Financial Statements SHG

Financial StatementYear ending 31st March 2012Year ending 31st March 2012

Financial Statements 2012 – Shropshire Housing Limited & Group

Shropshire Housing Limited &

Shropshire Housing Group

Financial Statements for the year ended 31 March 2012

Page Contents 1 Chair’s Statement - review of activities 2 Housing Association Governance 3 Statement of Board of Management’s Responsibilities 4 – 5 Statement on Internal Controls Assurance 6 Board Members’ Report 7 – 8 Operating and Financial Review 9 Auditors’ Report 10 Income and Expenditure Accounts 10 Statement of Total Recognised Surpluses & Deficits 11 Balance Sheets 12 Group Cash Flow Statement 13 Notes to the Cash Flow Statement 14 – 35 Notes to the Financial Statements

Registered Office

The Gateway, The Auction Yard, Craven Arms, Shropshire SY7 9BW

Homes & Communities Agency Registration No. LH 4494


1

Chair’s Statement

I am pleased to be able to report that the 2011/12 financial year has once again been one of achievement for the Shropshire Housing Group. We have performed well against our budgets and been successful in hitting other key targets. This is a remarkable achievement given the continuing challenging economic climate. The net position is a surplus of £3.0 million against a surplus in 2011 of £1.9 million.

Our expenditure on maintenance has once again been significant across the Group. South Shropshire Housing Association has maintained its expenditure and met its target in this area and Meres & Mosses Housing Association has made fantastic progress against its improvement works programme. In total, planned works and improvements have been undertaken to the value of over £6.2 million.

Meres and Mosses Housing Association is soon to hold its 5 year celebrations and everyone involved can be proud of what has been achieved in such a short time.

Our development programme has also seen another successful year. Across the Group, a total of 45 new properties were completed at Ashbook in Church Stretton and Claverley. Shared Ownership sales have gone well, significantly boosting our cashflow.

Finally, as always, I would like to thank both the staff and my fellow Board Members for their dedication and strong commitment to the Group and our objective of providing good quality homes and related services for the communities we serve. It has been an exceptionally demanding year and everyone has risen to the challenge admirably. I would also like to record my thanks and appreciation to the increasing number of tenants who work with us to ensure that we provide the services they wish to see. Shena Latto Chair 16th July 2012


2

Housing Association Governance

Status of the Association

Shropshire Housing Limited is registered with and regulated by the Financial Services Authority under the Industrial and Provident Societies Act 1965, Registered No. 30269R and is also registered with the Homes & Communities Agency in accordance with the Housing and Regeneration Act 2008, Registered No. LH 4494. The Parent Association, unlike its subsidiary Housing Associations, does not have charitable objects.

Purposes of the Association The Parent Association was formed for the benefit of the community in providing housing, accommodation and related services for people in need. Statement of Compliance with the NHF

Code of Governance Shropshire Housing Group has formally adopted the National Housing Federation Code of Governance. The Shropshire Housing Board reviews compliance with the Code each year on behalf of all members of the Group and confirms that Shropshire Housing and its subsidiaries comply with all material principles in the Code.

Members of the Association There is one category of shareholding membership within Shropshire Housing Limited, with each of the 8 members holding a £1.00 share. Members have voting rights at Annual and Special General Meetings. Members of the Association are eligible to be elected to sit on the Board and Sub Committees. The detailed arrangements regarding membership are set out in the Rules of the Association.

The Board of Management The Board comprises 8 members and a co-optee and is responsible for managing the affairs of the Group. The Board may include up to three co-opted persons appointed by the Board who, may not be members of the Association, to act as specialist advisers.

The Board members are drawn from a wide background bringing together professional, commercial and local experience. The Group’s Remuneration and Nominations Committee regularly reviews the skills available within the Board against the skills required. Effectiveness is periodically reviewed and monitored. The Board is responsible for the Group’s continuing strategy and policy framework. It delegates the day-to-day management and implementation of that framework to the Chief Executive Officer. The Board meets six times a year for regular business. Other meetings take place as required, including training and development activities. There are 2 representatives from South Shropshire Housing Association and 2 representatives from Meres & Mosses Housing Association on the Board of Management. The Board of Management has overall strategic and regulatory control of the Group but does not own any housing assets. Its role is to develop the business, forge new opportunities, and strengthen existing relationships. The subsidiaries (South Shropshire Housing Association, Meres & Mosses Housing Association, and Total Response Limited) are responsible for the day to day operating activities. An Intra-group agreement between the organisations sets out the commitments which each member makes to the Group and the responsibilities of each member. The Chair is appointed annually by Members of the Board.

Remuneration of Board Members The Independent Board Members receive a co-optee fee. Reasonable reimbursement is made for travel and subsistence in appropriate circumstances.


3

Statement of Board of

Management’s Responsibilities The Industrial and Provident Societies Acts 1965 to 2003 require the Board of Management to arrange for the preparation of financial statements for each financial year which give a true and fair view of the state of affairs of the Group as at the end of the financial year and of the surplus or deficit for that period. In preparing those financial statements, the Board of Management is required to: • adopt suitable accounting policies and apply

them consistently; • make judgements and estimates that are

reasonable and prudent; • state whether applicable accounting policies

have been followed subject to any material departures disclosed and explained in the financial statements;

• prepare the financial statements on a going concern basis.

The Board of Management is responsible for making the appropriate arrangements for keeping proper accounting records, which disclose with reasonable accuracy at any time, the financial position of the Group and to enable it to ensure that the financial statements comply with the Industrial and Provident Societies Acts 1965 to 2003, and the Housing and Regeneration Act 2008. It has responsibility for taking such steps as are reasonably open to it to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

Board Members’ Indemnity The Board members have confirmed that the Group does have Board member and Officers Insurance in place.

Financial Instruments The Group does not have any abnormal exposure to price, credit, liquidity and cash flow risks arising from its trading activities. The Group does not enter into any hedging transactions and no trading in financial instruments is undertaken.

Disclosure of Information

to Auditors

In the case of each of the persons who were Board members of the Group at the date when this report was approved:

• so far as each of the Board members is aware, there is no relevant audit information of which the Group’s auditors are unaware; and

• each Board member has taken all the steps that they ought to have taken as a Board member to inform themselves of any relevant audit information (as defined) and to establish that the Group’s auditors are aware of that information.

Going Concern

After reviewing the Group’s Budget for 2012/2013 and based on normal business planning and control procedures, the members of the Board have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. The financial statements have therefore been prepared on a going concern basis.


4

Statement on Internal Controls

Assurance Responsibility

The Shropshire Housing Limited’s Board of Management, as the ultimate governing body, is responsible for the system of internal control, which is designed to provide reasonable but not absolute assurance regarding:- • the safeguarding of assets against

unauthorised use or disposal; and • the maintenance of proper accounting

records and the reliability of financial information used within the business or for publication.

Key procedures have been established and are designed to provide effective internal control. These key areas cover control, reporting information systems, monitoring and risk management. The Board has a clear and well communicated strategy and policy covering the prevention and detection of fraud, and procedures are followed where fraud is suspected or detected. A clearly established whistle blowing policy is in place. The Board has reviewed the effectiveness of the system of internal control, including the sources of assurance agreed by the Board as being appropriate for that purpose. On the basis of the evidence provided by the Assistant Director of Performance and Governance in her report presented to the Shropshire Housing Board on 1st June 2012, we are satisfied that there is sufficient evidence to confirm that adequate systems of internal control existed and operated throughout the year. The Board is also satisfied that those systems were aligned to an ongoing process for the management of the significant risks facing the Group. No weaknesses were identified which would have resulted in material misstatement or loss and which would have required disclosure in the financial statements. • Control Environment

The Group Board has put in place an organisational structure with clearly defined lines of responsibility and delegations of authority. These are found in detail in the

Group’s Standing Orders, Financial Regulations, Treasury Management Controls and Risk Management Strategy and procedure. These delegations and authority levels are reviewed annually.

• Control Procedures Procedures are maintained for all the main functions and service areas, and in particular there are clearly defined policies for development projects and capital expenditure, including the appropriate authorisation levels. Information Technology procedures are periodically updated. All capital projects require Board approval before commencement and commitment of any funds. Completed development projects are also subjected to a post investment appraisal, comparing actual results to original forecasts.

• Information Systems The Group has a comprehensive system of financial reporting. The Annual Budget and Business Plan are approved by the Board. Actual results are reported against budget headings to each subsidiary Board meeting with any significant variances being reported together with explanations. The current borrowing and investment position is reported at each Board meeting, as well as to the Group’s Performance Committee.

In accordance with regulations, annual financial returns are submitted to the Tenant Services Authority, now the Homes & Communities Agency, and quarterly financial returns to our principal lenders. There are regular meetings of the Operational Management Team to review and monitor revenue and capital spending against budget assumptions. Cash balances are checked daily, coupled with revised forecasts of borrowing requirements at regular intervals as necessary. There are a number of annual reports on other functions to the Board; these include insurance arrangements and treasury management.


5

• Monitoring System

The control system is monitored by internal audit and within the annual plan the work is focused on the areas of greatest risk to the Group. Monitoring is also done by senior officers and managers.

• Risk Management

The Group’s officers have a clear responsibility for identifying risk facing each of the areas in which they operate and for putting in place procedures to mitigate and monitor risk. It is the Performance Committee’s responsibility to review and assess these risks.


6

Board Members’ Report

Members of the Board

The members of the Board who served during the period were as follows: Shena Latto Chair Irene Grant Lesley Hyde Richard Jaboor Gordon Hodgkiss Stuart McLaren Martin Buxey Tim Ralphs Paul Turner John Stringer (co-optee appointed

on 30.03.12) The Board reports that the Group produced a surplus of £3.0 million. This surplus is after charging £2.1 million for depreciation on housing stock, as required by Financial Reporting Standard 15 and the Statement of Recommended Practice for Registered Social Housing Providers. This has increased significantly as a result of component accounting. Turnover of the Group was £21 million. Interest charges amounted to approxi-mately £3 million.

Future developments The Board are continuing to look at developing new dwellings and to repair and improve existing properties. It is also continuing to look at new approaches to services and to partnerships with other agencies to best secure these aims.

Housing Properties and Other Fixed Assets

The Group now holds properties at a historical cost of £93.6 million net of Housing Grants and depreciation. These were financed through grants, external loans and internal funds. The value for existing use by a housing association of these properties is professionally assessed in excess of £143 million. During the year, 45 new properties were developed, 40 were demolished for redevelopment and a further 6 went out of management. At the year end, the number of housing and commercial properties managed by the Group totalled 4,529.

Cashflow and Liquidity The cashflow from operating activities during the year was £10.0 million. Loans increased by £6.7 million during the year leaving total borrowings for the Group at £84.55 million at the year end. By order of the Board Shena Latto Chair 16th July 2012


7

Operating and Financial Review

Background The Group has been created to provide a partnership framework enabling South Shropshire Housing Association and Meres and Mosses Housing Association to work together to deliver new affordable homes and first class housing services across Shropshire, Herefordshire and the Marches. Shropshire Housing is an association which is registered by the Homes & Communities Agency. As the Group Parent, Shropshire Housing has overall strategic and regulatory control of the Group but does not own any housing assets. Its role is to develop the business, forge new opportunities and strengthen existing relationships. It is doing this by setting new and challenging targets for the housing service and by developing new and creative policies to ensure that the Group is recognised as “the” housing group in the region. It also provides a range of back office services for the operational organisations. Shropshire Housing is an Industrial and Provident Society but does not have charitable objects. The two associations which form the housing arm of the Group are at different stages of development. South Shropshire Housing Association was formed in 1990 and, following a programme of Trickle Transfers, completed a full stock transfer of the Council’s housing stock in 1994. The Association completed all of its promises to tenants and has now developed a robust asset management strategy. The Association is an Industrial and Provident Society and converted to charitable status when it joined the Group.

Meres and Mosses Housing Association is about to celebrate its 5th year. Formed by North Shropshire District Council, the housing stock transferred on 30th July 2007 and Meres and Mosses Housing Association is now well on the way to delivering the promises made by the Council to its tenants and anticipates exceeding the Decent Homes Standard by 2012. The Association is an Industrial and Provident Society with Charitable Rules. Total Response Ltd is a limited company, wholly owned by Shropshire Housing, and its function is to provide maintenance and other property services to all members of the Group. Where possible this will be on a ‘for profit’ basis with all profits being retained in the Group. It also actively seeks to undertake work for private individuals. Operating Review The Group has seen a successful year in terms of its maintenance programme. Meres and Mosses Housing Association has accomplished its 5 year improvement programme, and South Shropshire Housing Association as it has consistently in recent years, again increased its expenditure on repairs. The Group completed 45 new properties across Shropshire during the year with a significant development programme planned for 2012/13 and beyond, subject to funding. Reporting Structure The Board comprises 8 members and one co-optee. The Board Members are drawn from a wide background bringing together professional, commercial and local experience. It also includes 2 representatives from South Shropshire Housing Association and 2 representatives from Meres & Mosses Housing Association. The Board is responsible for the Association’s continuing strategy and policy framework. It delegates the day to day management and implementation of that framework to the subsidiaries. The Board meets at least six times a year.


8

Continuous Improvement

The Group is committed to achieving excellent performance across the whole of its business and services. The Group has a comprehensive performance management framework which ensures a clear focus on performance improvement and clear responsibility for scrutiny on performance at various levels.

The Board has a specific Performance Committee which meets regularly. This is complemented by the Performance Management Group which is made up mainly of senior managers from across the Group. These bodies monitor benchmarked data together with performance indicators, reports and best practice visits. Risks and uncertainties The Group’s managers have a clear responsibility for identifying risk facing each of the areas in which they operate and for putting

in place procedures to mitigate and manage risk. It is the Performance Committee’s responsibility to review and assess these risks. Financial Review The 2011/12 financial year has produced good results with an operating surplus being achieved. The net position is a surplus of £3,030,226 against a restated surplus in 2011 of £1,898,245. The Group paid over £10 million in acquisition and construction of housing properties and received over £1.4 million in capital grants relating to this.

The results have been impacting by the change of accounting practice to follow component accounting and the prior year figures restated to reflect the effect.


9

Report of the Auditors to the members of

Shropshire Housing Limited We have audited the financial statements of Shropshire Housing Limited for the year ended 31 March 2012 which, for both the Group and the Parent entity, comprise the Income and Expenditure Accounts, the Statement of Total Recognised Surpluses and Deficits, the Balance Sheets, the Cash Flow Statements and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). Respective responsibilities of the Board

and Auditors As explained more fully in the Statement of Board’s Responsibilities set out on page 3, the Parent entity’s Board is responsible for the preparation of financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors. This report is made solely to Shropshire Housing Limited’s members, as a body, in accordance with section 9 of the Friendly and Industrial and Provident Societies Act 1968 and the Housing and Regeneration Act 2008. Our audit work has been undertaken so that we might state to Shropshire Housing Limited’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than Shropshire Housing Limited and its members as a body for our audit work, for this report, or for the opinions we have formed.

Scope of the audit of the financial statements

A description of the scope of an audit of financial statements is provided on the APB’s website at www.frc.org.uk/apb/scope/private. cfm.

Opinion on financial statements In our opinion the financial statements; • give a true and fair view of the state of the

Group’s and the Parent entity’s affairs as at 31 March 2012 and of the Group’s and the Parent entity’s income and expenditure for the year then ended;

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

• have been properly prepared in accordance with the Industrial and Provident Societies Acts, 1965 to 2003, the Housing and Regeneration Act 2008 and the Accounting Requirements for Registered Social Landlords General Determination 2006.

Matters on which we are required to

report by exception

We have nothing to report in respect of the following matters where the Industrial and Provident Societies Acts, 1965 to 2003 require us to report to you if, in our opinion; • a satisfactory system of control over

transactions has not been maintained; or • Shropshire Housing Limited has not kept

proper accounting records; 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. Date: Mazars LLP Chartered Accountants and Statutory Auditor 45 Church Street Birmingham B3 2RT


10

Income and Expenditure Account for the year ended 31st March 2012

2012 2011 2012 2011 GROUP GROUP SHL only SHL only £ £ £ £

Note Restated Turnover 2 21,472,418 20,768,760 4,831,586 4,256,476 Operating costs 2 (15,268,506) (15,701,776) (4,859,349) (4,256,688) Operating surplus / (deficit) 2 6,203,912 5,066,984 (27,763) (212) Share of deficit in joint ventures 10 (256) (187) - - (Deficit) / Surplus on sale of fixed assets 9 (2,350) 16,868 (2,364) - Surplus / (deficit) on ordinary activities before interest

5

6,201,306

5,083,665

(30,127)

(212)

Interest receivable and similar income 3 11,796 28,821 189 212 Interest payable and similar charges 4 (3,182,876) (3,214,241) - - Surplus /(Deficit) on ordinary activities before taxation

3,030,226 1,898,245 (29,938) -

Taxation on surplus on ordinary activities 8 - - - - Surplus/(Deficit) for the year transferred to reserves

19 3,030,226

1,898,245

(29,938)

-

All of the above relate to continuing activities. Statement of Total Recognised Surpluses and Deficits for the year ended 31st March 2012

2012 2011 2012 2011 GROUP GROUP SHL only SHL only £ £ £ £ Note Restated

Surplus for the year 3,030,226 1,898,245 (29,938) - Actuarial (loss) / gain 20 (424,000) 455,000 - - Prior year adjustment 26 1,629,006 - - - Total recognised surpluses/deficit relating to the year

4,235,232

2,353,245

(29,938)

-


11

GROUP Balance Sheet at 31st March 2012

N

ote

2012 Group 2011 Group Restated 2012 SHL only 2011 SHL only

£ £ £ £ £ £ £ £ Tangible fixed assets Tangible assets cost 9 149,179,753 140,230,747 1,370,995 1,182,472 Less Depreciation 9 (19,085,357) (17,072,852) (825,928) (508,625) Less Social Housing grant 9 (34,985,386) (33,662,848) - - Other capital grants 9 (823,690) (823,690) - - 94,285,320 88,671,357 545,067 673,847 Investments / Joint Ventures 10

(21,605) (21,349) - -

94,263,715 88,650,008 545,067 673,847 Current assets Assets held for resale 11 308,463 469,558 - - Stock 12 148,015 131,598 - - Debtors 13 1,238,301 1,484,380 173,457 106,607 Debtors due in more than 1 yr 14 18,907,360 22,853,836 - - Non cash investments 52,193 52,193 - - Investments 15 5,903,940 1,610,416 - - Cash at bank and in hand 552,743 583,026 28,815 54,692 27,111,015 27,185,007 202,272 161,299 Creditors: amounts falling due within one year

16 (3,889,396) (4,082,370) (777,269) (835,138)

Net current assets / (liabilities) 23,221,619 23,102,637 (574,997) (673,839) Total assets less current liabilities 117,485,334 111,752,645 (29,930) 8

Creditors: amounts falling due after more than one year

17 102,964,809 100,188,344 - -

Provision for pension liability 20 1,542,000 1,192,000 - - Capital and reserves: Called up share capital 18 103 105 8 8 Revenue reserve 19 12,978,422 10,372,196 (29,938) - 117,485,334 111,752,645 (29,930) 8

These financial statements were approved by the Board of Management on July 2012 and were signed on its behalf by Shena Latto Chair Board Member Jen Hayball Secretary


12

GROUP Cash Flow Statement for the year ended 31st March 2012

Note

2012 GROUP 2011 GROUP Restated 2012 SHL only 2011 SHL only

£ £ £ £ £ £ £ £

Net cash inflow from operating activities

a 10,029,390 7,460,775 157,743 550,629

Returns on investments and servicing of finance

Interest received 6,099 96,977 189 212 Interest paid (3,117,026) (3,084,453) - - (3,110,927) (2,987,476) 189 212 Capital expenditure

Acquisition and construction of housing properties

(10,790,141) (10,818,392) - Proceeds on disposal of fixed assets

12,000 - 12,000 -

Proceeds from sale of Right To Buy properties & miscellaneous land

252,570 (70,622) - Capital grants received

1,499,158 1,825,258 - Purchase of other tangible fixed assets

(259,705) (606,561) (205,801) (577,761)

(9,286,118) (9,670,317) (193,801) (577,761) Financing Principal lease repayments

(69,108) (29,189) 9,992 (5,690)

Net housing loans received b

6,700,000 - - -

Net shares issued 4 7 - - 6,630,896 (29,182) 9,992 (5,690) Increase / (Decrease) in cash

c

4,263,241 (5,226,200) (25,877) (32,610)


13

Notes to the Cash Flow Statement for the year ended 31st March 2012

(a) Reconciliation of operating surplus to net cash inflow from operating activities

2012 GROUP 2011GROUP 2012 SHL 2011 SHL Restated £ £ £ £ Operating surplus / (deficit) 6,203,912 5,066,984 (27,763) (212) Depreciation 2,623,230 2,550,308 331,666 293,389 Decrease / (Increase) in debtors 246,079 (64,390) (66,850) 10,373 Current assets held for resale 161,095 489,809 - - (Increase) in stock (16,417) (4,038) - - Increase / (Decrease) in creditors 461,491 (164,898) (79,310) 247,079 Movement in provisions 350,000 (413,000) - - Net cash inflow from operating activities 10,029,390 7,460,775 157,743 550,629

(b) Reconciliation of net cashflow to movement in net debt

2012 GROUP 2011 GROUP 2012 SHL 2011 SHL £ £ £ £ Increase / (Decrease) in cash in the year

4,263,241

(5,226,200)

(25,877)

(32,610)

Housing loans received (6,700,000) - - - Change in net debt (2,436,759) (5,226,200) (25,877) (32,610) Net debt brought forward (75,656,558) (70,430,358) 54,692 87,302 Net debt carried forward (78,093,317) (75,656,558) 28,815 54,692

(c) Analysis of changes in net debt - GROUP

At 31st March At 31st March 2011 Cash Flow 2012 £ £ £ Investments 1,610,416 4,293,524 5,903,940 Cash at bank and in hand 583,026 (30,283) 552,743 2,193,442 4,263,241 6,456,683 Debt due after 5 years (77,850,000) (6,700,000) (84,550,000) Total (75,656,558) (2,436,759) (78,093,317)


14

Notes (forming part of the financial statements) 1 Accounting policies The financial statements have been prepared in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), and in line with the Statement of Recommended Practice “Accounting by Registered Social Housing Providers” Update 2010 and the Accounting Requirements for Registered Social Landlords General Determination 2006. A summary of the more important accounting policies, which have been consistently applied is set out below. The accounting policies were reviewed by the Performance Committee on 9th May 2012 in accordance with FRS18. Accounting convention The financial statements are prepared under the historical cost convention. Turnover Turnover represents rents and service charges receivable in respect of tenanted properties, residential care charges and amounts invoiced in respect of the provision of management services. Fixed assets and depreciation Other tangible fixed assets are stated at cost and are written down to their residual value over their expected useful life on a straight line basis at the following annual rates: Office equipment, fixtures & fittings - 15% to 25% Plant & machinery - 15% to 25% Vehicles - 25% Housing Properties As required by Financial Reporting Standard 15 and the Statement of Recommended Practice for Registered Social Housing Providers, the Group has reviewed the useful economic lives of its housing properties and with effect from 1st April 1999 depreciates the property costs, less grants, freehold land and residual value. Housing properties in the course of construction are stated at cost and are transferred into housing properties when complete. The cost of properties is their purchase price or construction cost together with enhancement expenditure and other acquisition and development costs, including capitalised interest and directly attributable overheads. Freehold land is not depreciated. Depreciation is charged so as to write down the cost (net of social housing grant) of freehold housing properties other than freehold land to their estimated residual value on a straight line basis over their expected useful economic lives at the following annual rates: Housing Properties – 99 years Major components are treated as separable assets and depreciated over their expected useful economic lives or the lives of the properties to which they relate, if shorter, as the following average annual rates, these are approximate as there are sub-elements under each component: Roofs 60 years Kitchens 15 years Bathrooms 30 years Windows/Doors 20 years Central heating 25 years


15

This represents a change in accounting policy to comply with the 2010 SORP update. This has resulted in a prior year adjustment the effects of which are set out in the notes to the financial statements. Shared Ownership Properties All properties are split between fixed and current assets in line with the expectation relating to the first tranche sale percentage. The expected first tranche proportion is classified as a current asset until the point of the first tranche sale. The current asset is then transferred to cost of sales and matched against sales proceeds within the operating surplus in the Income and Expenditure Account. Any operating surplus is restricted to the overall surplus which takes into account the Existing Use Value-Social Housing (EUV-SH) of the remaining fixed asset element. The remaining element of the asset is classified as a fixed asset and included in housing properties at cost less SHG, less any provision for depreciation or impairment. Impairment The properties are reviewed for impairment annually, and where housing properties have suffered a permanent diminution in value, the fall in value will be recognised after taking account of any related capital gains. In view of the current economic conditions, a full review for impairment has been carried out, looking at revised property valuations, particularly for shared ownership properties. Where a risk of impairment has been identified, external property valuations have been obtained. Social Housing and Other Grants When developments have been financed wholly or partly by social housing and other grants, the costs of those developments have been reduced by the amount of the grant received. Social housing grant received in advance of the costs of housing properties in the course of construction is shown as a current liability. Provision is made in the balance sheet for repayments of social housing grants where it is likely that properties will be sold in the foreseeable future. Stock Stock is stated at the lower of cost and net realisable value. Liquid Resources These represent the total of assets which a business can use immediately to make payments. In general they include cash in hand, in bank, assets that can quickly be changed into cash. Operating leases Rentals payable under operating leases are charged on a straight-line basis over the term of the lease. Interest charges Interest charges represent the actual cost of financing purchased and transferred properties, completed property acquisitions, new developments and major repairs schemes where mortgages and loans have been received from external sources. Capitalisation of interest Interest on the loan financing a development is capitalised up to the date of practical completion, after adjustment for interest received on social housing grant in advance of the relevant expenditure. Interest has been charged at 5.17% per annum.


16

Pension costs Contributions payable to the Group’s pension schemes are charged to the income and expenditure account so as to spread the cost of pensions over the service lives of employees in the schemes. FRS 17 is followed. Taxation The charge for taxation is based on the results for the year and takes into account taxation deferred (or accelerated) because of timing differences between the treatment of certain items for taxation and accounting purposes. Provision is made for deferred tax on a full provision basis. We obtained charitable status confirmation from the HMRC for Meres and Mosses Housing Association from its first day of trading and for South Shropshire Housing Association from 6th August 2007. This is due to HMRC accepting our Charitable Objects. Shropshire Housing Limited and its subsidiary Total Response Limited are still subject to taxation. VAT policy The Group is VAT registered, but a large proportion of its income namely rents, is exempt for VAT purposes. This gives rise to a partial exemption calculation. Expenditure is shown inclusive of VAT and the input VAT recovered is shown in the Income and Expenditure Account. VAT sharing agreement Meres and Mosses Housing Association via the transfer agreement with North Shropshire District Council shares VAT savings arising out of the transfer in equal amounts. The related expenditure is shown gross and the VAT recovered is shown as a credit against capital to identify it separately for future use. Under the terms of the transfer agreement Meres and Mosses Housing Association has contracted to refurbish transferred properties and the amount due to the Association from the work is shown under debtors. The obligation to carry out these works is shown in the provisions for liabilities and charges. Supported People Income and Expenditure Separately identifiable accommodation based rent, service and support charge income along with any related costs for accommodation based supported housing are disclosed under “Supported Housing” within Note 2. Charges for and costs of support services funded under Supporting People are shown under “Supporting People” within Note 2 “Other Social Housing”. Basis of consolidation The Financial Statements consolidated the results of Shropshire Housing Limited, together with its subsidiaries, South Shropshire Housing Association, Meres and Mosses Housing Association and Total Response Limited.


17

Notes (continued) 2 Turnover, operating costs and operating surplus

2012 GROUP 2011 GROUP 2012 SHL only 2011 SHL only Turnover

£

Operating Costs

£

Operating Surplus

£

Turnover £

Operating Surplus

Restated £

Turnover £

Operating Costs

£

Operating Deficit

£

Turnover £

Operating Deficit

£

Lettings 18,936,996 13,157,626 5,779,370 17,953,027 4,487,999 - - - Other Social

Housing: Supporting People 640,001 553,581 86,420 631,978 103,770 - - - Foyer non letting 10,198 10,198 - 13,279 - - - - VAT 31,897 - 31,897 69,319 69,319 - - -

682,096 563,779 118,317 714,576 173,089 - - - Contribution to

pension scheme - (124,000) 124,000 - 413,000 - - - Non social housing

lettings 179,343 27,930 151,413 72,631 31,716 - - - Group activities 4,831,586 (4,859,349) (27,763) 4,256,476 (212) Shared ownership sales 761,170 676,238 84,932 991,900 19,820 - - - - External work TRL 649,141 703,261 (54,120) 736,088 (58,640) - - - - External facilities

management 185,641 185,641 - 196,979 - - - - - External CBL 78,031 78,031 - 103,559 - - - - -

21,472,418 15,268,506 6,203,912 20,768,760 5,066,984 4,831,586 (4,859,349) (27,763) 4,256,476 (212)


18

Notes (continued)

2 Income and expenditure from lettings (continued) - GROUP

2012 GROUP 2011 GROUP Restated

Housing

Accommodation

Supported Housing /

Older People Foyer Refuge Shared

Ownership

Total

Total £ £ £ £ £ £ £ Income

Net Rental Income 15,422,585 1,620,818 43,313 33,100 350,009 17,469,825 16,421,913 Net Service Charges Income 221,077 227,525 67,922 39,452 27,374 583,350 598,101

Charges for Support Services - 41,592 - - - 41,592 39,527 Net rental Income 15,643,662 1,889,935 111,235 72,552 377,383 18,094,767 17,059,541

Revenue grants from Homes & Communities Agency and Local

Authority - 371,418 116,120 108,573 - 596,111 596,945 Aids & Adaptations Grant 162,461 - - - - 162,461 250,884

Other Revenue Grants 7,709 - - 18,120 - 25,829 23,650 Other Income 57,807 - - 21 - 57,828 22,007

Total income from lettings 15,871,639 2,261,353 227,355 199,266 377,383 18,936,996 17,953,027

Expenditure on lettings Management 3,406,618 418,916 68,385 27,878 67,809 3,989,606 3,598,160

Services 508,890 245,776 71,087 54,135 13,294 893,182 776,711 Care and support 82,684 449,975 110,595 90,750 - 734,004 758,282

Routine maintenance 3,446,736 421,984 12,720 5,720 - 3,887,160 4,014,823 Planned maintenance 1,126,873 147,414 - - - 1,274,287 2,041,708

Rent losses from bad debts 186,439 25,252 1,269 1,593 - 214,553 235,366 Depreciation 1,860,533 253,233 10,492 2,040 38,536 2,164,834 2,039,978

Total expenditure on lettings 10,618,773 1,962,550 274,548 182,116 119,639 13,157,626 13,465,028 Operating surplus/(deficit) 5,252,866 298,803 (47,193) 17,150 257,744 5,779,370 4,487,999

Void Losses (162,418) (39,655) (5,188) (27,017) (2,851) (237,129) (174,436)

The supported housing project is property based. The rental income quoted refers to the rental due while the tenant is using the facility.


19

Notes (continued) 3 Interest receivable and similar income

2012 GROUP 2011 GROUP 2012 SHL 2011 SHL £ £ £ £ Interest receivable from bank deposits 11,796 28,821 189 212

4 Interest payable and similar charges

2012 GROUP 2011 GROUP 2012 SHL 2011 SHL £ £ £ £ Net finance charge on pension (note 20) 50,000 96,000 - - On bank loans, overdrafts and other loans repayable - wholly or partly in more than 5 years 3,261,005 3,277,152 - - Less: interest capitalised (128,129) (158,911) - - 3,182,876 3,214,241 - - 5 Surplus / (deficit) on ordinary activities before interest

2012 GROUP Restated 2011

GROUP 2012 SHL 2011 SHL

£ £ £ £ Surplus / (deficit) on ordinary activities before interest is stated after charging:

Depreciation of tangible fixed assets 2,623,230 2,550,308 332,666 293,389 Auditors’ remuneration (including VAT): In their capacity as auditors 44,616 40,789 44,616 40,789 In respect of other services 6,293 6,070 6,293 6,070 6 Staff costs

2012 GROUP 2011 GROUP 2012 SHL 2011 SHL £ £ £ £

Wages and salaries 5,613,556 5,232,218 2,161,455 1,882,530 Social security costs 460,318 404,972 185,022 138,883 Other pension costs 551,553 447,003 264,108 230,785 6,625,427 6,084,193 2,610,585 2,252,198 Average number of full-time equivalent persons employed during the year 230 230

77

74

These were categorised as: Central Support 31 30 31 30 Development 9 9 - - Asset Management 16 14 16 13 Housing 35 35 30 31 TRL 98 97 - - Sheltered/Domestic Support/SP 41 45 - - 230 230 77 74


20

Notes (continued) 7 Directors’ emoluments

The remuneration paid to the Officer and Board Members of the Group (the Board of Management, the Chief Executive, Director of Resources and other Directors) was: 2012 GROUP 2011 GROUP 2012 SHL 2011 SHL £ £ £ £ Total emoluments 455,827 452,268 455,827 452,268 The emoluments of directors disclosed above (excluding pension contributions) includes the following amounts paid: Group Chief Executive 105,426 108,389 105,426 108,389 Group Director of Resources 84,020 95,153 84,020 95,153 Group Assistant Director of Performance & Governance 62,609 60,200 62,609 60,200 Group Executive Director Development and Assets 79,650 76,029 79,650 76,029 Group Executive Neighbourhoods 80,845 74,836 80,845 74,836 412,550 414,607 412,550 414,607 Aggregate amount of directors’ pension contributions 43,276 37,661 43,276 37,661 Fees payable by way of expenses and Remuneration to Board Members 78,500 63,112 78,500 40,050

The Chief Executive is an ordinary member of the pension scheme. No additional contributions to any pension scheme have been made and there were no special or enhanced terms which apply. The employer’s contribution to the pension scheme on behalf of the Chief Executive in 2011/2012 was £19,670 (£2010/11 £19,285). Board members, excluding Meres and Mosses Board members who only received expenses, were paid at the following rates during the year:

Role / Position £ Group Chair 8,275 Group Vice Chair 5,517 Subsidiary Chair 6,047 Subsidiary Vice Chair 3,517 Group Committee Chair 5,517 Subsidiary Committee Chair 3,517 Group Board Member (incl. co-optees) 3,310 Subsidiary Board Member (incl. co-optees) 2,653

Meres and Mosses Board members received payment from April 2012.


21

Notes (continued) 8 Taxation

United Kingdom Corporation Tax

2012 GROUP £

Restated 2011 GROUP

£

Current - - (Credit)/Charge in accounts - - Factors affecting current tax charge for the year: The tax assessed for the year is lower than the standard rate of corporation tax in the UK (30%). The differences are explained below:

Surplus on ordinary activities before tax 3,030,226 1,898,245

Tax on surplus on ordinary activities at 26% 787,858 493,543 Costs not deductible for tax purposes (primarily depreciation of properties) - -

Surpluses arising during period with charitable status (777,468) (513,016) Capital allowances - - Land remediation and adjustments - - Utilisation of tax losses - - Unrelieved tax losses carried forward (10,390) 19,473 Adjustment to tax charge in respect of previous periods - -

- -


22

Notes (continued) 9 Tangible fixed assets – GROUP Freehold

housing properties

Freehold housing

properties in the course of construction

Foyer Office equipment, fixtures &

fittings

Plant and machinery & vehicles

Total

£ £ £ £ £ £ Cost

As at 1st April 2011 116,604,901 7,549,443 1,943,704 1,899,119 391,477 128,388,644 Restated for previous year 11,719,867 - 122,236 - - 11,842,103

Restated opening balance 128,324,768 7,549,443 2,065,940 1,899,119 391,477 140,230,747 Additions 9,300,852 1,079,848 17,261 232,229 38,925 10,669,115

Schemes completed 6,578,638 (6,578,638) - - - - Disposals (1,163,488) (420,082) - (107,812) (28,727) (1,720,109)

At end of year 143,040,770 1,630,571 2,083,201 2,023,536 401,675 149,179,753

Depreciation and impairment

At beginning of year 5,336,741 - 82,207 1,102,198 338,610 6,859,756 Restated for previous year 9,897,110 - 315,986 - - 10,213,096

Restated opening balance 15,233,851 - 398,193 1,102,198 338,610 17,072,852 Charge for the year 2,154,341 - 20,986 405,109 42,794 2,623,230

Eliminated on disposals (488,550) - - (107,812) (14,363) (610,725)

At end of year 16,899,642 - 419,179 1,399,495 367,041 19,085,357


23

9 Tangible fixed assets (continued) - GROUP Freehold

housing properties

Freehold housing

properties in the course of construction

Foyer Office equipment, fixtures &

fittings

Plant and machinery &

vehicles

Total

£ £ £ £ £ £ Social Housing grants

At beginning of year 31,249,775 2,053,103 359,970 - - 33,662,848 Receivable 1,109,470 213,068 - - - 1,322,538

Schemes completed 2,053,103 (2,053,103) - - - - At end of year 34,412,348 213,068 359,970 - - 34,985,386

Other capital grants brought forward 200,000 - 623,696 - - 823,690

At end of year

200,000

-

623,696

-

-

823,690 Net book value At 31st March 2012 91,528,780 1,417,503 680,362 624,041 34,634 94,285,320 At 31st March 2011 91,569,437 5,496,340 968,888 796,921 52,867 88,671,357

Works to existing properties during the year amounted to £6,255,322. This has been accounted for as follows:- Planned maintenance - revenue £1,291,376 Improvements - capital £4,963,946 Assets held under finance leases: £ Cost 31,049 Acc. Depreciation (7,762) NBV 23,287


Notes (continued) 9 Tangible fixed assets – SHROPSHIRE HOUSING LIMITED

Office

equipment, fixtures &

fittings

Plant and machinery &

vehicles

Total

£ £ £ Cost

At beginning of year 1,120,987 61,485 1,182,472 Additions 186,201 31,049 217,250 Disposals - (28,727) (28,727)

At end of year 1,307,188 63,807 1,370,995

Depreciation

At beginning of year 469,694 38,931 508,625 Charge for the year 315,715 15,951 331,666

Eliminated on disposals - (14,363) (14,363)

At end of year 785,409 40,519 825,928

Net book value At 31st March 2012 521,779 23,288 545,067 At 31st March 2011 651,293 22,554 673,847

Assets held under finance leases:

£ Cost 31,049 Acc. Depreciation (7,762) NBV 23,287

24


Notes (continued) 9 Tangible fixed assets (continued) – GROUP ONLY Housing properties and housing properties in the course of construction include £2,392,871 (2011: £2,264,742) of accumulated capitalised interest. Number of units 2012 GROUP 2011 GROUP Under development at end of year: Housing accommodation 15 45 Under management at end of year: Housing accommodation 4,501 4,508 Managed for private landlords 4 4 Commercial units 24 18 4,529 4,530 Disposal of fixed assets 2012 GROUP

£

2011 GROUP

£ Proceeds 12,014 16,868 Cost (136,539) (391,842) Depreciation eliminated on disposal 122,175 391,842 (Deficit) / Surplus on disposal (2,350) 16,868 10 Investments – GROUP ONLY 2012 GROUP 2011 GROUP

£ £ Shares in Joint Venture undertaking: At 1st April 2011 40 40 Addition - -

At 31st March 2012 40 40 In 2005, the South Shropshire Housing Association acquired 40 ordinary shares of £1 each in South Shropshire Local Homes Limited, out of a total of 99 issued. The principal activity of the company in the year under review was that of the provision and sale or rent of affordable housing for local people. Dividends on sale or winding up of the company will entitle the 3 shareholders equal amounts on distribution irrespective of share numbers held. The accounting period is the year ended 31st March.

25


Notes (continued) 10 Investments (continued) – GROUP ONLY South Shropshire Housing Association’s share of the joint venture, South Shropshire Local Homes Limited 2012 2011 £ £ £ £ Share of turnover - - Share of loss before tax (256) (187) Taxation - - Loss after tax (256) (187) Balance brought forward (21,349) (21,162) (21,605) (21,349) Share of assets Fixed assets - - Current assets 389 492 389 492 Share of liabilities Due within one year or less (22,001) (21,848) Due after more than one year-

shares

(33)

(33)

Share of net liabilities (21,645) (21,389) Shares held 40 ordinary £1 shares 40 40 (21,605) (21,349) 11 Assets held for resale 2012 GROUP 2011 GROUP £ £ Shared ownership completed units 220,753 100,958 Shared ownership work in progress 87,710 368,600 308,463 469,558 12 Stock 2012 GROUP 2011 GROUP £ £ Consumable maintenance stock 148,015 131,598 13 Debtors 2012 GROUP 2011 GROUP 2012 SHL 2011 SHL Due within one year £ £ £ £ Gross rental arrears 1,259,708 1,042,885 - - Less: Provision for bad debts (652,583) (500,744) - - 607,125 542,141 - - Prepayments and accrued income 631,176 942,239 173,457 106,607 1,238,301 1,484,380 173,457 106,607

26


Notes (continued) 14 Debtors due after more than one year 2012 GROUP 2011 GROUP £ £ Improvement works 18,907,360 22,853,836 15 Current asset investments 2012 GROUP 2011 GROUP £ £ Cash on short term deposit 5,903,940 1,610,416 16 Creditors: amounts falling due within one year 2012 GROUP 2011 GROUP 2012 SHL 2011 SHL £ £ £ £ Trade creditors 1,795,297 2,069,186 117,241 106,159 Other taxation and social security 164,894 140,232 59,191 47,148 Rent in advance 203,409 180,935 - - Social Housing Grant in advance* 241,902 65,283 - - Accruals and deferred income 1,483,894 1,626,734 600,837 681,831 3,889,396 4,082,370 777,269 835,138 * Includes recycled capital grant £ Opening balance Homebuy 18,750 Grant element of Shared Ownership 176,620 Closing Balance 195,370 It is envisaged that this will be recycled into another capital scheme in 2012. 17 Creditors: amounts falling due after more than one year – GROUP ONLY

Improvement Works Housing loans The Group has a combined borrowing facility of £125,000,000 of which £84,550,000 had been utilised at 31st March 2012 (£40,450,000 undrawn). The facility is for a term of 35 years on both fixed and variable rate terms. The Group is able to choose from time to time to select fixed term borrowing from variable rates. The borrowings are secured by fixed and floating charges over the assets of the Group; variable rates are at LIBOR plus the agreed margin. Fixed rate loans were between 3.83% and 5.8% including margin. 2012

£ 2011

£ Amounts repayable by instalments and not wholly repayable within five years:

Repayable after five years 84,550,000 77,850,000 Refinancing costs

(492,551)

(515,492)

Total

102,964,809

100,188,344

2012 2011 £18,907,360 £22,853,836

27


18 Called up share capital

2012 GROUP

2011 GROUP

2012 SHL

2011 SHL

£ £ £ £ Issued and fully paid shares of £1 each: At beginning of year 105 100 8 8 Issued during the year 4 5 - - Relinquished during the year (6) - - - At end of year 103 105 8 8 The shareholders do not have rights to dividends, redemptions, distributions etc. 19 Reserves GROUP SHL GROUP £ £ At 1st April 2011 8,743,190 - Prior year adjustment 1,629,006 - At 1st April 2011 restated 10,372,196 - Surplus/(deficit) for the year 3,030,226 (29,938) Actuarial (loss)/gain on pension scheme (424,000) - At 31st March 2012 12,978,422 (29,938)

20 Pension obligations The Group’s employees are members of the Social Housing Pension Scheme (SHPS) or the Shropshire County Pension Scheme. Total pension cost for the Group was £551,553 (2011: £447,003) covering 101 (2011: 97) employees. This includes £151,800 (£66,000 in 2011) lump sum payment for the Shropshire County Pension Scheme funding deficit. (a) Social Housing Pension Scheme South Shropshire Housing Association participates in SHPS (the Scheme). The Scheme is funded and is contracted-out of the State Pension scheme. It is not possible in the normal course of events to identify on a consistent and reasonable basis the share of underlying assets and liabilities belonging to individual participating employers. This is because the Scheme is a multi-employer scheme where the Scheme assets are co-mingled for investment purposes, and benefits are paid from total Scheme assets. Accordingly, due to the nature of the Scheme, the accounting charge for the period under FRS17 represents the employer contribution payable. The Trustee commissions an actuarial valuation of the Scheme every three years. The main purpose of the valuation is to determine the financial position of the Scheme in order to address the level of future contributions required so that the Scheme can meet its pension obligations as they fall due.

28


20 Pension obligations (continued) The last formal valuation of the Scheme was performed as at 30 September 2008 by a professionally qualified Actuary using the Projected Unit Method. The market value of the Scheme’s assets at the valuation date was £1,527 million. The valuation revealed a shortfall of assets compared with the value of liabilities of £663 million, equivalent to a past service funding level of 69.7%. The Scheme Actuary has prepared an Actuarial Report that provides an approximate update on the funding position of the Scheme as at 30 September 2010. Such a report is required by legislation for years in which a full actuarial valuation is not carried out. The funding update revealed an increase in the assets of the Scheme to £1,985 million and indicated a reduction in the shortfall of assets compared to liabilities to approximately £497 million, equivalent to a past service funding level of 80%. The next triennial formal valuation of the Scheme is due as at 30 September 2011. The results of the valuation will be available by December 2012. (b) Shropshire County Superannuation fund The Shropshire County Superannuation fund is a local Government Pension Scheme and is a multi-employer defined benefit scheme. The scheme is funded and is contracted out of the state scheme. The last formal valuation of the Scheme was performed at 31st March 2010 by a professionally qualified actuary using the “projected unit credit actuarial cost” method. The market value of the Scheme’s assets at the last valuation date was £951 million. The valuation revealed a Past Service deficit of some £226 million (equivalent to a past service funding level of 81%). The share of fair value of assets at 31st March 2010 (last full actuarial valuation) was as follows: £’m Equities 495 Bonds 238 Other 218 Market Value 951 Past Service liabilities (1,177) Past Service deficits (226) South Shropshire Housing Association paid contributions at the rate of 20.2% during the accounting period which is also set for the next 2 years. Member contributions vary between 5.9% and 7.5%. We additionally pay the lump sum of £151,800 which is set for the next 2 years. Meres & Mosses Housing Association paid contributions at the rate of 15% during the accounting period. Member contributions vary between 5.9% and 7.2%. The employer contribution rate was set at 15% for the next 2 years. Financial assumptions A qualified independent actuary, Mercer Limited, carried out an actuarial valuation at 31st March 2012 for disclosure purposes. The major assumptions used were: 31 March 2012 31 March 2011 Rate of CPI inflation 2.5% 3.4% Rate of increase in salaries 4.0% 4.4% Rate of increase in pensions 2.5% 2.9% Discount rate 4.9% 5.5%

29


20 Pension obligations (continued) South Shropshire Housing Association & Shropshire Housing Limited The assets of the scheme and the expected rate of return were: Rate of return

expected at 31st March 2012

Value at 31st March 2012

£’000

Rate of return expected at

31st March 2011


£’000 Equities 7.0% 1,269 7.5% 1,470 Bonds 4.1% 249 5.1% 226 Government bonds 3.1% 345 4.4% 257 Property 6.0% 86 6.5% 86 Cash liquidity 0.5% 115 0.5% 115 Other 7.0% 331 7.5% 102 Total market value of assets 2,395 2,256 i) Liability and funding status under Financial Reporting Standard 17 of South Shropshire

Housing Association’s part of the fund. 2012

£’000 2011

£’000 Plan assets 2,395 2,256 Benefit obligations (3,297) (3,097) Deficit in scheme (902) (841)

ii) Analysis of the amount which has been charged to operating surplus under Financial

Reporting Standard 17 2012

£’000 2011

£’000 Current service cost (46) (49) Employer contribution 197 112 Total operating charge 151 63

iii) Analysis of the amount which has been charged to interest costs under Financial Reporting

Standard 17 2012

£’000 2011

£’000 Expected return on assets 132 128 Interest on liabilities (169) (184) Net return (37) (56)

iv) Analysis of amount which has been recognised in the statement of total recognised

surpluses and deficits (STRSD) 2012

£’000 2011

£’000 Asset (loss) / gain (82) (19) Liability (loss) / gain (93) 173 Changes in assumptions underlying the present value of the scheme liabilities -

-

Actuarial (deficit) / surplus for recognition in the STRSD (175) 154

30


20 Pension obligations (continued) v) Movement in Financial Reporting Standard 17 deficit during the year

2012 £’000

2011 £’000

Deficit at the beginning of the year (841) (1,179) Restated - - Movement in year: - Past service loss - 177 - Current service cost (46) (49) - Contributions 197 112 - Net return from other financial income (37) (56) - (Deficit) / Surplus in STRSD (175) 154 Deficit at the end of year (902) (841)

vi) History of experience surpluses (deficits) calculated under Financial Reporting Standard 17

2012 £’000

2012 As a % of Scheme assets/

liabilities Asset (loss) Change in assumptions (82) 3.4% Experience gain on liabilities (93) 2.8% Total amount recognised in the STRSD (175) 5.3%

Meres & Mosses Housing Association The assets of the scheme and the expected rate of return were: Rate of return

expected at 31st March

2012


£’000

Rate of return expected at

31st March 2011


£’000

Equities 7.0% 1,697 7.5% 1,983 Bonds 4.1% 333 5.1% 304 Government bonds 3.1% 461 4.4% 347 Property 6.0% 115 6.5% 116 Cash liquidity 0.5% 154 0.5% 155 Other 7.0% 442 7.5% 137 Total market value of assets 3,202 3,042 vii) Liability and funding status under Financial Reporting Standard 17 of Meres & Mosses

Housing Association’s part of the fund. 2012

£’000 2011

£’000 Plan assets 3,202 3,042 Benefit obligations (3,842) (3,393) Deficit in scheme (640) (351)

31


20 Pension obligations (continued) viii) Analysis of the amount which has been charged to operating surplus under Financial

Reporting Standard 17 2012

£’000 2011

£’000 Current service cost (147) (163) Past service cost curtailment loss - - Total operating (charge) (147) (163)

ix) Analysis of the amount which has been charged to interest costs under Financial Reporting

Standard 17 2012

£’000 2011

£’000 Expected return on assets 177 133 Interest on liabilities (190) (173) Net (charge) / return (13) (40)

x) Analysis of amount which has been recognised in the statement of total recognised

surpluses and deficits (STRSD) 2012

£’000 2011

£’000 Asset (loss) / gain (109) 496 Liability (loss) / gain (140) (195) Changes in assumptions underlying the present value of the scheme liabilities -

-

Actuarial (deficit) / surplus for recognition in the STRSD (249) 301

xi) Movement in Financial Reporting Standard 17 deficit during the year

2012 £’000

2011 £’000

Deficit at the beginning of the year (351) (785) Restated - - Movement in year: - Past service loss - 222 - Current service cost (147) (163) - Contributions 120 114 - Net return from other financial income (13) (40) - (Deficit) / Surplus in STRSD (249) 301 Deficit at the end of year (640) (351)

32


20 Pension obligations (continued) xii) History of experience surpluses(deficits) calculated under Financial Reporting Standard 17

2012 £’000


liabilities

2011 £’000


liabilities Asset (loss) / gain (109) 3.4% 496 16.3% Change in assumptions - - - - Experience (deficits) / gain on liabilities (140) 3.6% (195) 5.7% Total amount recognised in the STRSD (249) 6.5% 301 8.9%

21 Capital commitments – GROUP ONLY

2012 2011 £ £ Capital expenditure contracted for but not provided in the financial statements

2,553,930

957,678

Capital expenditure authorised by the Board of Management but not yet under contract

7,281,961

2,772,000

The Board of Management expects the expenditure it has authorised to be fully financed by a combination of Social Housing Grant, private loan finance, or from the Group’s own funds. There is a formal borrowing facility in place with Newcastle Building Society, The Royal Bank of Scotland plc and Shropshire Council to fund all planned capital expenditure requirements for South Shropshire Housing Association. For Meres & Mosses Housing Association a formal borrowing facility is in place with Lloyds TSB plc to fund all planned capital expenditure requirements. 22 Other financial commitments

The Group and Association were committed to making the following annual payments under non-cancellable operating leases: Operating leases which expire:

2012 GROUP £

2011 GROUP £

2012 SHL £

2011 SHL £

Property Plant Total Total Property & Total

Property & Total

Within 1 year 9,000 86,859 95,859 87,961 9,000 - 1 - 2 years - 67,161 67,161 27,774 - - 2 - 5 years - 6,371 6,371 38,535 - - over 5 years - - - 97,027 - - 9,000 160,391 169,391 251,297 9,000 -

33


Notes (continued) 23 Contingent liabilities – GROUP ONLY

South Shropshire Housing Association has been notified by the Pension Trust of the estimated employer debt on withdrawal from the Social Housing Pension Scheme based on the financial position of the Scheme at 30th September 2011. As of this date the estimated employer debt for South Shropshire Housing Association was £6,919,296. This has not been provided for, as no such decision has been taken. 24 Legislative provisions

The Group consists of four members: 1) Shropshire Housing Limited, which is incorporated by the Financial Services Authority under

the Industrial and Provident Societies Act 1965, registered no 30269R, and is also registered with the Homes & Communities Agency in accordance with the Housing and Regeneration Act 2008, registered no L4494;

2) A wholly owned private limited company Total Response Limited, company number 6178863; and two subsidiaries

3) South Shropshire Housing Association (incorporated under the Industrial and Provident Societies Act 1965. Registered No. 27191R and also registered with the Homes & Communities Agency in accordance with the Housing and Regeneration Act 2008, Registered No. LH 3943) The Association has charitable objects with effect from 6th August 2007, reference XT4981;

4) Meres & Mosses Housing Association (incorporated under the Industrial and Provident Societies Act 1965. Registered No. 30241R and also registered with the Homes & Communities Agency in accordance with the Housing and Regeneration Act 2008, Registered No. LH4493. The Association has charitable objects with effect from first day of trading, reference XT4980.

The entity has taken advantage of FRS 8 exemption from disclosing certain intra-group transactions. 25 Related Party Transactions Marches Housing & Charitable Trust (MHCT), which is a registered charity, was registered on 9th December 2003, having an accounting reference date of 30th June. The activities of Marches Housing & Charitable Trust were raising funds for the relief of poverty, sickness and old age and to advance education and provide leisure facilities in Shropshire and other specified areas. Marches Housing & Charitable Trust has more recently reviewed its objectives to include promotion of social and financial inclusion building of community capacity in partnership with the local community and local agencies. Some of the trustees are our Board Members and the Secretary is a member of the Shropshire Housing Limited staff. The decision was taken during the year to return the unused portion of SSHA funded money of £29,095.92 in September. The remaining money is being used on projects at the discretion of SSHA staff. It has since been decided that MHCT will not be wound up as a charity but will be re-launched under a different name with different trustees and objectives. There is no intention for SSHA to provide financial support in the future. In the year to March 2012, South Shropshire Housing Association paid out £3,082 of donations on behalf of grants approved by Marches Charitable Trust.

34


Any tenants who sit on the board of South Shropshire Housing Association are charged for rent and other services on normal business terms. Board members who are appointed by councils do not affect the way we receive any grants; they are all at arm’s length. Members who are involved with any business with whom we trade have to declare their interests and take no part in the letting of any contracts involving the same. Shropshire Housing Limited is one of the funding members of CHIC, the Central Housing and Investment Consortium. In 2012 we paid in £24,000. CHIC has been set up to deliver efficiencies in buying through bulk discounts. The founding members should be able to recoup some of the initial spend, should members join at a later date. 26 Prior Year Adjustment Shropshire Housing Group has adopted the Statement of Recommended Practice (SORP): Accounting by “Registered Social Housing Providers” Update 2010 in this current year ended 31st March 2012. This has resulted in the provisions for component accounting being implemented this year. Major components are now treated as separable assets and depreciated over their expected useful economic lives or the lives of the properties to which they relate, if shorter. Significant costs referring to the replacement of major components were previously treated as revenue expenditure. Comparative figures have been restated to reflect this change of accounting policy.

Cumulative effect to 31 March 2010

Prior year adjustment 2010/2011

Cumulative effect to 31 March 2011

Balance sheet Reserves – revenue reserves 2,723,316 (1,094,310) 1,629,006 Income and expenditure account

Increase in operating costs 1,094,310 Reduction in operating surplus (1,094,310)

35

Financial Statements SHG

Documents

Transcript of Financial Statements SHG