accounts Balance Sheets as at 31 March Consolidated Cash flow statement for the year ended 31 March Notes to the financial statements for the year ended 31 March Year ended 31 March 2015

3 Board members, executive, advisors and bankers Board Members Chair: Vice Chair: Judith Newton (retired September 2014) Andrew Gibson Other members: Mel Groves John Ramm Kate McFerran Paul Gamble Jim Watt Emma Luddington Manny Lewis (appointed September 2014) Mee Ling Ng Sophie O Connor Sheila Hyde Sarah Joiner (from September 2014) Senior Management Team: Paul Gamble Deborah Stephenson Patrick Shaw Barry Chalkly (retired July 2014) Group Company Secretary: Barry Chalkley (retired July 2014) Patrick Shaw (appointed August 2014) Registered Office: Holyer House 20/21 Red Lion Court, London EC4A 3EB Auditors: External: Internal: BDO LLP Mazars 2 City Place The Broadway, Beehive Ring Road Dudley Gatwick West Midlands West Sussex RH6 0PA DY1 4PY Principal Solicitors: Devonshires Salisbury House London Wall, London EC2M 5QY Bankers: National Westminster Bank plc Euston Road Branch 320 Euston Road London NW1 3DB A charitable society incorporated under the Industrial and Provident Societies 1965 Act No.19341R Registered with the Homes and Communities Agency: LH0459 Year ended 31 March

4 Report of the board Introduction from the Chair and CEO Manny Lewis, Chair Paul Gamble, Chief Executive Welcome to Habinteg s financial statements for the year ended 31 March Our vision is that all communities are fully inclusive for disabled people and offer places to live that meet their needs and provide the highest level of independence, choice and control. To achieve this, our mission is to champion inclusion by providing and promoting accessible homes and neighbourhoods that welcome and include everyone. As well as reporting on our financial position at the year end, this document provides an insight into our recent achievements in pursuit of this mission and outlines our ongoing approach to achieving value for money. We have three strands to our activities which are outlined in our business plan and reflected in these pages: providing homes and services, demonstrating expertise and influencing decisions. Everything we do is underpinned by our core values of inclusion, determination, friendly professionalism and positive challenge which set the tone and standards for our work. At the end of the year our group surplus after tax was 3.0m, an increase of 0.3m on the previous year. We have also seen improved performance in several areas, e.g. rent collection was 101%, tenant satisfaction was 84% and 82% of our tenants are satisfied we provide value for money. The government s budget, announced in July, is going to present some significant challenges Habinteg and the housing sector will have to face, together with increasing financial volatility in the economy and further welfare cuts. The Board recognises the need to take proportionate risk to manage our affairs but also to ensure our tenants are getting the best available services and value for money. The surplus this year was achieved despite some one off costs relating to the restructure of the group. Our gearing remains low and we have continued to build up healthy reserves that will enable us to deliver strongly going forward. 4 Year ended 31 March 2015

5 During the year we have recommenced development of new homes in Bristol and Hounslow. We hope this is the beginning of a larger programme to meet increased demand for accessible homes, giving us the opportunity to showcase our expertise in design, and implement some of the recommendations from the pan-european istay@home research project. We are committed to significant investment in IT to deliver improved services to tenants, better reporting tools and to help reduce operational costs. We will also continue to test technological solutions to assist independent living, such as those researched as part of istay@home. During the year we also built our new Northern office from where many of our housing services are delivered. It will provide us with more flexible meeting space for training and conferences. To enhance our reputation as an expert provider of accessible services we transferred the operations of our subsidiary, the Centre for Accessible Environments (CAE), to the parent Habinteg from 1 April We see the synergy in mission helping to improve our services and increase our influence beyond the housing sector, and enabling us to provide improved training and consultancy services. We continued to lead engagement in the government s review of housing standards this year. Our technical expert on Lifetime Homes was closely involved in negotiating the new standards, ensuring that the government s new three tier system delivers an appropriate standard of access. At the same time we sought to influence the policy context, securing engagement opportunities with key parliamentarians as well as collaborating with other like-minded organisations to influence debate. With the new standards now in place, we will continue to seek to hold policy makers to account for the number of accessible homes that are built. Habinteg recognises the need for the new regulatory standards and the need for strong governance in a changing environment with increasing risks. During the coming year we will be focussing on meeting the regulator s new standard and achieving the strategic goals that underpin them. We will also take forward our business plan, projecting our key goals to 2020, ensuring we continue to make a difference. So even as we reflect on a year of improving financial and operational performance, we are vigilant to the developing impact of welfare reforms on our tenants and determined to respond flexibly to the challenges and opportunities that may arise as policy makers tackle the demands of the UK housing market. Manny Lewis, Chair Paul Gamble, Chief Executive Year ended 31 March

6 Governance Habinteg s board is made up of 12 members, 11 non-executive directors and the Chief Executive. Judith Newton s term of office as Chair came to an end at the 2014 AGM. Our thanks go to Judith for her hard work and dedication during her nine years of service on the board, four years of which have been in the role of Chair. During the year leading to the publication of this report we have recruited Manny Lewis as our new Chair, and also recruited Sarah Joiner as an independent board member. The board meets in full six times a year. They delegate specific responsibilities to four committees: Appraisal and Remuneration Committee; Assurance and Audit Committee, Development Committee and Homes and Services Committee. Each of these meet periodically to oversee their respective portfolios with a remit that includes monitoring performance, scrutinising risk management and ensuring value for money. Their scope also included a responsibility to ensure the appropriate management and governance relationship between Habinteg and what was our subsidiary, Centre for Accessible Environments. Our Rules of Association are based on the National Housing Federation (NHF) Model rules The Board s Code of Governance uses the main principles and provisions of the National Housing Federation (NHF) s guide, Excellence in Governance (July 2010). In line with the guidance we have carried out a triennial review of our governance arrangements to ensure we continue to adopt best practices. Board members as of June 2015: Paul Gamble Manny Lewis Andrew Gibson Mel Groves Sheila Hyde Mee Ling Ng Emma Luddington Kate McFerran Sophie O Connor John Ramm Jim Watt Sarah Joiner 6 Year ended 31 March 2015

7 Challenge and learning from others We take regular opportunities to challenge and compare our governance structures and practice. A full review of governance is commissioned from external consultants every three years. The results of the current review will be available in July External advisors worked with us on recruitment of new board members during , including the role of chair. As part of this recruitment process the consultant advised on remuneration levels, benchmarking against others in our sector. The total cost to Habinteg of board remuneration in the last year was 58K. Our board possess skills, expertise and experience aligned to the needs of our business plan. We maintain this fit through regular skills audits, particularly as vacancies arise. Each board member goes through an annual appraisal process which enables both individuals and the group to reflect on their performance, identify strengths and address weaknesses to ensure a strong, well informed and challenging governing body. Attendance at full board meetings and committees is also monitored. Overall attendance in the year ending March 2015 was 97%. Regulation Habinteg is regulated by the Homes and Communities Agency (HCA). The HCA has classified the organisation as low risk in their most recent viability report (March 2013), and we maintain the V1 and G1 ratings indicating that both viability and governance are judged effective. Currently the main risks to the organisation fall under five broad themes: 1. Financial risks due to external economic factors most notably welfare reform changes which have an impact on our tenants household income, and the rental income of Habinteg over the next four years. 2. Major incidents leading to loss of life or loss of services. 3. Reputational risks resulting from major incidents or adverse publicity. 4. Risks associated with resuming development. 5. Technological risks associated with increased dependence on IT for our operations. The R-Map details each area of risk along with a summary of actions required in order to mitigate the risk - through internal control systems, forecasting and detailed scenario planning. The R-Map is reported to every meeting of Assurance and Audit Committee and the following board meeting. Governance in action As well as attendance at board and committee meetings, our board members take regular opportunities to meet with tenants and hear their views. Visiting schemes, meeting with tenants in their homes as well as attending tenant forum meetings enables the board to hear tenant feedback and ideas first hand. This contact enables the board to build a full picture of the organisation, strengthening their ability to challenge and support our approach. Risk management The senior management team review Habinteg s risk register each quarter and report to both the Assurance and Audit Committee and the full Board. Risks are assessed according to probability, impact and controls in place. Those risks deemed significant or current are reviewed more frequently in the form of a Risk Management Action Plan (R-Map). Year ended 31 March

8 Operating and financial review - Introduction Habinteg was founded in 1970 with the aim of creating inclusive housing schemes that support tenants independence and participation. Since then the organisation has expanded to operate in 82 local authorities. We currently have 3,284 properties of which 1,248 properties are designed specifically for wheelchair users, the remainder being accessible and adaptable to the needs of occupants. At the year-end Habinteg Housing Association Limited remained in a strong financial position having achieved a surplus of 3.0m; up from 2.7m the previous year. We generated a cash surplus too, despite investing 3.3m of capital expenditure and reducing our loan balance by 2.3m. The year was one that saw changes in senior personnel and our operations. Judith Newton, our Chair of four years, and Board Member for nine, retired in September, succeeded by Manny Lewis. Barry Chalkley, Finance and Resources Director for 18 years also retired in July During the year we put in place the governance arrangements to start developing new properties and are on site on two schemes and pursuing other opportunities. We have also carried out our three-yearly review of governance to ensure we are operating as effectively as we can in this vital area. Whilst the new housing standards policy was adopted toward the end of the parliament, the arguments we set out, calling for 100% accessible homes as a default national policy, provided leadership in the sector and helped to keep access firmly on the agenda. Following a review by the Cranfield Trust we put in place the building blocks to expand the operations of our subsidiary the Centre for Accessible Environments (CAE) firstly by transferring its operations to the parent, Habinteg. 8 Year ended 31 March 2015

9 Operating and financial review - Value for money Our value for money programme and efficiency are central to our business, bringing together our aspirations for customer service, efficiency, and effectiveness in pursuit of our business goals, taking into account our commitment to, and the interests of our stakeholders. Our aim is to do the right things and do things right, the first time, at the right cost. Delivering cost-effective services means we can improve lives, support stable, inclusive communities and now invest in supplying more accessible homes and services to meet increasing demand and expectations. We recognise value for money does not always mean doing things cheaply. It means we look to achieve value for the quality of homes and services we wish to deliver and our tenants require and expect from us, recognising this may differ from other housing providers. It also often means taking the long view, where investment now will result in savings later, and planning for and delivering ongoing improvements. We believe the views of tenants are a good indication of whether we are providing value for the rent and service charges they pay. In 2014/2015 we were encouraged to see 82% of our residents were satisfied with the value they get, up from 81% in the previous satisfaction survey. Our tenants are involved in assessing value for money, participating in service reviews, communications projects, tenant inspections and contract review meetings. We report to all our tenants on value for money each autumn in our Annual Report to Tenants. This document is available in a range of formats and can be downloaded from the tenant pages of our website Value for money is integral to Habinteg s culture, and everyone is empowered to challenge and drive value for money improvements, not only tenants, senior management team and board members, but all staff, regardless of role or seniority. Value for money is systematically considered as part of all project proposals and is delivered in many ways. For example, working with tenants to tailor cleaning and window cleaning services on an estate, or tendering our corporate insurance services both of which have resulted in an improved service and at reduced costs. Benchmarking We benchmark our performance as a way to assess the value for money we are achieving year on year. We use national comparators because we operate nationally, referring predominantly to data available through the HouseMark benchmarking syndicate. In areas where comparison with HouseMark isn t possible or appropriate we use data from other bodies such as the Chartered Institute of Personnel Directors (CIPD) and the Homes and Communities Agency (HCA), e.g. the global accounts. In 2015/2016 we are planning to make even more use of the HouseMark services as we look to compare ourselves with more organisations and learn from others excellent practices. Information about our value for money strategy is accessible to all our stakeholders. As well as the annual report to tenants, stakeholders such as local authorities, partners and funders can find our value for money selfassessment, including details of our strategy and action plan, on the finance pages of our website Annual Report to Tenants 2015 Making choices together Year ended 31 March

10 Value for money savings already made Our key value for money achievements during the reporting year are in the table below. Table 1 - Value for money programme highlights Project Insurance services Anticipated gains: Key Estimated financial benefit 150,000pa Text messaging service (maintenance) 6,500pa Travel and Accommodation Service Review 35,000pa Digital first tenant information 2,000pa Treasury Management Review 2014/15 40,000 Payroll services 20,000 Training services review 8,000 Tax review 70,000 pa Estate cleaning 750 Communal lighting 1,100 Retendering utilities 4%-13% Cyclical decorations 25,700 Key: Direct financial benefit Efficiency gains Service improvements Social / environmental Ongoing value for money and investment The strong financial performance in recent years has made it possible to consider developing new homes in the coming three years. Full options appraisals will be carried out on each site to ensure we are making the best of the opportunities available. In addition to this investment we are exploring the possibility of extending the number of solar panels on our properties beyond the 10 Year ended 31 March ,024 properties that currently have them, thereby increasing the number of tenants who will directly benefit from lower fuel bills, as well as increasing Habinteg s turnover. We have also embarked on an IT strategy to help improve the efficiency of all our operations. The IT strategy aims to improve the mobility of our workforce, the security and stability of our IT services, the accessibility of our services by our tenants, and provide value for money for both tenants and Habinteg. We believe if we can address the digital inclusion

11 barriers that affect many of our tenants it will provide value for money for them and us. Our value for money self-assessment and action plan (which can be found on our website at details our future priorities and specific targets. Our objectives for the coming year include: Operational reviews of repairs processing loan portfolio pension arrangements recovery of former tenant arrears tenant re-charges use of meeting rooms in our Northern office Retendering of smoke alarm contracts electricity supply contracts water hygiene Investment in IT infrastructure solar PV installations We will also conduct a property MOT on those properties that have a high level of repairs expenditure and we will work with our peers via HouseMark to regularly compare both operational and financial performance. The action plan also details the specific targets for value for money which we have set ourselves for the coming year. Value for money reporting structure the Habinteg wheel The Habinteg wheel is an integral part of our business planning framework. It presents five perspectives on our organisation: Finance, Services, Customer, People and Society. We monitor and report on performance according to each area of the wheel, providing benchmarks and tracking data. This allows us to describe the value for money, efficiency and effectiveness that we are achieving for each aspect. The following five sections of this OFR relate to the five perspectives of the wheel (see below), with value for money reporting provided for each. Year ended 31 March

12 Operating and financial review - Finance Our financial performance is the perspective of the Habinteg wheel which runs through all four other areas, and enables the continued success, improvement and expansion of all other aspects of the organisation. The Association s surplus of 3.0m achieved at the end of March 2015 showed an increase of 300k on the previous year. This was achieved despite there being over 110k of one-off costs relating to the transfer of CAE s operations to Habinteg. Gross operating margins have reduced slightly from 28.8% to 27.0%. Net operating margin has increased slightly from 12.7% to 14.2%; the sector averages for 2013/2014 were 26.5% and 15.0% respectively (HCA global accounts 2014). Figure 1 - Financial performance of the association Operating performance Millions 25 35% 20 30% 25% 15 20% 10 15% 5 10% 5% % Turnover Operating costs Gross surplus Net surplus Net surplus / turnover Gross surplus / turnover 12 Year ended 31 March 2015

13 Cash generated from operations was 8.6m, of which 2.8m was paid in interest, and 2.3m to repay loans during the year. 3.3m was invested in capital assets via our capital works programme, the building of our new northern office and the redevelopment of two existing sites in Bristol and Hounslow. We also invested 326k in capital expenditure on IT equipment as we look to take advantage of the developments in this area to improve our performance and reduce costs. Overall there was a cash surplus of 228k. Our new office will allow us to accommodate any growth required as we take on new services, and reduce our dependency on external venues for meetings, and thereby reduce our operating costs. Table 2 Loan covenants Our loan covenants focus on interest cover and gearing ratios. Value for money is seen as a means to improve these ratios if it results in higher surpluses Target 2016 Interest cover (times) >167 Gearing ratio (%) 32.7% 30.9% < 50.0% With these ratios Habinteg has financial capacity. We exceed sector averages, and have improved in the past year. In future years we expect to make use of this capacity, providing our affordable housing services to more tenants in need of inclusive housing to facilitate their independent living, whilst retaining our financial strength. Table 3 Financial projections for the Association 2016 to 2018 Year Ended 31 March Turnover ( 000 ) 21,263 21,965 22,754 I&E Account Surplus ( 000 ) 2,256 1,909 1,509 Interest cover 271% 238% 208% Loans 51,735 50,236 53,618 Gearing 29% 28% 30% Projections based on prudent assumptions for the next three years indicate continued growth in turnover and strong surpluses, whilst making considerable additional investment in existing homes, new homes and our operating services. Year ended 31 March

14 How we invest our resources The chart below (figure 2) shows how we spent our income during 2014/2015. Figure 2 - Expenditure analysis Loan repayments - 10% Services - 19% Interest - 13% Management - 14% Other capital expenditure - 8% Major works - 7% Routine maintenance - 13% Development activity - 3% Cyclical maintenance - 9% Void loss - 1% Major repairs expenditure - 1% Other - 2% We compare our costs to the sector average costs per unit. Table 4 - Expenditure comparison with sector Average per unit Benchmark ( 000) (HCA global accounts 2014 averages) 2013/ / Services 460 1,042 1,232 Management 1, Routine maintenance Cyclical maintenance Year ended 31 March 2015

15 Service charges remain higher than the sector average due predominantly to our unique purpose providing inclusive housing. The resulting high number of tenants who require specialist equipment such as hoists, specialist baths and lifts, increases our cost base. However in 2014/2015 we have retendered utility costs and achieved at least as good prices as the previous year, despite inflation, and in some cases lower costs. The resulting benefits to tenants will be shown in the 2015/16 accounts. Our management costs per unit ( 948) compares favourably against the sector benchmark for traditional associations. This lower cost is not at the expense of tenants satisfaction. Overall satisfaction with our services for 2014/2015 is 84%, down marginally on the 2012 rating of 85% but still above our target of 80% (source: tenant survey 2015). We are planning a review of our maintenance expenditure in the coming year to firstly understand why our costs are high and then prioritise areas for reducing costs and ensure that our maintenance expenditure represents good value for money. We have however managed to reduce it slightly over the past year. Like many other providers we have seen a reduction in the Supporting People income we receive from local authorities as they look to reduce their costs. Where we have had contract cuts we have restructured our services and made commensurate savings in costs to offset the lost income. Investment in new properties During 2014/2015 we restarted developing new properties, beginning with the remodelling of an existing scheme, the Bristol, to enhance independent living. By making it fit for purpose and therefore easier to let, we will save management time and money in the future. We also completed our new Northern office from which we have operated since April As well as housing our customer service operation and other central roles the premises will provide meeting and training space, saving time and venue hire cost for staff and tenant meetings. During 2015/2016 we will continue our development programme on existing and new sites. A Development Committee has been established to oversee the programme, and financial capacity and funds are in place. During the year we will review our treasury operation to ensure it is providing us with maximum value in terms of cost and flexibility, as well as looking at the potential for new loans to develop more properties. We are aiming to build on our existing infrastructure to manage any new units and services and therefore spread existing costs over a wider unit base. Year ended 31 March

16 Operating and financial review Services The services perspective of the Habinteg wheel draws on the key performance indicators of our housing operation and support to tenants. We use benchmarking data to ensure that the way we deliver our homes and services represents good value for money and that our performance compares well with that of similar sized housing providers. Our operations performance has been good during the year with 101% of rent collected. At the same time current tenant arrears continued to improve, reducing to 4.02%, an improvement on 4.29% the previous year. Whilst this places us in the lower quartile of the HouseMark benchmarking club it represents a small improvement on the previous year against a backdrop of increased financial pressures on many Habinteg tenants. This demonstrates the ongoing impact of our planned response to welfare reform changes. We are looking at technological solutions to assist in further reducing our rent arrears as part of our IT strategy. Former tenant arrears remained constant at 1.23% which we are aiming to reduce over the coming year. Table 5 Services key performance indicators Year Ended 31 March Actual 2013 Actual 2014 Actual 2015 Actual 2015 Benchmark: Housemark performance quartile[1] 2016 Target % of current rent collected % % % % Upper % Current Tenant Arrears 5.10% 4.50% 4.29% 4.02% Lower 4.00% Former Tenant Arrears 1.30% 1.16% 1.23% 1.23% Median 1.2% Rent loss due to voids 0.80% 0.70% % Median 1.0% Average re-let time (days) Median 21 Gas Servicing on properties complete in year 99.89% 99.96% 99.91% % Upper 100% 16 Year ended 31 March 2015

17 Our void loss places us in the median quartile whilst average re-let times increased by one day to 27 days from 26, narrowly missing our 25 day target and placing us in the third quartile. We have set a demanding target to improve re-let times by a further six days in the coming year. Gas servicing is 100%. Figure 3 - Repairs performance % completed in target time Year ended Routine Urgent Emergency Figure 3 shows the improving trend in completion of repairs within target time, except on emergency repairs. We know that having repairs completed on time is extremely important to our tenants. We increased the proportion completed within target time and outperformed target for both routine, which achieved 98.60%, and urgent cases which achieved 98.40%, up from 98.33% and 98.26% respectively. Completion of emergency repairs performed fractionally worse than last year with 98.89% on time; compared to 99.60% in 2013/2014. Satisfaction with repairs ended the year at 84%. Table 6 - Satisfaction with repairs 2013/ /2015 Overall repairs satisfaction 79% 84% Routine repairs completed on time 98.33% 98.60% Urgent repairs completed on time 98.26% 98.40% Emergency repairs completed on time 99.60% 98.89% Year ended 31 March

18 We aim to ensure that our wheelchair accessible homes are let to households that include a wheelchair user. This is a tangible expression of value for money in the context of our inclusive housing mission and we set our target at 100% for this reason. Our target reflects our aspiration, whereas in practice when relets are granted to households that don t include a wheelchair user they are usually offered on the basis that the incoming tenant or a member of their family is likely to need to use a wheelchair in the foreseeable future due to a progressive or variable condition, or that they use other equipment to help them get around. Table 7 - Use of wheelchair accessible stock Target 2016 % wheelchair properties let to wheelchair users 70% 81% 73% 79% 81% 100% Active asset management Our overall return on assets is an expression of the net operating surplus as a percentage of total net assets and at the end of the reporting year stands at 7.06%. Table 8 - Return on assets Benchmark (HCA Global accts 2014) Return on assets 6.70% 7.06% 5.3% Taking an active asset management approach we leased 23 properties to another social housing partner who was able to fund improvements to the quality of the building and the environment for tenants. We have just finished the first phase of a major refurbishment and reconfiguration at The Bristol, a 21 unit Habinteg scheme where Supporting People funding has been significantly reduced over the last year and the properties were outdated for our tenants needs. It is being remodelled into 14 self-contained accessible flats of which four will meet wheelchair housing design criteria. 18 Year ended 31 March 2015

19 Operating and financial review Customer We aim to be the landlord of choice for disabled people by treating people as individuals and the customer perspective of the Habinteg wheel draws together evidence to demonstrate the effectiveness of our approach. Overall, 84% of customers tell us that they are satisfied with the service that they receive from Habinteg, which is down slightly from last year s 85%. We have however increased our rating on staff helpfulness 92% of tenants agreeing that our staff are helpful compared to 91% last year, and out-performing target by 7%. We received 76 compliments this year, which is up on last year by 14. We are proud to be accredited under the Customer Services Excellence Award scheme again this year, and have achieved the Compliance Plus rating in two key areas; customer insight and the culture of the organisation. Tailored and targeted contact We are constantly looking for the most effective ways to meet the diverse needs of our customers. For example the online rent account facility which allows customers to monitor their rent account as and when best suits them was launched in 2013 and accessed by tenants 1,116 times during the year ending March We also use a text messaging service to confirm repairs appointments and gather feedback from tenants. This has proved to be an efficient way to communicate with tenants and saves administration time for staff. Our tenant facing materials and communications are available in a variety of formats including large print, braille and audio. We also offer the option of using the Language Line translation service. By increasingly providing information online we are able to keep tenants up to date with news and opportunities in a more timely way, as well as reducing costs. Our housing management staff maintain valuable face to face contact with our tenants. Their rolling programme of tenant contact visits helps Habinteg understand individual Year ended 31 March

20 circumstances as benefit reforms come into effect. They are able to offer appropriate support with decision making or signpost tenants to third party sources of support and advice. This cost neutral strategy has contributed to the stability of our rental income. Adapting our properties Providing and supporting applications for adaptations to our properties when required is one of the most important ways that we support our tenants to maintain independence. The legal responsibility for adaptations sits with individual local authorities, however we make provision for a number of minor adaptations in our budget and employ an in-house occupational therapist to manage our activity in this area. This year we have provided 245 (2013/2014: 195) adaptations valued at under 1,000 each directly to tenants and supported a further 14 to apply for local authority Disabled Facilities Grants to fund more expensive adaptations. We have also provided six (2013/2014; one) major adaptations at a cost in excess of 1,000. During the coming year we will also be looking at ways to make sure those of our tenants currently unable to benefit from access to the internet have the chance to get on line. For example, we are piloting WiFi in two of our schemes. Tenant Involvement All tenants are invited to give their views in surveys about specific topics and membership of the Your Voice opinion panel is open to all it currently has 45 members. We have also just completed our tri-annual tenant survey; the results of which will influence our operational plans in the coming year. The tenant involvement framework was reviewed in 2014/2015 with creation of independent scrutiny panels replacing tenant inspectors. The scrutiny panels will provide greater focus and speed in resolving local issues and will feed topics into the national improvement agenda. They have already started their cycle of scrutiny with a review of estate management and in the coming year they will play a key role in the reviews of tenant recharges, former tenant arrears and gas servicing. 20 Year ended 31 March 2015

21 Operating and financial review People The people who work at Habinteg are the most important factor in our ability to deliver our business plan. At the end of the reporting year we had 124 staff members with a full time equivalent (FTE) of This equates to a stock to staff ratio of 33.5 properties per FTE. Our ratio is higher than sector average, which stood at 28 per employee in 2013/2014, because we provide some housing with support. During the previous year we introduced a revised Performance and Development Review (PDR) system to replace our annual appraisal process. The PDR framework applies to all staff and provides explicit links between each individual s role, the business plan and our organisational values. Performance ratings given as part of each staff member s PDR also link to our performance related pay system. We regularly commission external benchmarking of our salaries against the market, and our salaries are in line with the median market level. This year we have introduced new awards for staff, including an award for the staff member who best achieves value for money for Habinteg and its customers. Year ended 31 March

22 Days lost per year Habinteg Housing Association Figure 4 - Staff absence Public sector Non profit sector Private sector Habinteg Our absence figure of 6.38 days compares well against CIPD benchmarks for private, public and not for profit sectors. Supporting and valuing our staff Our commitment to develop and nurture our staff is reflected in the fact that we were re-accredited by the Investors In People (IIP) scheme during 2013/2014, being the first housing association to have achieved a Gold rating in its second successive assessment. We are also proud that we have eight staff currently studying for professional qualifications. During 2014/2015 we are enhancing our training programmes, particularly in IT as part of the IT strategy. We support our staff with issues that may occasionally have an impact on their work. Our third party Employee Assistance Programme offers counselling, financial and health advice both to employees and their partners. We value the diversity of our staff, 19.66% of whom identify themselves as disabled people. As members of Business Disability Forum we undergo periodic assessment by them. Our latest was conducted in 2012 and positioned us among the top ten employers of disabled people nationally, alongside a range of public and private sector organisations. 22 Year ended 31 March 2015

23 Operating and financial review Society The society perspective of the wheel is used to assess the impact we are having outside of our core customer base. It includes the work we do to influence policy makers to ensure widespread provision of accessible homes as well as our energy management work. Energy strategy In response to decreasing prices in the energy markets our gas and electricity supplies were retendered in 2014, a move which continues to provide savings on utilities costs that are passed on to tenants. Tenants whose homes are fitted with panels need to buy less electricity to run their homes. Habinteg tenants in these properties will have saved an average of on their electricity costs in the last year. Our solar panel installations continue to generate a significant amount of electricity which is fed into the national grid. In this reporting year our installations generated a total of 2.2 m KWh of electricity, which has contributed to reducing our CO2 emissions by 1,224 tonnes. Table 9 - Solar power generation 2014/ (partial year only) Target 2016 Installations working in year n/a: 1,024 1,024 1,024 1,024 Solar PV Generation figures (KWH) 400,795 1,872,539 2,212,913 2,239,972 2,200,000 CO2 reduction (tonnes) 219 1,023 1,210 1,224 1,250 Year ended 31 March

24 We use the Standard Assessment Procedure (SAP) methodology, via an independent domestic energy assessor, to compare the energy and environmental performance of dwellings. They now achieve an average SAP rating of which placed us in the upper quartile for this measure in the 2015 round of Checkmate benchmarking. The average energy performance of our stock is now Category C with the ratio of how our stock performs by category shown in figure 5. Figure 5 - SAP ratings Number of properties A B C D E F Energy efficiency (SAP) ratings Championing inclusive homes We continue to champion the critical importance of accessible housing in ensuring inclusion and equality for disabled people, working both as an individual organisation and in collaboration with like-minded professional groups and charities. During this operating year we drew attention to the economic case for accessible homes as well as the moral case for equality and independent living for disabled people. This was the focus of our continued engagement with ministers and senior officials on the government s review of housing standards as well as consultations on several bills. We also fed information on our tenants experience into the parliamentary committee consultation on a change to benefit waiting days, which drew on the likely impact on Habinteg tenants and was quoted in the committee s final report to Government. In April 2015 the Government published new regulatory standards for accessible homes. The standards draw closely on the Lifetime Home Standard and Wheelchair Housing Design Guide, both of which Habinteg has long championed. Whilst this development recognises the importance of accessible homes within regulation for the first time, the optional nature of the access standards remains a major concern. With the new framework in place our focus will turn to the planning authorities who will be charged with their implementation and the professionals responsible for monitoring build standards. We will also continue to call for the impact of the new rules on the supply of accessible homes to be closely monitored. Leading in Europe Our involvement in the three year istay@home project concluded at the end of June The product testing and evaluation phases all took place over the past 12 months. The product testing phase involved us testing a suite of ICT solutions that was focused primarily on 24 Year ended 31 March 2015

25 mitigating the impact of mobility impairments amongst tenants. The project yielded some positive results showing that ICT solutions can enable elderly and/or disabled people to lead more independent lives and by extension stay at home longer. The next step for Habinteg is to continue to develop this mobility package with the aim of introducing it to our tenants and promoting it to UK housing providers. We continue to play a key role in the European Federation for Living - a best practice collaboration between a group of public and private sector organisations from North West Europe. Habinteg is leading a topic group on Accessible Housing with participants from France, Germany, Finland, Netherlands, Belgium and the UK. The main aim of the group is to make a significant contribution to Europe in the area of accessible housing and the ageing society. We are currently running a European post graduate design competition on accessible housing. Getting the message across In pursuing these policy themes the reach of our message has grown. During this financial year we increased the number of opportunities to see Habinteg in the media from 4.8 million to 12.8 million. At the same time our social media reach increased from 851,000 to 3.3 million. In the coming year we aim to increase the uptake of reports and resources that we offer to our stakeholders. 76 items of coverage 12,862,096 opportunities to see 402 social media interactions 4,859 visits to campaign web pages 415 report downloads Year ended 31 March

26 Statement of the Board responsibilities for the system of internal controls 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 in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). The directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the association and of the surplus or deficit of the association for that period. The Board receives and considers reports from management on the risk management and control arrangements during the course of the year, both directly and through its committee structure. The Board, through its Assurance & Audit Committee, also receives the independent report of its Internal Auditors, Mazars, in addition to the Audit Highlights Report from its external auditor, BDO LLP. The processes to identify and manage the key risks to which Habinteg is exposed are an integral part of the internal control environment. Such processes, which are reviewed annually and revised where necessary, include strategic planning, recruitment to the Senior Management Team, regular performance monitoring, control over developments and the setting of standards and targets for health and safety, data protection, fraud prevention and detection, and environmental performance. The system of internal controls including the process of identifying, evaluating and managing the significant risks faced by Habinteg has been in place for the year under review and up to the date of approval of the report and financial statements. These include detailed budgets for the year ahead and forecasts for subsequent years which are reviewed and approved by the Board and monitored throughout the year by the Board. The Board receives regular reports on performance, including key performance indicators, and progress towards the Association s objectives, targets and outcomes. Regular management reporting on control issues provides assurance to successive levels of management, committee and the Board. This is supplemented by regular reviews by internal audit, provided by an external firm of accountants, which provides independent assurance to the Board via the Assurance & Audit Committee. These reviews are within a risk based, three year audit programme, designed to test both identified areas of risk and the soundness of operational and accounting processes. The Assurance & Audit Committee is also responsible for ensuring that corrective action is taken in relation to any significant control issues. For the year ended 31 March 2015 there were no breakdowns in internal control resulting in material loss to the Group. Fraud Habinteg s procedures deal specifically with fraud and similar risks, its Probity Policies including a specific Anti Fraud Policy. Internal division of duties is rigorously enforced to minimise the risk of fraud. Any known or suspected instances of fraud are recorded in the register and reported via the Assurance & Audit Committee to the Board. There were three minor instances of known or suspected fraud during the year under review and up to the date of the approval of the report and financial statements. Action taken in response to significant failings or weaknesses Where any fundamental or significant risks or weaknesses are identified by any of the monitoring or control measures referred to above an action plan, with relevant timescales, is agreed for the rectification of these issues. These are monitored on behalf of the Board by the Assurance and Audit Committee. 26 Year ended 31 March 2015

27 Statement of the Board responsibilities for the system of internal controls During the year under review there were no fundamental risks or weaknesses identified by External Audit, Internal Audit or the internal control arrangements. Action has been taken or is being taken to rectify other weaknesses identified and the result of these actions is reported routinely to the Assurance & Audit Committee. The Co-operative & Community Benefit Societies Act 2014 and registered social housing legislation require the Board to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Association and the surplus of the Association for that period. In preparing these financial statements the Board has: selected suitable policies and applied them consistently; made 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 Act 2014, the Co-operative and Community Benefit Societies (Group Accounts) Regulations 1969, 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 for the prevention and detection of 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). Financial statements are published on the association s website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the association s website is the responsibility of the board members. The board members responsibility also extends to the ongoing integrity of the financial statements contained therein. safeguarding the assets of the Association and taking reasonable steps for the prevention and detection of fraud and other irregularities. The Board is also responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations and the Statement of Recommended Practice: Accounting by registered social housing providers Update The Board is responsible for the maintenance and integrity of the corporate and financial information on the Habinteg Housing Association Limited website. Legislation in the UK governing the preparation and dissemination of the financial statements may differ from legislation in other jurisdictions. Annual General Meeting The annual general meeting is scheduled to take place on 15 September 2015 at Habinteg s northern office, Chapman House in Bradford, commencing at 1pm. Year ended 31 March