Shape Housing Association

Transcription

1 Shape Housing Association Annual report for the year 1 April 2011 to 31 March 2012 Industrial and Provident Society registration number 24208R Shape Tenant Housing Services Association Authority Ltdregistration number LH3918 Page 1 of 15

2 Shape Housing Association Limited Annual report for the Year 1 April 2011 to 31 March 2012 Contents Report of the Board 1 Independent auditor s report 2 Income and expenditure account 3 Balance sheet 4 Notes to the financial statements 5 Registered Office: The Maltings, River Place, Lower Bristol Road, Bath BA2 1EP Tel:

3 Report of the Board

4 Report of the Board Operating and Financial Review The Association has elected not to produce an Operating and Financial Review (OFR) for the year. An OFR has been provided in the consolidated Somer Housing Group Limited financial statements, which can be obtained from our website ( or in hardcopy by contacting our registered office address. Statement of responsibilities of the Board The Friendly and Industrial and Provident Societies Act 1968 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 of the surplus or deficit for that period. In preparing financial statements, the Board is required to:- Select appropriate accounting policies and then apply them consistently; Make judgements and estimates which are reasonable and prudent; State whether applicable Accounting Standards have been followed; subject to any material departures disclosed and explained in the financial statements; Prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the Association will continue in business. The Board is responsible for keeping proper accounting records which disclose with reasonable accuracy at any time, the financial position of the Association and enable it to ensure that the financial statements comply with the Friendly and Industrial and Provident Societies Act 1968, the Housing and Regeneration Act 2008 and the Accounting Requirements for Registered Social Landlords Determination It has general responsibility for taking reasonable steps to safeguard the assets of the Association and to prevent and detect fraud and other irregularities. The Board is responsible for the maintenance and integrity of the Association s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. Report of the Board on internal control In accordance with best practice on internal control and risk management, and as the Association is regarded as a small association, the Board has chosen not to provide a full statement on internal control. The Board of Management has however received the Executive Team s annual report, and has conducted its annual review of the effectiveness of the system of internal control that is designed to provide reasonable, but not absolute assurance. The Board of Management confirms that there are ongoing processes for maintaining sound systems of internal control and for managing significant risks. These processes have been developed throughout the financial year, up to the date of the signing of the financial statements and are regularly reviewed by the Board. Annual General Meeting The Annual General Meeting will be held on 28 September Independent auditors PricewaterhouseCoopers LLP have indicated their willingness to continue in office and a resolution concerning their reappointment will be proposed at the Annual General Meeting. The Report of the Board was approved by the Board on 16 July 2012 and signed on its behalf by:... C.R. Thomas Chair... S Rodliffe Board member... P Armstrong Secretary Page 1 of 15

5 17) Prior year adjustment continued 2011 Total Tangible fixed assets accumulated depreciation 000 As previously stated 31 March Component accounting adjustment from prior years 187 Component accounting adjustment in 2011 year March 2011 restated Total Revenue Reserves 000 As previously stated 31 March ,198 Component accounting adjustment from prior years (109) Component accounting adjustment in 2011 year (8) (117) 31 March 2011 restated 1,081 Income and expenditure account adjustments 2011 Total Independent 000 Operating costs As previously stated 1,685 auditor s report Component accounting adjustment in year 8 As restated 1,693

6 Independent auditors report to the members of Shape Housing Association We have audited the financial statements (the financial statements ) of Shape Housing Association or the year ended 31 March 2012 which comprise the Income and Expenditure Account, the Balance Sheet, and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). Respective responsibilities of the Board and auditors As explained more fully in the Statement of Board s Responsibilities set out on page 1, the Board is responsible for the preparation of financial statements which give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (ISAs) (UK and Ireland). Those standards require us to comply with the Auditing Practices Board s Ethical Standards for Auditors. This report, including the opinions, has been prepared for and only for the association s members as a body in accordance with Section 9(1) of the Friendly and Industrial and Provident Societies Act 1968 and the Housing and Regeneration Act 2008 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the association s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the board; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. Opinion on financial statements In our opinion the financial statements: give a true and fair view of the state of the association s affairs as at 31 March 2012 and of its income and expenditure; and have been properly prepared in accordance with the Friendly and Industrial and Provident Societies Act 1968, the Housing and Regeneration Act 2008 and The Accounting Requirements for Registered Social Landlords General Determination Matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Friendly and Industrial and Provident Societies Act 1968 requires us to report to you if, in our opinion: the association has not kept proper books of account in accordance with Section 1(1)(a) of the Friendly and Industrial and Provident Societies Act 1968; or a satisfactory system of control over transactions has not been maintained in accordance with Section 1(1)(b) of the Friendly and Industrial and Provident Societies Act 1968; or the financial statements are not in agreement with the books of account; or we have not received all the information and explanations we need for our audit. PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors 31 Great George Street Bristol BS1 5QD Date: 25 July 2012 Page 2 of 15

7 Income and expenditure account

8 Income and Expenditure Account for the year ended 31 March 2012 Restated Note Turnover 2b 1,835 1,773 Operating costs 2b (1,705) (1,693) Operating surplus 2b Interest receivable and other income Interest payable and similar charges 4 (5) (5) Surplus for the year All results derive from continuing activities. The Society has no recognised gains or losses other than those included in the results above and therefore no separate statement of total recognised gains and losses has been presented. There is no material difference between the surplus on ordinary activities and the retained surplus for the year stated above and their historic cost equivalents. Shape Housing Association registered number IP24208R. The restatement of prior year results is due to the implementation of component accounting, (see note 17). Page 3 of 15

9 Balance Sheet

10 Balance Sheet at 31 March 2012 Restated Fixed assets Note Housing properties - depreciated cost 8a 4,408 4,426 Social housing grant 8a (3,807) (3,807) Net book value of housing properties 8a Other fixed assets 8b - 6 Total fixed assets Current assets Debtors Investments Cash at bank and in hand Creditors: amounts falling due within one year 11 (259) (287) Net current assets Total assets less current liabilities 1,216 1,081 Capital and reserves Revenue reserve 13 1,216 1,081 Total shareholders funds 1,216 1,081 The notes on pages 5 15 form part of these financial statements. These financial statements were approved by the Board on 16 July 2012 and are signed on its behalf by:... C.R. Thomas Chair... S Rodliffe Board member... P Armstrong Secretary Page 4 of 15

11 Notes to the financial statements

12 Notes to the financial statements for the year ended 31 March ) Principal accounting policies The financial statements have been prepared in accordance with applicable Accounting Standards in the United Kingdom, the Friendly and Industrial and Provident Societies Act 1968, the Statement of Recommended Practice (SORP) for Accounting by Registered Social Landlords 2010 Update, and comply with the Accounting Requirements for Registered Social Landlords General Determination A summary of the principal accounting policies, which have been applied consistently with the exception of the prior year adjustment for component accounting described in note 17, are set out below. Basis of accounting The financial statements are prepared on the historic cost basis. Turnover Turnover represents rental, service charge income and support charges receivable in the year net of voids and other miscellaneous income. Revenue Recognition Rental and service charge income is recognised from the point when properties under development reach practical completion or otherwise become available for letting. Rental income is deferred to a future period where it does not relate to the current period. Charges relating to support services funded under Supporting People are recognised as they fall due under the contractual arrangements with the Administering Authority. Other income is recognised as receivable on the delivery of services provided. Housing properties Housing properties are stated at cost. Cost includes the original purchase price of the asset and the costs attributable to bringing the asset to its working condition for its intended use. Housing properties are split between the structure and those major components which require periodic replacement. Housing properties in the course of construction are held at cost and are not depreciated. They are transferred to completed properties when handed over for letting or sale. The change in accounting policy through the implementation of component accounting has resulted in a material prior year adjustment (see note 17). Works to existing properties Replacement of major components is capitalised and depreciated over its economic useful life. Works that result in an enhancement in the economic benefit of housing properties are capitalised and depreciated over the remaining economic life of the property. All other expenditure on repairs incurred over the life of a property is charged to the income and expenditure account as incurred. Other fixed assets Other fixed assets are stated at cost. Cost includes the original purchase price of the asset. Non housing fixed asset expenditure under 1,000 is not capitalised. Page 5 of 15

13 1) Principal accounting policies continued Depreciation Tangible fixed assets, except freehold land, are stated at cost less accumulated depreciation and capital grants. Where the cost of the asset exceeds the residual value depreciation is charged on a straight-line basis over the expected economic lives of the assets. The depreciation charge is commenced on the first day of the month after completion. As required by Financial Reporting Standard (FRS) 15 Tangible Fixed Assets and the SORP 2010, depreciation is calculated to write off the costs of tangible fixed assets, less their residual values, over their economic useful lives using the straight line basis. A review of an assets economic useful life and whether there has been any impairment is carried out on an annual basis. For depreciation purpose, the following economic useful lives of depreciation have been applied: Housing Properties Structure Kitchen Bathroom Boilers and Electrical Heating Systems Heating distribution systems Windows 100 years 20 years 30 years years 30 years 30 years Where the Association s interest in a property is leasehold, depreciation is charged over the remaining period of the lease. Other Fixed Assets Computer equipment and IT software Furniture and equipment 3-5 years 3-8 years Social Housing Grant Social Housing Grant receivable is accounted for as a contribution towards the capital costs of housing schemes in accordance with the SORP The gross historic cost of schemes and social housing grant are shown in Note 8a. Grants in respect of revenue expenditure are credited to the Income and Expenditure Account in the same year as the expenditure to which they relate. Bad and doubtful debts Provision is made against rent arrears for both current and former tenants and against sundry debts to the extent that the Board considers them to be irrecoverable. Pension The Association participates in the Aviva Group Personal Pension Scheme. The Aviva Group Personal Pension Scheme is a defined contribution scheme. Under the scheme, employees have been allocated their own personal pension policy and can choose their own investment fund from the many offered by Aviva. The assets of the scheme are separate from the Group and are invested by independent investment managers. The employer s contribution is charged to the Income and Expenditure Account during the period of the employee s pensionable service to which it relates. FRS 17 Retirement Benefits has been applied. Page 6 of 15

14 1) Principal accounting policies continued Taxation The Association has charitable status for tax purposes and no liability to Corporation Tax arises. Value added tax The Association s primary income streams, rent and support payments, are exempt for value added tax (VAT) purposes. The vast majority of expenditure is subject to VAT, which the Association is unable to reclaim and hence this expenditure is shown inclusive of VAT. Some VAT can be reclaimed under the partial exemption method; this is credited to the Income and Expenditure Account in the relevant cost heading. Service charges Service charges receivable represents income receivable from tenants and leaseholders in respect of services provided by the Association. Service charge income is recognised in turnover and the costs of these services are recognised in operating costs. Cash flow statement exemption Under FRS 1 (revised 1996) Cash flow statements the Association is able to take the exemption of not preparing a cash flow statement. The company is a wholly owned subsidiary of a group headed by Somer Housing Group Limited, and is included in the consolidated financial statements of that company. Related party transactions The Association has taken advantage of the exemption in Financial Reporting Standard 8 Related party disclosures to not disclose intra-group transactions as it is a wholly owned subsidiary of Somer Housing Group, a company that prepares consolidated financial statements, which are publicly available. Investments Investments comprise of cash deposits placed on the money market to maximise interest receivable. Deposits are placed on 6 month fixed term contracts. Page 7 of 15

15 2) Turnover a) Income and expenditure from lettings Income from lettings General Needs housing Supported housing Restated Rent receivable Service charges receivable Support charges receivable Net rent receivable 109 1,712 1,821 1,714 Revenue grants from local authorities and other agencies Total income from lettings 109 1,713 1,822 1,752 Expenditure on letting activities Service costs Management and support - 1,089 1,089 1,069 Routine maintenance Major repairs expenditure Rent losses from bad debts Depreciation on housing properties Total expenditure on lettings 24 1,679 1,703 1,691 Operating surplus on lettings Void loss ) Turnover b) Total income and expenditure Turnover Operating cost Operating surplus 2012 Restated Operating surplus General needs housing Supported housing 1,713 1, Other Total 1,835 1, ) Interest receivable and other income Interest receivable bank 10 3 Page 8 of 15

16 4) Interest payable and similar charges Interest payable 5 5 5) Operating surplus Operating surplus is arrived at after charging: Restated Depreciation on owned tangible fixed assets Auditors remuneration in their capacity as statutory auditors 3 3 Bad debts ) Directors emoluments The Directors are defined as the members of the Board and members of the Executive Team. Only one member of the Executive Team receives remuneration from the Association (Managing Director). All other members are remunerated by Somer Housing Group Limited and Somer Community Housing Trust. Their emoluments for the financial year are presented in the financial statements of those organisations. The Managing Director of Shape Housing Association combines this role as the Managing Director of Redland Housing Association Limited, also part of the Somer Housing Group. The Managing Director has joint contract of employment with Shape Housing Association, Redland Housing Association Limited and Somer Housing Group Limited. Costs are split 65% to Redland Housing Association Limited and 35% to Shape Housing Association based on an estimation of time spent managing the two associations. The Managing Director did not receive contributions to any money purchase scheme or receive compensation for loss of office. Aggregate emoluments paid or receivable by the Managing Director (Including pension contributions and benefits in kind) 37,775 35,227 Costs relating to members of the Executive Team employed by Somer Housing Group Limited are apportioned to member organisations based on a combination of drivers including turnover and number of units. Costs totalling 10,000 were apportioned to Shape Housing Association during the financial year in respect of these services (2011: 14,000). None of the Board Members receive an emolument; they are only entitled to claim expenses incurred in their capacity as Board Members. The following expenses were reimbursed to board members in the year: Total expenses reimbursed to Board Members 1,401 1,830 Page 9 of 15

17 7) Employee information The average number of full time equivalents (35 hour) employed during the financial year was as follows:- Administration 5 5 Housing Total Staff costs: Wages and salaries Social security costs Pension costs Total Employer pension contributions during the year totalled 26,000 (2011: 27,000) of which 2,216 was unpaid as at 31 March 2012 (2011: nil). These contributions were paid during April Page 10 of 15

18 8a) Tangible fixed assets housing properties Freehold housing properties for letting Leasehold housing properties held on long lease 2012 Total Cost Opening balance as previously stated 4, ,587 PYA (see note 17) At 1 April 2011 (restated) 4, ,669 At 31 March , ,669 Social housing grant At 1 April ,807-3,807 At 31 March ,807-3,807 Accumulated depreciation Opening balance as previously stated PYA (see note 17) At 1 April 2011 (restated) Charge for the year At 31 March Net book value At 31 March At 31 March The above assets relate entirely to completed schemes. Social Housing Grant is potentially repayable on the disposal of properties which were partially funded by Social Housing Grant. Expenditure to works on existing properties Amounts capitalised enhancements - Amounts charged to income and expenditure account During the year all works undertaken as part of the planned maintenance programme were charged to the income and expenditure account on the basis of the nature of the works undertaken. Page 11 of 15

19 8b) Tangible fixed assets other Computer equipment and IT software Furniture and other equipment 2012 Total Cost At 1 April At 31 March Grants received At 1 April At 31 March Accumulated depreciation At 1 April Charge for the period At 31 March Net book value At 31 March At 31 March ) Debtors Total 2012 Total Rental arrears and service charges Less: provision for bad and doubtful debts (137) (119) Prepayments and accrued income Other debtors 4 22 Amounts owed by group undertakings ) Investments Total 2012 Total At 1 April Increase in investments March Investments comprise of cash deposits placed on the money markets. Page 12 of 15

20 11) Creditors: amounts falling due within one year Total Total Bank overdraft 1 - Prepaid rents Trade creditors 6 2 Other creditors - 7 Taxation and social security Accruals and deferred income Amounts owed to group undertakings ) Called up non-equity share capital allotted, issued and fully paid Units Units At 1 April Issued during the year 8 1 Cancelled/repaid during the year (2) (8) At 31 March Each member of the Association holds one share of 1. The shares are non-transferable and non-redeemable and carry no rights to receive either income or capital payments. 13) Revenue reserve As previously reported 1,198 Prior year adjustment (see note 17) (117) At 1 April 1,081 Surplus for the year 135 At 31 March 1,216 The prior year adjustment has arisen as a result of the reassessment of historic cost of housing properties, due to the implementation of component accounting (see note 17). 14) Ultimate parent undertaking Somer Housing Group Limited is the ultimate parent undertaking and controlling party of Shape Housing Association. It is incorporated in the United Kingdom. It owns one share in Shape Housing Association and has the right to appoint the Committee members of Shape Housing Association. The consolidated financial statements of Somer Housing Group Limited are available from The Maltings, River Place, Lower Bristol Road, Bath, BA2 1EP. Page 13 of 15

21 15) Reconciliation of movement in shareholders funds Restated Surplus for the year Opening shareholders funds (restated) 1,081 1,003 Closing shareholders funds 1,216 1,081 Closing shareholders funds comprise Non-equity interests 1,216 1,081 16) Homes and bed spaces in management 2012 Total 2011 Total General needs housing Supported housing Owned Managed of the managed units are held on long term leases from the local authority. 17) Prior year adjustment The prior year adjustment reflects the implementation of component accounting in accordance with SORP 2010 update. Component accounting requires a split between the structure and the major components which require periodic replacement. Replacement of major components is capitalised and depreciated over its economic useful life. Works that result in an enhancement in the economic benefit of housing properties are capitalised and depreciated over the remaining economic life of the property. All other expenditure on repairs incurred over the life of a property is charged to the income and expenditure account as incurred. The effects on the 2011 figures are as follows: Balance sheet adjustments 2011 Total Tangible fixed assets housing properties at cost 000 As previously stated 31 March ,587 Component accounting adjustment from prior years 78 Component accounting adjustment in 2011 year March 2011 restated 4,669 Page 14 of 15

22 17) Prior year adjustment continued 2011 Total Tangible fixed assets accumulated depreciation 000 As previously stated 31 March Component accounting adjustment from prior years 187 Component accounting adjustment in 2011 year March 2011 restated Total Revenue Reserves 000 As previously stated 31 March ,198 Component accounting adjustment from prior years (109) Component accounting adjustment in 2011 year (8) (117) 31 March 2011 restated 1,081 Income and expenditure account adjustments 2011 Total 000 Operating costs As previously stated 1,685 Component accounting adjustment in year 8 As restated 1,693 Page 15 of 15