YOUR HOUSING GROUP LIMITED Report and Financial Statementss3-eu-west-1.amazonaws.com/24jobs-recruiters/5/YHG Financial Statements... · YOUR HOUSING GROUP LIMITED Report and Financial

YOUR HOUSING GROUP LIMITED

Report and Financial Statements

Year ended 31 March 2013

Industrial and Provident Society registration number: 30666R

Home and Communities Agency registration number: L4203

YOUR HOUSING GROUP LTD

CONTENTS Page

Board and Senior Officers 2

Introduction from the Chair and Chief Executive 3

Report of the Board 4

Operating and Financial Review 10

Statement of the Responsibilities of the Board for the Financial Statements 19

Annual Review and Internal Control Statement 20

Independent Auditor's Report .22

Group Income and Expenditure Account 23

Group Statement of Total Recognised Surpluses and Deficits 23

Association Income and Expenditure Account 24

Group Balance Sheet 25

Association Balance Sheet 26

Group Cash Flow Statement 27

Notes to the Financial Statements 28


REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2013

BOARD AND SENIOR OFFICERS

Board of Management

Non-Executive Kathy Cowell DL Mark Tattersall BSc, FCMA John Eccles Lynn Foster MIPD, MA Gordon Ibbotson FCT,MA, Dip BA, PhD Margaret Lloyd BA Kevin Stewart BSc, MRICS Neil Singleton aBE Mavis Wareham LB, FCIPD Patrick Sharman FCA

Executive

Brian Cronin BA, FCCA Michelle Gregg BA (Hons), PG Dip Hsg, PG Dip L'ship

Senior Officers Simon Morris BSc (Hons), ACA Stephen O'Connor BSc, MRICS Stephen Haigh HNC CDM

Sarah Eglin BS (Hons), PG Dip HRM,

MCIPD

Company Secretary Bronwen Rapley LLB (Hons)

Treasury Consultant to the Board Adrian Jolliffe

Bankers

Group Chair Deputy Group Chair

Chief Executive Deputy Chief Executive / Executive Director - Operations

Executive Director - Resources Executive Director - Growth Interim Executive Director - Growth & Development Executive Director - People

David Tolson Partnership

Royal Bank of Scotland, Ashton House, P a Box 666, Waterloo Street, Bolton, BL18FH

Auditors KPMG, St James Square, Manchester, M2 6DS

Registered Office Apex House, 266 Moseley Road, Levenshulme, Manchester, M19 2LH

2

Deceased 26 March 2013

Resigned 5 August 2013 Resigned 30 July 2013 Appointed 8 March 2013

Resigned 5 July 2013


INTRODUCTION FROM THE CHAIR AND CHIEF EXECUTIVE

We have much to be proud of following our first year after merger. With over 33,000 homes throughout the North West of England, West Midlands and Yorkshire, the size and influence of the Group means we now have increased financial strength and stability. We are now even better equipped to deliver our vision of transforming lives and communities through the investment of our resources.

Our business and governance models put customers at the heart of our business. We have set up a new Community Governance structure to ensure that customers have real influence on our business direction and the ability to scrutinise our performance at a local level. Further details of the new structure are found in the Governance section of these accounts. The customer satisfaction survey carried out this year indicates that customer satisfaction has improved by 2%, a result we are very proud of.

One of the critical pieces of work carried out this year, which community governors have had the opportunity to influence, was developing our business objectives and supporting strategies. We now have a clear and well informed business direction with an executive and a non-executive appointed to take responsibility for driving each strategy forward.

The organisation has undertaken a considerable amount of work to enable the new operating model to be implemented which brings together the two former organisations and their subsidiaries. By the end of the year we had achieved what we set out to do in terms of creating a new operating model. The new operating model affects both the operational delivery of services to customers and residents as well as the internal aspects of the business that support our key business drivers . The next 9 months will see the remaining parts of the Group join the new operating model which will achieve the Group objective of delivering highly valued services across our organisation.

It will not surprise readers of these financial statements to learn that we continue to work in a challenging operating environment in terms of the resources available and the economic climate in general. What is pleasing to note is that the Group's flexibility and financial strength enabled it to meet and in many cases exceed what we set out to do in the detailed business case for merger.

Here are some headline facts and figures which demonstrate our strong performance:

• Group turnover has increased by E7.2m to £159.0m this year • The Group has a development programme of affordable homes totalling 1329 units plus a

further 129 units available for open market sale

• Savings of around E2m have been made in the first year of merger, when the detailed business case did not plan to make any savings in the first year

• Turnaround of empty properties reduced from 19 to 15 days, saving around E250k

In summary, we believe that the Group is well placed to continue to deliver high quality services to its customers. We are confident that we will weather the uncertainty that the ever changing operating environment brings. We commend to you the financial statements for the year to 31 March 2013 and look forward to continued strong performance in the year ahead.

Kathy Cowell Group Chair

Brian Cronin Chief Executive

3


REPORT OF THE BOARD

The Board presents its report and the audited financial statements for the year ended 31 March 2013.

PRINCIPAL ACTIVITIES

Your Housing Group Limited (lithe Group") is the parent body and service provider to member organisations of Your Housing Group which operate throughout the North West and parts of Staffordshire and West Yorkshire. The Group's core business is the letting of affordable housing and the provision of services which transform and benefit the communities it serves. It also develops homes for rent and sale and has a significant build programme.

In April 2012, Arena Housing Group and Harvest Housing Group merged to form Your Housing Group. The Group is now half way through a 2 year transition programme. The conclusion of the programme will see all entities and staff in the Group operating in a consistent manner which both reflects best practice and the fact that we are 'stronger together'. The following diagram shows the legal structure of Your Housing Group'

Frontis Homes

Outlook Homes

Moorlands Housing

Tung Sing

Your Housing

Group ~haritable 1&1

RP

J Arena

Housing Group

Derwent & Solway

Leasowe Community

Homes

I Headrow Arena

Future

A full list of Group entities can be found in note 28 to these accounts.

GOVERNANCE

Governance Practicalities

I

Manchester & District

Partington

Ascent

The Group operates a Common Board structure for the parent and three largest stock owning entities in the Group, namely:

• Your Housing Group Limited • Arena Housing Group Limited • Manchester & District Housing Association Limited

• Frontis Homes Limited Other subsidiaries retain their own independent boards.

Information about individual non-executive remuneration can be found in note 11 to the accounts.

4


Governance Strategy A Governance Strategy has been agreed by the Group Board and establishes plans to rationalise the legal structure in a phased manner over the coming 5 years. Phase 1 will seek to rationalise the non stock owning entities and phase 2 will work towards collapsing the Common Board entities. Existing stock owning subsidiaries are likely to remain in place for the medium term.

Average attendance at Board meetings during the year was 86%. The Chair monitors attendance of individual Board Members.

Governance Structure The Group's governance structure, like the operating model, reflects operation as a single organisation. The four sub committees of the Board - Audit & Risk, Members & Staffing, Operating Board and Growth, operate on behalf of the whole Group. The Group has also embraced the concept of co-regulation with customers, this is outlined in more detail in a later section.

The governance structure is demonstrated in the following diagram:

<0our Governing Outcomes for

Customers & Residents

YHG Operational Leadership Team and Staff

Does the 'doing' of running and supporting the organisation against

The strategic framework

Day to day management of the business is delegated to the Executive Leadership Team. All Registered Providers of Social Housing within Your Housing Group have adopted and comply with the National Housing Federation Code of Excellence in Governance.

CO-Regulation in Practice Following merger, the Group wished to encourage a greater degree of resident involvement in its decision making. It also sought to weave co-regulation into its core governance framework. For these reasons a Community Governance structure was established which links in with our subsidiary boards. This structure enables residents to monitor local performance and have significant influence in shaping the Group's overall business strategies. The Community Governance Groups (CGGs) and subsidiaries cover the following geographic areas and customer segments:

5


Community Governance

~.i2.§ - geOgraPhiC)

An Operating Board, comprising elected representatives from each of the Community Governance Groups and the five subsidiaries, was established in September 2012. The Operating Board facilitates a formal line of communication between the Group Board and Community Governance framework. This provides an effective mechanism for strategic consultation with customers and ensures that customer and community needs remain at the heart of everything we do by ensuring operational and performance and objectives are met.

A Scrutiny Committee has been set up to support the Community Governance structure. It consists solely of resident members who are not formally involved in any other aspect of the Group's governance. The Committee scrutinises service delivery at Group level, directs the Resident Inspectorate and monitors delivery of service standards.

Operating model The legal structure of the organisation is undoubtedly that of a Group, but a conscious decision was made prior to merger to select an operating model which allowed the Group to operate as one organisation. For this reason there are two core areas which operate centrally providing services to all parts of the Group:

The first core area is Your Response - a shared service centre providing the first point of contact for customers and residents. Your Response is able to process a large volume of transactional activities (e.g. phone queries, rent statements) to maximise efficiencies for the Group.

The second core area is Group services which are provided from Head Office. This includes the Executive team along with Finance, Governance, Human Resources, Development and ICT.

The final piece of the operating model jigsaw is the work done in our communities. Local services including letting properties and supporting tenancies are delivered to communities from their local office. These are supported by the Property Team who work closely with local staff and customers to ensure appropriate investment is made into our properties as well as repairs being carried out.

We also have specialist Supported, Older Persons and Non Social Housing teams. These operate across the whole Group but are managed centrally to ensure expertise and best practice is shared consistently.

6


Key benefits of this operating model include: • Staff based in communities are able to focus on their interaction with customers and develop

flexible and tailored responses to neighbourhood management issues.

• Economies of scale are generated as fewer specialists are needed centrally to provide Group wide services.

• Investment is made into central services to ensure that they are specialised and high quality. • Customers and employees can expect consistent service provision across the Group.

• Services are delivered in a way which meets the expectations of the customers and that can be flexible and can adapt to changing demands

Your Housing Group Brand We have launched new branding this year to ensure 'Your Housing Group' raises its profile with both community and business customers. Customers of the Common Board entities listed above will all receive services from Your Housing Group rather than the individual landlord. New brand names have also been launched as follows:

• Your Derwent & Solway

• Your Eavesbrook • Your Moorlands

• Your Partington

As the operating model continues to roll out, the Group's local identities will be updated to reflect the new brand.

PEOPLE

People Strategy

People are at the heart of Your Housing Group, and our success in delivering services to our customers relies on the commitment, passion and performance of our people. As our ambassadors; they protect and promote our reputation and are key to enabling and enhancing our customer experience.

In the first year following merger, we have achieved an enormous amount. A large portion of the organisation needed to go through a change in staffing structure. To date, 61% of staff who fell within this scope have been consulted, the remainder will be completed by September 2013.

The current focus for staff, particularly managers, is how to translate the overarching business strategy into reality and how that will help to shape our business culture.

Our People Strategy has been agreed by the Group Board and contains phased plans which support our strategic objectives. Key areas of focus are :

• Ensuring we have the right people and structures to deliver our strategies now and for the future

• Having an engaged and passionate workforce who are enthusiastic and performing

• Ensuring both current and future employees are advocates for YHG as an employer • Protection from reputational issues by ensuring legal requirements are complied with

• Creating a flexible and simple people service which is value adding and collaborative.

Culture We encourage a culture of openness and collaboration where ambition, performance and enthusiasm are recognised . Our ability to take pride in both the achievements of ourselves and others is second nature.

This year we have launched our internal brand, our 'People Promises'. These demonstrate our commitment to our people and are aligned to our values and strategies.

7


A new performance and development process has been established, ensuring all objectives set will be aligned to business drivers as well as our values, behaviours and People Promises. This will ensure they meet both our strategic and cultural intent.

When we recruit, we are committed to ensuring opportunities are offered in an equal and fair way. We appreciate the value of having a diverse workforce to reflect the communities we serve.

Business Operating model

The new operating model is explained in detail above. From a People perspective, our approach has been to engage and consult with staff, residents and relevant governance groups to achieve a successful adoption of the new operating model.

We recognised the challenge presented by implementing a new operating model and have supported our people through the merger period to ensure they are able to make the best choices about their future.

BUSINESS STRATEGY

Strategic Intent

The Group Board approved its business strategy for the next 5 years in March 2013.

We have simplified our strategic intent into five key areas. Customers are at the core of our mission and will be our primary focus, supporting that are key actions around developing new homes for future customers, developing our people so that they can deliver our ambitions, creating value to invest in our future and creating a best in class governance system that holds the strategic vision and tests it against our values.

The following diagram shows how the business strategy fits together:

8


The table below gives a summary of progress in each of the key areas of the Strategic Business Intent. The Group has 13 supporting strategies all of which have one year implementation plans. We will continue to review our strategies in light of changes in the operating environment to ensure we are placed to respond to emerging risks and opportunities.

Customers People Value Governance Growth

Achievements this • Young People • People • Finance • Governance • Growth year - Strategies have • Financial Inclusion • Employment and Skills • Property Asset • Risk • Information been developed in the • Health and Wellbeing Management • Older People areas listed. • Operations

Plans for the future • Continue to consult with and • To seek • Work with key listen to young people Retaining and attracting talent • Embed a robust and continuous stakeholders and

• Review and develop innovative through our People Promise commercial financial improvement partners to deliver a

financial products and services • Identify further approach and range of tenures and

• Recruit Health and Wellbeing opportunities to help our • Strategic review of development of housing options

champions residents get into work; our Repairs service our approach to • Support new and

• Seek to ensure strategic develop their skills, self-regulation innovative ways of

partnerships are established, confidence and self-esteem. • Develop a truly working

maintained and supported to risk aware • Review of shelt ered deliver outcomes for our culture within housing provision customers

--"------the Group

- --- --- -- -----

Signed by the (h,I" K,thy (owell, on beh,lf ofthe Bo"do .... ~ .. ~ ............ . Date: .5?:?..::-.. 9. .. 5. :: .\~.

9


OPERATING AND FINANCIAL REVIEW

External Environment Summary

Your Housing Group recognises the challenges and opportunities that the current economic climate brings and our approach to innovation, together with our vision and values, is enabling us to respond to these changes for the benefit of our residents.

Your Housing Group faces the following key challenges: • The uncertain economic outlook will have continuing implications for our tenants' job prospects

and disposable incomes • The economic situation may affect rates and terms for any borrowing by the Group, especially if

UK banks are adversely affected by the Euro zone crisis

• The changing nature of and pressures on local housing markets will require the Group to identify both gaps in provision and development opportunities (including in the private rented sector) as well as areas where weak markets constitute a risk

• The changing approaches of the Homes and Communities Agency to development and regulation need to be considered, especially in view of the intention to introduce a more proactive approach to economic regulation, to develop the emphasis on VFM, and to concentrate attention on how registered providers are dealing with risk

We also recognise that as public bodies are being forced to consider new ways of working and delivering services, this could open up new opportunities for the Group, including bringing empty homes back into use.

Risk and Uncertainties We recognise that we continue to operate within a challenging political and economic environment and see effective risk management as a critical management tool to guide the organisation through these challenges. Our Risk Management Strategy and supporting methodology, together with establishing a Risk Strategy Group, ensures we are well placed to identify, respond to and manage risk.

The resources available for managing risk are finite and so our aim is to achieve an optimum response to risk, priorities in accordance with our evaluation of the probability and potential impact of a risk occurring. The Group has established an appropriate risk appetite which determines when a response to risk is sufficient and when it is not, ensuring that resources are always used to the best effect.

We consider that the key risks that will continue to present us the key challenges and required effective control over the next 12 months are:

RISK

Welfare Reform:

• Housing Benefit and other welfare reforms will affect many tenants and could impact on the Group's cash-flow - major changes are being introduced at the moment the impacts of which need to be monitored but further changes to the welfare system are threatened

- increase in rent arrears across the Group - negative social impact on our communities from the depressed economic climate - reduction in funding and/or resource support from external agencies - reputational issues may arise from the impact on our residents

10

OUR RESPONSE

We have: - undertaken extensive analysis of the potential financial impact - our Welfare Reform Project Group has coordinated our response to the risks including : Identifying 'at risk' customers and targeting our communication with them Prioritising our investment in our Money Advice & Tenancy Support services Building on the existing relationships with key Local Authority partners Reviewing and revising our Community / Neighbourhood Plans Reviewing and revising all the Group's strategies including our Rent Policy & Financial Inclusion


- demand issues, including the number and cost of empty properties arising from changing market needs.

On-going government budget reductions and changes to the spending priorities. Local Authority funding reductions and those reductions in funding to Supporting People commissioning authorities. • Given the scale of local cuts, the Group

recognises the need to keep the impact of public spending cuts under review and will identify any action that it can take to mitigate the impacts - this particularly applies in the areas of social care and Supporting People where some councils are now finding themselves under extreme pressure

Note that with these economic pressures we recognise that there is the potential that the Group is required to 'fill the gaps' which may in turn bring opportunities for new services that we can provide to our communities. Failure to identify and understand the financial and operational impact of pursuing diverse growth opportunities at a time when our Regulator needs assurance that social housing assets are protected.

Failure to deliver our core services to residents and optimise customers satisfaction levels against a back drop of significant financial pressure for both organisations and individual customers.

FINANCIAL REVIEW: Performance in the Period

Strategy Completing detailed Project Appraisals and Business Cases to ensure that the Group's resources are focussed on optimising outcomes The Group has short, medium and long term financial plans and continues to demonstrate strong cash flow management adopting prudent financial assumptions. The Group Board continues to receive regular reports around the impacts on services and cash flow and financial monitoring.

Our strategies set clear directions, together with careful resource planning and project appraisals. Our approach to securing future funding recognises the need to 'ring fence' our social housing assets and secure the future of our core services. The Growth Committee continue to monitor and challenge proposed activities and ensure we achieve a balanced portfolio. We have established 13 Strategies and 6 Business Drivers that will ensure all activities are focussed on delivering core outcomes for our residents. Regular performance reporting to Group Board, Operating Board and the Executive Leadership Team.

Our financial strategy is to deliver strong financial governance to allocate financial resources and capacity that can be invested to create value for our customers, communities and stakeholders. To continue to be a financially robust and commercially innovative social business; recognising that the generation of cash resources is fundamental to enable investment in our communities.

This is reflected in the Group's continued strong financial performance during a period of exceptional organisational change. For the year ended 31 March 2013 the Group reports an increased turnover of 4.7% to £lS9.0m (2012 : £lSl.8m), including a 2.3% increase in turnover from social housing lettings.

The surplus (excluding restructuring costs) before taxation has decreased 3.0% to £l2.8m (2012: £13.2m), however, this includes an additional £l.2m of major repairs and maintenance expenditure during the year.

Net interest payable remains stable and broadly in line with the previous year at £l8.0m (2012 : £l7.9m).

11


Income and Expenditure

The table below summarises the Group's surplus before taxation since 2008/09

(SORP 10) Income and Expenditure 2012/13 2011/12 Restated 2009/10 200S/09

2010/11

fm fm fm fm fm

Total turnover 159.0 151.S 150.0 143.3 129.1

Operating costs and cost of Sales (12S.5) (121.5) (126.1) (119.5) (10S.0)

Restructuring costs (4.7) - - - -

Share of joint venture operating loss - (0.1) (0.2) (0.2) (0.1)

Operating surplus 25.S 30.2 23.7 23.6 21.0

Surplus on disposal of property 0.3 0.9 1.6 1.4 loS

Surplus on ordinary activities before

interest and taxation 26.1 31.1 25.3 25.0 22.S

Net interest payable (lS.0) (17.9) (17.7) (lS.7) (19.9)

Surplus for the year before taxation S.l 13.2 7.6 6.3 2.9

Financial Ratios

Operating Margin 16% 20% 16% 16% 16%

Interest Margin 11% 12% 12% 13% 15%

Balance Sheet

The table below summarises the Groups year-end financial position since 2008/09 (SORP 10)

Balance Sheet 2012/13 2011/12 Restated 2009/10 200S/09 2010/11

fm fm fm fm

Tangible Assets (net of grants & 628.2 613.5 591.2 607.9

depreciation)

Net current assets/ (liabilities) 82.8 38.4 25.9 0.9

Total assets less current liabilities 711.0 651.9 617.1 60S.S

Loans due after more than one year 495.2 443 .9 412.6 393.8

Other Long Term Liabilities 8.6 9.3 7.0 12.7

Reserves 207.2 198.7 197.5 202.4

711.0 651.9 617.1 60S.S

Financial Ratios

Net Gearing 71% 69% 68% 67%

The comparatives for both Income and Expenditure and Balance Sheet have been restated and represent the aggregate of Arena Housing Group and former Harvest Housing Group.

12

fm

589.7

(4.1)

5S5.6

375.7

4.9

205.0

5S5.6

65%


Treasury Management

Borrowings: As at 31 March the Group had total borrowings of £497.13m (2012: £444.48m), with a further £36.08 m of committed unutilised available loan facilities (2012: £21.58 m). Group borrowings mainly comprise long term committed bank loans together with a small element of long term bond market club issues and are mainly repayable on a conventional capital and interest basis.

G roup Borrowings

The Group provides treasury management services to all subsidiaries. Effective treasury risk management is crucial to both financial performance and balance sheet stability, and is operated centrally in accordance with Board approved objectives and operating parameters, which are set out in the Group Treasury Policy and the Group Treasury Strategy. Key issues that the Policy and Strategy seek to address are funding and liquidity risk, interest rate risk, covenant compliance and exposure to counterparties. Regular updates on all treasury activities are given to the Group Board. Our approach to funding is designed around impending changes of the regulatory focus of securing social housing assets.

Financing risk: The Board has adopted a Funding Plan that aims to ensure that it has sufficient available resources at all times to meet its short and medium term funding needs. The Group has recently borrowed £35m for Arena from Royal Bank of Scotland under the Government's Funding For Lending Scheme and has 2 years forward funding already in place across the Group.

Net Interest Payable

. 2012

12013

Interest rate risk: Net interest payable in the year (interest paid less interest capitalised in respect of development and interest received) increased to £18.0 m (2012: £17.9 m). The Group borrows at both fixed and floating interest rates and uses a range of f inancial instruments to manage its interest rate risk including index linked and variable to fixed interest rate swaps. The proportion of loans on a fixed rate has been temporarily kept low to take advantage of low variable interest rates. Interest rate markets are monitored daily and the Treasury team is able to

act swiftly to switch to fixed rates if this should change. The Board has agreed that the portfolio could be increased to 85% fixed rate if interest rates start to rise. The Treasury Strategy is carefully tailored to meet the needs of the individual subsidiaries and the Group overall, it is tested by business plan sensitivities and evolves through a process of regular review and refinement .

Liquidity risk: The Group maintains at least 12 months liquidity for each developing subsidiary. Liquidity comprises a mixture of cash and committed loan facilities available to draw down. It is managed centrally and totalled £112.1m (2012: £56.2 million) at the year-end. The Group spreads its counterparty exposure by using a range of highly rated investment counterparties and AAA rated money market funds. It regularly monitors their credit ratings and has withdrawn funds where a credit rating falls below the minimum acceptable level.

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liquidity

• Committed undrawn

-Cash

• F ixe d

. Va r iab le

• Index Linked


Gearing

a 2013

Legal and regulatory risk The Group has a range of loan

covenants across its subsidiaries. The covenants are

performance related and measure operating surplus /

operating cash flow in comparison to total interest payable,

debt per unit and net worth. The ratios are tested on

annual basis and the Group met all covenants throughout the year for all loans and this is forecast to continue

indefinitely. Where financial covenants have been affected

by the introduction of component accounting changes have

been agreed with the affected lenders.

64% 66% Operational performance

During the first year of Your Housing Group, we continued to operate different processes across the

2 legacy organisations and we retained different targets across the newly merged organisations

against which we have monitored performance. This year of transition has required us to work

towards a single set of performance indicators which we have completed in consultation with

Boards, Community Governance Groups and our Leadership Team.

The following graph shows some of Your Housing Group's key performance for 2012-13 shown for

both 2 legacy organisations:

Note that former Arena performance is shown first, followed by former Harvest performance.

Arrears %

ALL TARGETS MET

Void Rent Loss %

ALL TARGETS MET

Re-Iet Days

ALL TARGETS MET

Satisfaction with repairs

Resident

Satisfaction Group

Decent Homes

Standard

Actu al 4 .1% v Ta rget: 4.4 %

Act uaI 2.9% vTarget : 3.0 %

O~% 1.0% 2~% 3.0% 4.0% 5.0%

Act ual 1.4% '-'Ta rg et: 1.9%

Act ual 0.2% v Targ et : 1.5%

0.0 % 0 .5%

P.ctua I 21.1 v Target : 27.8 da ys

Act ua l 11.6 v Ta rget: 2 1.0 day s

1.0% 1 .5%

I I I I :

2.0%

5 .0 10.0 15.0 20.0 25.0 30.0

Actual 94.69% v Target 96% (Former Arena) Actual 94.67% v Target 96% (Former Harvest)

Actual 83.6%

Actual 100% v Target 100% (Former Arena)

Actual 100% v Target 100% (Former Harvest)

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VALUE FOR MONEY SELF ASSESSMENT Progress to Date As part of our commitment to meeting the regulatory requirement to 'self-assess' our value for money arrangements this section outlines the key steps that Your Housing Group is taking towards ensuring VFM is optimised. Our governance and leadership teams have taken a key role in ensuring that VFM has been an inherent consideration as we have moved through this key year of change and development.

Our focus during 2012-13 was to deliver the performance as outlined within the Detailed Business Case for Merger as agreed with the Homes and Communities Agency. We recognise that the economies of scale and efficiencies arising from consolidating our operations will only deliver tangible savings from Year 2 post merger. Examples of savings being generated from the economies of scale arising from merger to date include:

• Savings of over £400,000 from consolidating our insurance portfolio across the 2 former organisations

• Savings of £187,000 from reviewing our energy contracts • Savings of £700,000 from retendering our mobile and fixed line communications • Savings of £50,000 from reviewing our warden call service provision

The Group Board have reviewed throughout the year the performance that the Group has been achieving, together with the progress being made in delivering the promises as outlined in the Detailed Business Case for Merger.

Our savings to date have been reinvested primarily on our Tenancy Support and Money Advice resource in direct response the risks arising from Welfare Reform.

Developing our Approach Your Housing Group has continued its commitment to optimise the quality of the services our customers receive, whilst at the same time ensuring that we minimise the costs of service provision and increase our efficiency. We also recognise that the concept of 'Value for Money' (VFM) is changing. The principles of economy, efficiency and effectiveness have been developed into a wider approach where Registered Providers define VFM for themselves. Your Housing Group is therefore developing an approach by reference to our vision and business strategy objectives and by working with our residents and business partners.

As a new organisation we have the opportunity to ensure that VFM also maximises social value and underpins our business strategy and long term financial plan (LTFP) We are identifying and developing how we will ensure the Group delivers 'VFM' in practice and are implementing a framework that will ensure that we understand and evidence the return on our assets that our existing, proposed and new activities deliver.

Your Housing Group is committed to developing a framework with the involvement of key parties to help ensure that everyone in the Group sees that VFM is more about 'value' than 'money' and, more specifically, embraces the new approach to securing 'social value' including:

• Social and economic benefits

• Service Quality • Environmental benefits • Financial and commercial benefits

Social Value At Your Housing Group we are committed to delivering social value wherever possible and leveraging social value outcomes from the work we do with all our strategic partners. The Public Service (Social Value) Act now requires Local Authorities and other commissioners of public services to consider how services can benefit people living in local communities. This will help to involve more social enterprises in delivering services.

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Achievements in the Year

During 2013, as outlined previously, our priority was to achieve the savings outlined within the Detailed Business Case for merger. We must also recognise the achievements that we have made in relation to the value aspects of VFM which include:

Social Value -we have built Social Value into our procurement processes to ensure that we record the achievements we make and communicate our achievements to our residents.

Community Outcomes - we recognise that the work we do in our communities needs to optimise the benefits that we can achieve. Our Community Projects Resource Planning process ensures that our community activities are thoroughly evaluated, outcomes recorded, achievements reported and resources focused to optimise the delivery of services for the Group and its residents.

Examples of the social outcomes we have achieved include:

Your Routes2Work secured £220,605 external funding via The Coalfield Regeneration Trust and ESF Families Programme to support 674 disadvantaged people throughout the County of Cumbria move closer to the labour market. Of the 674 people whom we engaged with 389 took part in training to improve their employability and 214 secured employment.

Our team of Advisers provided constant on-going support to help people overcome barriers to employment including support with:-

Job Planning - Helping people to find work experience opportunities, improve interview skills and signpost to employment opportunities locally. Clients encountering financial problems were referred to debt advice and support to assist them manage their money.

We also provided a range of Health and Well Being Support - supporting people to manage their health conditions enabling them to look for employment; supporting people for whom the care of a family member was a barrier to employment to develop care packages thereby enabling them to look for work.

Internal Process Improvements - during the implementation of our new operating model we have embraced the opportunity to review and improve our processes following the principles of established best practice including Six Sigma and Lean Thinking. We have reviewed over 100 internal processes and identified a significant number of process changes and improvements.

How Do We Compare?

We are committed to delivering the best quality services for our residents and constantly seek to improve what and how we deliver. As outlined previously our focus for the 2012-13 year has been on ensuring that we deliver the promises to customers as outlined within the Detailed Business Case for Merger as agreed with the HCA.

Your Housing Group's operational performance as compared to the national average and 'upper quartile' performance for Registered Providers as recorded by Housemark, is outlined in the following table:

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Your Housing Group Performance at 31 National Upper March 2013 Average Quartile

Arrears % Former Arena 4.1% 3.27% 2.47%

Former Harvest 2.9% Void Rent Loss % Former Arena 1.4% 1.05% 0.68%

Former Harvest 0.2%

Re-Iet Days Former Arena 21.1 25.32 18.78 Former Harvest 11.6

Satisfaction With Former Arena 94.69% 76.9% 86.35% Repairs Former Harvest 94.67%

Resident Satisfaction Group 85% 83.4% 88.1% Decent Homes Group 100% 99.57% 100% Standard

Source of National Average and Upper Quartile Comparators: Housemark Quarterly Performance Indicators Data as at 15 July 2013.

Performance Targets for 2013/2014

Your Housing Group Performance Target for 2013/2014 Arrears % Former Harvest 3.0%

Former Arena 4.1%

Void Rent Loss % Former Harvest 1.5%

Former Arena 1.5%

Re-Iet Days Former Harvest 21.0 Former Arena 28.0

Satisfaction With Repairs Former Harvest 96%

Former Arena 96%

Resident Satisfaction Former Harvest 85%

Former Arena 85%

Decent Homes Standard Former Harvest 100%

Former Arena 100%

These targets have been set for the period up to 31 October 2013.

We are committed to actively comparing our operational processes and benchmarking our performance. As we move forward post-merger we are seeking to engage both within the sector and outside of our sector to ensure we optimise the opportunities for learning and maximise our performance.

Growth, Development, Regeneration and Sales Your Housing Group is pursuing a varied Growth Strategy which involves:

• reducing exposure of the Group to individual markets or product types and ensuring we protect our social assets;

• ensuring we support our mission of transforming lives and communities in the most effective ways across our areas of operation.

We are:

• a Strategic Development Partner of the HCA;

• a Development Partner of choice with a number of key Local Authorities;

• successful in attracting funding to deliver 1,329 homes by 31 March 2015, 100% of the programme presented in the bid. Against this programme we have: o completed 198 units o have 451 units on site o all units due to be on site by the end of summer 2013.

17


The Ascent Development Programme, our Joint Venture with Staffordshire Moorlands District Council accounts for approximately 25% of the Affordable Homes Programme for the Group and we have:

• 32 completed units; • 88 units are on site; • All units due to be on site by the end of summer 2013.

Key to our success in delivering the programme in a challenging economic environment is:

• our approach to procurement and generating efficiencies wherever possible; • developing mixed tenure developments, using outright sale and affordable home ownership products to

support new developments.

Our sales programme has involved:

• 105 sale completions of new homes equating to 2 sale completions per week;

• 62 were general needs sales; • 43 were Extra Care for the over 55's

We have sought to balance our Growth strategy with opportunities funded through cross subsidy or other funding streams including:

• securing a position on the HCA Delivery Partner Panel - this will provide opportunities over the next four years to bid for land being released by the HCA and local authorities;

• seeking new opportunities to build on existing successes, such as our Private Finance Initiative (PFI) projects at Cheshire, Warrington and Grove Village;

• being in the final stages of a procurement competition to become the preferred bidder to deliver a programme of 390 PFI funded extra care units across Stoke-on-Trent.

The Group has linked into wider regeneration projects where there has been an opportunity to benefit our communities, completing refurbishment and transformational work which strengthens our income streams by tackling long term void properties, as well as improving the lives of local residents. In particular our on-going involvement in the Anfield area of Liverpool, after Housing Market Renewal Pathfinder funding ceased in 2010, has seen the completion of a programme of 24 refurbishments and conversions of terraced properties.

In 2013/14 we will be continuing this work, combining strong asset management with development and regeneration projects to continue transforming this community.

18


STATEMENT OF THE RESPONSIBILITIES OF THE BOARD FOR THE FINANCIAL STATEMENTS

The Board Members are responsible for preparing the report of the Board and the financial statements in accordance with applicable law and regulations.

Industrial and Provident Society law and social housing legislation require the Board Members to prepare financial statements for each financial year for the Group and Association in accordance with United Kingdom Generally Accepted 'Accounting Practice (United Kingdom Accounting Standards and applicable law).

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 Group and Association for that period.

In preparing these financial statements, the Board Members are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and accounting estimates that are reasonable and prudent;

• state whether applicable UK Accounting Standards and the Statement of Recommended Practice: Accounting by registered social housing providers (Update 2010) have been followed, subject to any material departures disclosed and explained in the financial statements; and

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Association will continue in business.

The Board Members are responsible for keeping adequate accounting records that are sufficient to show and explain the Group's and the Association's transactions and disclose with reasonable accuracy at any time the financial position of the Group and the Association and enable them to ensure that the financial statements comply with the Industrial and Provident Societies Acts 1965 to 2003, the Industrial and Provident Societies (Group Accounts) Regulations 1969, the Housing and Regeneration Act (2008) and the Accounting Direction for Private Registered Providers of Social Housing 2012. They are also responsible for safeguarding the assets of the Group and the Association and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Financial statements are published on the Group'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 Group's website is the responsibility of the Board Members. The Board Members' responsibility also extends to the on-going integrity of the financial statements contained therein.

Disclosure of information to the auditors

At the date of making this report each of Your Housing Group Limited's Directors, confirm the following:

• Board Members are not aware, of any relevant information needed by Your Housing Group Limited's auditors in connection with preparing their report that has not been provided to the auditors, and

• Each Board member has taken all steps that they ought to have taken as a Director in order to make themselves aware of any relevant information needed by Your Housing Group Limited's auditors in connection with preparing their report and to establish that Your Housing Group Limited's auditors are aware of that information.

The report of the Board was approved on 25 September 2013 and signed on its behalf by:

!SfL~ 19


ANNUAL REVIEW AND INTERNAL CONTROL STATEMENT

The Board is ultimately responsible for Your Housing Group's system of internal control and for reviewing the effectiveness of the system. The Board recognises that no system of internal control can provide absolute assurance or eliminate all risk. The system of internal control is designed to manage risk and provide reasonable assurance that key business objectives and expected outcomes will be achieved. It also exists to give reasonable assurance about the preparation and reliability of financial and operational information and the safeguarding of the Group's assets and interests.

The Board has adopted a risk-based approach to internal controls, which are embedded within the normal management and governance process. This approach includes the regular evaluation of the nature and extent of risks to which the Group is exposed and meets the principle of the Regulatory Code and National Housing Federation's Code of Governance, Section K that: "The Board must establish a formal and transparent arrangement for considering how the organisation ensures financial viability, maintains a sound system of internal controls, manages risk and maintains an appropriate relationship with external auditors."

The process for identifying, evaluating and managing risk has evolved from the processes previously embedded throughout the two legacy organisations and is now permeating throughout Your Housing Group. Risk registers are in place across the Group and risks and controls are regularly reviewed by management teams across the business. Risk is monitored regularly by the Group Board and Audit & Risk Committee through the presentation of assurance reports detailing risk activity and the effectiveness of risk identification and mitigation mechanisms.

The Board has reviewed its Risk Management Strategy throughout the year under review and has given due consideration to key risks as part of the process of developing the Your Housing Group Strategic Business Intent and supporting strategies.

A process of assurance reporting on internal control and risk has been developed which provides hierarchical assurance to successive levels of management and to the Audit & Risk Committee and the Board. Key performance indicators (KPls), both financial and non-financial are regularly reported to management and Boards. These KPls are used to inform discussions at managers' meetings and drive improvements to the internal control framework.

The Board has a policy of zero tolerance to fraud and in addition to the normal checks and balances put in place to prevent fraud, employees' responsibilities and standards of conduct are clearly set out in a range of policies which collectively form the Group's Code of Conduct. There is a Whistleblowing Policy in place and staff are encouraged to report any wrongdoing of which they become aware. All frauds reported or uncovered are recorded in the fraud register and presented to the Board, who receive regular reports on progress thereafter.

Audit and Risk Committee, on behalf of the Board has received the Chief Executive's report and has conducted its annual review of the effectiveness of the system of internal control. The Board has a number of policies in place to support its systems of internal control. These cover issues such as delegated authority, segregation of duties, accounting, treasury management, health and safety, data and asset protection and fraud detection and prevention . Financial control is exercised through the setting of detailed budgets each year which feed into the financial planning process, coupled with a reporting and monitoring system that is driven by key performance indicators.

Your Housing Group has a comprehensive programme of internal audits which is delivered across the Group by the co-sourced internal audit service. Agreed recommendations for improvements in systems are implemented by management and progress on the actions is monitored through the Group Audit & Risk Committee and reviewed by the internal auditors.

The internal auditors report directly to every meeting of the Group Audit & Risk Committee and annually express an opinion on the control systems in place in the organisation. For 2012/13 the internal auditors have concluded that; the risk management activities and controls in the areas examined were found to be suitably designed to achieve the specific risk management control and governance arrangements, and based on sample testing and in-year follow up work, risk management, control and governance objectives were operating with sufficient effectiveness to provide reasonable, but not absolute assurance that the related risk management, control and governance objectives were achieved for the period under review and up to the date of signing the accounts.

20

YOUR HOUSING GROUP l TO

Going Concern

After making enquiries, the Board has a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason, it continues to adopt the going concern basis in the financial statements.

21


INDEPENDENT AUDITOR'S REPORT THE MEMBERS OF YOUR HOUSING GROUP LIMITED

We have audited the financial statements of Your Housing Group Limited for the year ended 31 March 2013 set out on pages 23 to 76. The financial reporting framework that has been applied in their preparation is applicable law and UK Accounting Standards (UK Generally Accepted Accounting Practice).

This report is made solely to the Group's members, as a body, in accordance with section 128 of the Housing and Regeneration Act 2008 and section 9 of the Friendly and Industrial and Provident Societies Act 1968. Our audit work has been undertaken so that we might state to the association's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the association and the association's members, as a body, for our audit work, for this report, or for the opinions we have formed .

Respective responsibilities of the Board and auditor

As more fully explained in the Statement of Board's Responsibilities set out on page 19, the association's 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 (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

Scope of the audit of the financial statements

A description of the scope of an audit of financial statements is provided on the Financial Reporting Council's website at www.frc.org.uk/auditscopeukprivate.

Opinion on financial statements

In our opinion the financial statements:

• give a true and fair view, in accordance with UK Generally Accepted Accounting Practice, of the state of affairs of the Group and Association as at 31 March 2013 and of the Group's and Association's surplus for the year then ended; 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 Direction for Private Registered Providers of Social Housing 2012.

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 i( in our opinion:

• a satisfactory system of control over transactions has not been maintained; or

• the association 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.

Harry Mears (Senior Statutory Auditor)

for and on behalf of KPMG LLP, Statutory Auditor

Chartered Accountants St James' Square Manchester M26DS

22


GROUP INCOME AND EXPENDITURE ACCOUNT Year ended 31 March 2013

Turnover: Group and share of joint venture

Less: share of joint venture turnover

TURNOVER

COST OF SALES

Restructuring costs

OPERATING COSTS

GROUP OPERATING SURPLUS

Share of joint venture operating loss

TOTAL OPERATING SURPLUS

Surplus on sale of housing assets

Interest receivable and other income

Share of joint venture interest receivable

Interest payable and similar charges

Share of joint venture interest payable

SURPLUS ON ORDINARY ACTIVITIES BEFORE TAXATION Tax on surplus on ordinary activities

SURPLUS ON ORDINARY ACTIVITIES AFTER TAXATION Minority Interests

SURPLUS FOR THE FINANCIAL YEAR

Note

3.1

3.1

3.1/31

3.1

3.1

5

8

9

12

23 .1

2013 £'000

160,294

(1,266)

159,028

(6,956)

(4,675)

(121,534)

25,863

(21)

25,842

285

1,083

1,973

(19,569)

(1,492)

8,122

(259)

7,863

(177)

7,686

GROUP STATEMENT OF TOTAL RECOGNISED SURPLUSES AND DEFICITS Year ended 31 March 2013

2013 £'000

Surplus for the year 7,686 Un realised gain/(deficit) on revaluation of investment 35 Actuarial loss on pension scheme (1,925)

Total recognised surpluses and deficits for the year 5,796

All amounts relate to continuing activities.

23

2012 £'000

Restated

153,000

(1,218)

151,782

(4,993)

(116,529)

30,260

(97)

30,163

973

842

2,023

(19,217)

(1,548)

13,236

(453)

12,783

12,783

2012 £'000

12,783 25

(2,081)

10,727


ASSOCIATION INCOME AND EXPENDITURE ACCOUNT


2013 2012 Note £'000 £'000

TURNOVER 3.2 16,380 14,375

Restructu ring costs 3.2,31 (1,690)

OPERATING COSTS 3.2 (15,420) (13,908)

(DEFICIT)/SURPLUS ON ORDINARY ACTIVITIES BEFORE INTEREST (730)

Interest receivable and other income 8 3

(DEFICIT)/SURPLUS ON ORDINARY ACTIVITIES AFTER INTEREST (727)

Gift Aid receivable 30 800

SURPLUS ON ORDINARY ACTIVITIES BEFORE TAXATION 73

Tax on surplus on ordinary activities 12 (21)

SURPLUS FOR THE FINANCIAL YEAR 23.2 52

All amounts relate to continuing activities.

There were no recognised surpluses and deficits other than those included in the income and expenditure account.

Accordingly a statement of total recognised surpluses and deficits has not been presented.

24

467

5

472

500

972

972


GROUP BALANCE SHEET 31 March 2013

TANGIBLE FIXED ASSETS

Housing properties - cost

Depreciation

Impairment

Social Housing Grant

Other Capital Grant

Other tangible fixed assets

Investments

Share of joint venture gross assets

Share of joint venture gross liabilities

CURRENT ASSETS

Stocks

Properties developed for sale

Debtors

Investments - money on deposit

Cash at bank and in hand

CREDITORS: amounts falling due within one year

NET CURRENT ASSETS

TOTAL ASSETS LESS CURRENT LIABILITIES

CREDITORS: amounts falling due

after more than one year - financial debt

- non-financial debt

PROVISIONS FOR LIABILITIES AND CHARGES

PENSION LIABILITY

CAPITAL AND RESERVES

Revaluation reserve Designated reserves

Revenue reserve

Minority Interest

GROUP'S FUNDS

Note

13.1

13.1

13.1

13.1

13.1

14

15.1

15.3

15.3

16

17

18

21

21

22 10

23 .1

23.1

23.1

24

2013 £'000

1,252,240 (139,522)

(862) (448,814)

(61,618)

601,424

12,999 12,184 24,661

(23,070)

628,198

73 5,752

14,351

31,642

80,465

132,283

(49,472)

82,811

711,009

486,143 6,791

719 10,077

6,980 13,088

187,571 (360)

207,279

711,009

2012 £'000

Restated

1,233,403

(131,120)

(295)

(458,426)

(47,384)

596,178

11,816

4,100

24,864

(23,438)

613,520

39

5,746

14,579

26,753

27,309

74,426

(36,013)

38,413

651,933

438,212

5,691

694

8,625

7,046

12,882

178,783

198,711

651,933

These financial statements were approved and authorised for issue by the Board on 25 September 2013 and

signed on its behalf by: .r Kathy Cowell

~~ · ... ~~~r:;::::::all 25


ASSOCIATION BALANCE SHEET 31 March 2013

TANGIBLE FIXED ASSETS Investments

CURRENT ASSETS

Debtors

Cash at bank and in hand

Note

15.2

17

2013 £'000

6,388

462

6,850

2012 £'000

4,221

322

4,543

CREDITORS: amounts falling due within one year 18 (5,141) (2,886)

NET CURRENT ASSETS

TOTAL ASSETS LESS CURRENT LIABILITIES

CAPITAL AND RESERVES

Revenue reserve

ASSOCIATION SURPLUS

1,709

1,709

23 .2 1,709

24 1,709

These financial statements were approved and authorised for issue by the Board on 25 September 2013 and signed on its behalf by:

~. Kathy Cowell

I'L.~J.~"k Tatte,,,11

...... .... /b-......... Brian Cronin

26

1,657

1,657

1,657

1,657


GROUP CASH FLOW STATEMENT

Year ended 31 March 2013 2013 2012

Note £'000 £'000

Net cash inflow from operating activities 26.1 46,152 51,986

Return on investments and servicing of finance Interest received 1,597 814

Interest paid {19,641} {18,873}

{18,044} {18,059}

Taxation

Corporation tax receivedj{paid} 79 {7}

Capital expenditure and financial investment

Purchase and construction of housing properties {43,913} {57,271}

Social Housing Grant - received 13,192 10,288

Purchase of other fixed assets {3,257} {2,901} Sales of housing properties 10,564 2,833 Purchase of fixed asset investments {719}

Investment in joint ventures {18} 497

Sales of other tangible fixed assets 4 194

{24,147} {46,360}

Cash inflow before management of liquid resources and financing 26.2,26.3 4,040 {12,440}

Management of liquid resources Increase in short term deposits 26.2,26.3 {4,889} {10,748}

Financing Loans received 26.2 52,672 30,325

52,672 30,325

Increase in cash 26.2,26.3 51,823 7,137

27


NOTES TO THE FINANCIAL STATEMENTS Year ended 31 March 2013

1. LEGAL STATUS

The Association is a charitable Industrial and Provident Society under the Industrial and Provident Societies Act 1965 and is a registered provider of social housing.

2. ACCOUNTING POLICIES

Basis of accounting

The financial statements of the Association are prepared in accordance with UK Generally Accepted Accounting Practice (UK GAAP) and the Statement of Recommended Practice : Accounting by Registered Social Housing Providers (Update 2010) and comply with the Accounting Direction for Private Registered Providers of Social Housing 2012. We have undertaken a review of going concern and are satisfied the Group has adequate resources to continue in operation existence for the foreseeable future. Therefore the financial statements are prepared on a going concern basis.

Basis of consolidation

Where the Group enters into business combinations and the combination satisfies the criteria set out in paragraphs 6-11 of Financial Reporting Standard (FRS) 6 - Acquisitions and Mergers, merger accounting will be used. Any combination that cannot be regarded as a merger will be treated as an acquisition by the dominant party and acquisition accounting will be used.

On 2 April 2012, the Association became the ultimate parent undertaking of Arena Housing Group Limited. This combination has been accounted for following the principles of merger accounting as set out in FRS 6. As such the prior year comparatives have been presented as though the continuing operations of Arena Housing Group and its subsidiaries (along with the Association's existing subsidiaries) were part of the Group throughout the year ended 31 March 2012 and earlier periods.

Turnover

Turnover comprises rental income receivable in the year, income from shared ownership first tranche sales, sales of properties built for sale and other services included at the invoiced value (excluding VAT) of goods and services supplied in the year and revenue grants receivable in the year.

Rental income is recognised from the point when properties under development reach practical completion or otherwise become available for letting. Income from first tranche sales and sales of properties built for sale is recognised at the point of legal completion of the sale. Revenue grants are receivable when the conditions for receipt of agreed grant fund ing have been met. Charges for support services funded under Supporting People are recognised as they fall due under the contractual arrangements with Administering Authorities.

Interest payable

Interest is allocated at a constant rate on the carrying amount over the period of borrowing. Interest is capitalised on borrowings to finance developments and improvements to the extent that it accrues in respect of the period of development if it represents either:

a) Interest on borrowing specifically financing the development programme after deduction of interest on Social Housing Grant (SHG) in advance; or

b) Interest on borrowings of the Group as a whole after the deduction of interest on SHG in advance to the extent that they can be deemed to be financing the development / improvements programme.

Other interest payable is charged to the income and expenditure account in the year.

28



2. ACCOUNTING POLICIES (CONTINUED)

Taxation

The charge for taxation for the year is based on the surpluses arising on certain activities which are liable to tax.

Deferred taxation is provided in full on timing differences which result in an obligation at the balance sheet date to pay more tax, or a right to pay less tax, at a future date, at rates expected to apply when they crystallise, based on current tax rates and law.

Timing differences arise from the inclusion of items of income and expenditure in taxation computations in periods different from those in which they are included in the financial statements. Deferred tax is not provided on timing differences arising from the revaluation of fixed assets where there is no commitment to sell the asset. Deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will be recovered.

Tax liabilities on chargeable gains arising from the sale of first tranche of shared ownership disposals are recognised in the current liabilities of the Group.

VAT

The Group charges Value Added Tax (VAT) on some of its income and is able to recover part of the VAT it incurs on expenditure. The financial statements include VAT to the extent that it is suffered by the Group and is not recoverable from HM Revenue and Customs. The balance of VAT payable or recoverable at the year-end is included as a current liability or asset.

Pension costs

The Group participates in the Social Housing Pension Scheme (SHPS). The SHPS is a multi-employer defined benefit pension scheme. As such, the Group is unable to identify its share of the underlying asset and liabilities of the SHPS. Therefore under the provisions of Paragraph 9 of Financial Reporting Standard 17 -Retirement Benefits, the Group accounts for the contributions to the SHPS as if it were a defined contribution scheme. The cost of providing pensions to the Group is charged to the income and expenditure account as incurred during the year.

The Group also participates in the Staffordshire County Council Pension Fund. The difference between the fair value of the assets held in the Group's defined benefit pension scheme and the scheme's liabilities measured on an actuarial basis using the projected unit method are recognised in the Group's balance sheet as a pension asset or liability as appropriate. The carrying value of any resulting pension scheme asset is restricted to the extent that the Group is able to recover the surplus either through reduced contributions in the future or through refunds from the scheme.

Changes in the defined benefit pension scheme asset or liability arising from factors other than cash contribution by the group are charged to the profit and loss account or the statement of recognised surplus and losses in accordance with FRS 17 'Retirement Benefits.'

The Group operates the Arena Group Pension Scheme, a defined benefit pension plan, for some of its employees. This scheme is now closed to new members. The pension costs of the scheme are charged against income and based on an actuarial method with actuarial assumptions. These are designed to provide the anticipated pension cost over the average service lives of the employees in the scheme in a way that seeks to ensure that he regular pension cost represents a broadly level percentage of the current and expected future pensionable payroll in the light of current actuarial assumptions. Variations from the current cost are spread over the remaining service lives of current employees in the pension scheme.

29




Housing properties

Housing properties are principally properties available for rent and are stated at cost less depreciation. Cost includes the cost of acquiring land and buildings, development costs, interest charges incurred during the development period and expenditure incurred in respect of improvements.

Works to existing properties which replace a component that has been treated separately for depreciation purposes, along with those works that result in an increase in net rental income over the lives of the properties, thereby enhancing the economic benefits of the assets, are capitalised as improvements.

The Group separately identifies the major components which comprise its housing properties, and charges depreciation so as to write-down the cost of each component to its estimated residual value, on a straight

line basis, over its estimated useful economic life.

Where SHG has been allocated to a component; the depreciable amount is arrived at on the basis of original cost, less the proportion of SHG and other grants attributable to the component, less residual value.

The Group depreciates the major components of its housing properties over the following periods:

Structure Roofs Kitchens Bathrooms Electrical Systems Doors Windows Boilers Central Heating Loft Insulation Renewables

Freehold land is not depreciated.

100 Years 60 Years 20 Years 25 Years 30 Years 30 Years 30 Years 20 Years 40 Years 30 Years 25 Years

Properties held on leases are amortised over the life of the lease or their estimated useful economic lives in

the business, if shorter.

Where a development is evaluated by the Group as a single scheme but has more than one element, i.e. a mixed tenure development, the surplus on anyone element is restricted to the level of the likely overall

surplus of the scheme.

Impairment

Housing properties which are depreciated over a period in excess of 50 years are subject to impairment reviews annually. Other assets are reviewed for impairment if there is an indication that impairment may have occurred. Where there is evidence of impairment, other assets are written down to their recoverable amount. Any such write-down is charged to the Operating Surplus, and is disclosed in notes 4 & 5 -'Turnover, Operating Costs and Operating Surplus.' An appropriate discount rate is applied to determine

value in use.

30




Shared Ownership properties

Shared ownership properties are included in housing properties at cost. The cost during the period of construction up to first tranche sale is apportioned between fixed assets and current assets to reflect the Group's intention to dispose of a part of the property by leasehold sale. Proceeds of sale of first tranches are accounted for as turnover in the Income & Expenditure Account. Proceeds from subsequent tranches are treated as disposal of fixed assets and disclosed in the Income & Expenditure Account. The current asset element of shared ownership properties are stated at the lower of cost and net realisable value.

Shared Equity properties

Properties held for Shared Equity sale are included at cost. This cost is held within current assets to reflect the Association's intention to dispose of the property. Proceeds of sale are accounted for as turnover in the Income & Expenditure Account, and the amount held in current assets is transferred to the Income and Expenditure account as a cost of sale. The equity loan provision is held as a Fixed Asset Investment.

Donated land

Donated land is included in the cost of housing properties at its value when donated. It is shown as a capital grant and deducted from total housing property cost in the same way as Social Housing Grant when received from a public body, or if received from a private body the difference between acquisition cost and market value is accounted for as a donation in the Income & Expenditure Account.

Properties held for outright sale

Completed properties for outright sale are valued at the lower of cost or net realisable value and included in current assets. Cost comprises materials, direct labour and attributable development overheads. Net realisable value is based on estimated sales price after allowing for all further costs of completion and disposal.

Social Housing Grant

Social Housing Grant (SHG) is receivable from the Homes and Communities Agency (HCA) and is utilised to reduce the capital costs of housing properties, including land costs. It is allocated to the land, structure and components of the associated asset. Grant receivable in respect of identifiable components is allocated to those components.

SHG due from the HCA or received in advance is included as a current asset or liability. SHG received in respect of revenue expenditure is credited to the income and expenditure account in the same period as the expenditure to which it relates.

SHG is subordinated to the repayment of loans by agreement with the HCA.

Where individual components are disposed of and this does not create a relevant event for recycling purposes, any grant which has been allocated to the component is released to the income and expenditure account. Upon disposal of the associated property, the Group is required to recycle these proceeds; as such a contingent liability is disclosed to reflect this.

Following the sale of a property under the right to acquire initiative, the disposal proceeds and SHG receivable, are included as a creditor due after more than one year, until it is recycled within the Group or paid to the HCA.

31




Other grants

Other grants are receivable from local authorities and other organisations. Capital grants are utilised to reduce the capital costs of housing properties, including land costs. Grants in respect of revenue expenditure are credited to the income and expenditure account in the same period as the expenditure to which they relate.

Supported housing managed by agents

The Group, as owner of hostels, claims Social Housing Grant and other revenue grants. The grants are included in the income and expenditure account and the balance sheet of the Group. The treatment of other income and expenditure in respect of hostels depends on whether the Group carries the financial risk.

Where the Group carries the financial risk (for example, for losses from voids and rent arrears) all the hostels income and expenditure is included in the income and expenditure account.

Where the agel]cy carries the financial risk, the income and expenditure account includes only that income and expenditure which relates solely to the Group. Other income and expenditure of hostels in this category is excluded from the income and expenditure account. All income and expenditure of hostels in this category is shown by way of note.

Other tangible fixed assets and depreciation

Depreciation is provided on a straight line basis on the cost of other tangible fixed assets to write them down to their estimated residual values over their expected useful lives. No depreciation is provided on the freehold land.

The expected useful lives for other fixed assets are: Freehold office buildings 40 years Leasehold property Lesser of life of lease or 40 years Garages 25 years Furniture, fixtures, fittings & office equipment 5 years Computer software 5 years Computer and telephony equipment 4 years Motor vehicles 4 years

Investments

Investments in listed securities within fixed assets are shown in the Balance Sheet at market value. Other investments within fixed assets are stated at cost less any provision for impairment. Investments held as current assets are stated at lower of cost and net realisable value.

Liquid Resources

Within the Group consolidated cash flow statement liquid resources are made up of cash held on short-term deposit. These are current assets held as readily disposable investments.

32




Deferred income - services

The Group has an obligation under tenant service agreements to replace furniture and equipment relating to certain tenancies. The amount is based on the Group's liability to replace the furniture and equipment on a cyclical basis.

To the extent that the amount is to be used to replace scheme assets within the next 12 months an amount is included in creditors falling due within 1 year.

Supporting people income

Supporting People funding was introduced on 1 April 2003 and replaced Supported Housing Management Grant. Supporting People contracts are entered into with administering authorities and are of two types:

a) Block subsidy is determined for each tenancy based on support needs.

b) Block gross is a fixed sum payable determined by the number of qualifying bed spaces and subject to minimum occupancy levels as agreed with the administering authorities.

Designated reserves

The Group will not ordinarily establish a designated reserve unless it specifically identifies expenditure that is expected to be incurred in the near future and that has been earmarked for a particular purpose.

Business Combinations

Where the Group enters into business combinations and the combination satisfies the criteria set out in paragraphs 6-11 of FRS 6, merger accounting will be used. Any combination that cannot be regarded as a merger will be treated as an acquisition by the dominant party and acquisition accounting will be used. On acquisition, the recognised asset and liabilities of the business will be measured at fair values. The nature of the transaction will be considered to determine whether it is a commercial acquisition or a non-exchange transaction. For non-exchange transactions, the fair value of the gifted recognised assets and liabilities will be recognised as a gain or loss in the income and expenditure account in the year of transaction.

Leased Assets

Assets held under finance leases are included in the Balance Sheet and depreciated in accordance with the Group's normal accounting policies. The present value of future rentals is shown as a liability.

The interest element of rental obligations is charged to the Income and Expenditure account over the period of the lease in proportion to the balance of capital repayments outstanding.

Rentals payable under operating leases are charged to the Income and Expenditure account on a straightline basis over the lease term.

Disposal Proceeds Fund

Where properties are sold under the Right to Acquire Initiative, the sale proceeds are retained to develop new social housing. The amount retained is held within creditors until re-invested in accordance with HCA policies.

33




Recycled Capital Grant Fund

Social Housing Grant released on sale of a property may be repayable but is normally available to be recycled and is credited to a Recycled Capital Grant Fund and included in the Balance Sheet in creditors until re-invested in accordance with HCA policies.

Sale of housing properties

Properties are disposed of under the appropriate legislation and guidance. All costs and grants relating to the share of property sold are removed from tangible fixed assets or current assets at the date of sale. Any grants received that cannot be repaid from the proceeds of sale are abated and the grants removed from the financial statements.

Derivatives

The Group uses interest rate swaps to reduce its exposure to future increases in the interest rates on variable rate loans. The notional principal is not reflected in the Group's Balance Sheet. Payments made under swaps are accrued over the payment period on a straight-line basis and adjusted against interest payable on the loans.

Investment Properties

In accordance with SSAP 19, market rented properties held for their investment potential are included in the Balance Sheet at their open market value. Valuations are carried out by external valuers at least every five years. Properties are reviewed regularly by the directors and if, in their opinion, impairment has occurred, the property is written down to its valuation .

The aggregate surplus or deficit arising on revaluation is transferred to the revaluation reserve except where a deficit is deemed to represent a permanent diminution in value, in which case it is charged to the Income & Expenditure account.

On disposal of a fixed asset property, any surplus or deficit calculated by comparing net sale proceeds with book value is included in surplus on ordinary activities before taxation and any realised revaluation surplus or deficit is reclassified to the revenue reserve.

This policy represents a departure from statutory accounting principles, which require depreciation to be provided on all fixed assets. The directors consider that this policy is necessary in order that the financial statements may give a true and fair view. Depreciation is only one of the factors reflected in the annual valuation and cannot be separately quantified .

34


NOTES TO THE FINANCIAL STATEMENTS


3.1 TURNOVER, OPERATING COSTS AND OPERATING RESULT - GROUP 2013 2012

Operating Operating

Cost Operating surplus/ Cost Operating surplus/

Group - continuing activities Turnover of sales costs (deficit) Turnover of sales costs (deficit) £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000

Restated Restated

Social housing lettings (note 4.1) 133,676 . (103,770) 29,906 130,670 (101,794) 28,876

Other social housing activities Shared ownership first tranche sales 5,228 (4,626) 602 2,088 (1,499) (420) 169 Shared equity property sales 1,145 (986) 159 944 (656) 288 Outright property sales 1,486 (1,344) 142 2,987 (2,838) 149 Supporting People contract income 3,767 (5,187) (1,420) 3,284 (3,293) (9) Neighbourhood regeneration 49 (1,046) (997) (972) (972) Cheshire PFI (84) (84) (124) (124) Development costs not capitalised (53) (53) 1,398 (1,304) 94 Management services 1,442 (822) 620 1,298 (766) 532 Other revenue grants 305 (330) (25) 687 (699) (12) Other 266 503 769 1,194 (1,270) (76)

13,688 (6,956) (7,019) (287) 13,880 (4,993) (8,848) 39

Non-social housing activities

Lettings (note 4.2) 4,207 (2,294) 1,913 4,204 (2,469) 1,735 Restructure costs (4,675) (4,675) Other 7,457 (8,451) (994) 3,028 (3,418) (390)

11,664 (15,420) (3,756) 7,232 (5,887) 1,345

159,028 (6,956) (126,209) 25,863 151,782 (4,993) (116,529) 30,260

35



3.1 TURNOVER, OPERATING COSTS AND OPERATING RESULT - GROUP

Operating surplus analysed: Lettings Shared ownership first tranche sales Management services Sale of properties Other

36

31,819 602 620 301

(7,479)

25,863

30,611 169 532 437

(1,489)

30,260




3.2 TURNOVER, OPERATING COSTS AND OPERATING RESULT - ASSOCIATION

Association - continuing activities

Other income and expenditure

Management services to group undertakings Restructure costs

Operating Turnover costs

£'000 £'000

16,380 (15,420) (1,690)

16,380 (17,110)

37

2013 2012 Operating

surplus/ Operating Operating (deficit) Turnover costs surplus

£'000 £'000 £'000 £'000

960 14,375 (13,908) 467 (1,690)

(730) 14,375 (13,908) 467




4.1 INCOME AND EXPENDITURE FROM SOCIAL HOUSING LETTINGS - GROUP

Supported housing & Low

General housing for cost home Care Key Total Total

Group Housing older people ownership homes worker Other 2013 2012 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000

Restated

Income from lettings Rent receivable net of identifiable service 91,733 10,710 3,747 4,018 1,452 2,043 113,703 110,120 charges Service charges receivable 4,896 5,110 1,022 2,209 427 675 14,339 16,109 Charges for support services 195 1,122 1,317 1,484 Rent pool support income 59 24 83 31 Facility fee 1,653 513 2,166 2,072 Other income 702 664 25 614 63 2,068 854

Total income from lettings 97,585 19,283 4,794 6,841 2,455 2,718 133,676 130,670

38



4.1 INCOME AND EXPENDITURE FROM SOCIAL HOUSING LETTINGS - GROUP (CONTINUED)

Group General Supported Low Housing housing & cost home

housing ownership for older

people

f'OOO f'OOO f'OOO

Expenditure on letting activities Management (27,642) (4,264) (1,241)

Routine maintenance (14,373) (1,684) (74)

Planned maintenance (7,891) (1,243) (27)

Environmental works (515) (59) (2)

Major repairs expenditure (4,391) (491) (11)

Decommissioning costs (51) Services (5,906) (5,090) (344)

Cost of support services (221) (1,475) (6)

Rent losses from bad debts (789) (56) (5)

Housing property depreciation (10,248) (1,306) (439)

Ground rent (391) (1) (10)

Impairment (567) Cheshire PFI -lease rentals (1,655) (748)

Other costs ~

Total expenditure on lettings (72,985) (17,324) (2,909)

Operating surplus/(deficit) on lettings 24,496 1,959 1,885

Void losses (1,249) (234) (105)

39

Care Key Other Total Total homes worker 2013 2012

Restated

f'OOO f'OOO f'OOO f'OOO £'000

. (4,464) (684) (407) (38,702) (34,870) (158) (72) (309) (16,670) (19,424) (428) (140) (275) (10,004) (7,225)

(1) (577) (865) (13) (30) (4,936) (3,750) 148 97 (738)

(1,585) (616) (434) (13,975) (15,754) (28) (1,730) (2,180)

6 (2) (47) (893) (736) (561) (135) (317) (13,006) (13,378)

(402) (413) (567) (73)

(2,403) (2,315) (2) (73)

(7,083) (1,649) (1,820) (103,770) (101,794)

(242) 806 898 29,906 28,876

(131) (306) (163) (2,188) (2,221)



4.2 PARTICULARS OF TURNOVER FROM NON-SOCIAL HOUSING LETTINGS

Full market rent Intermediate market rent Key worker Leasehold schemes for the elderly Other

5. SURPLUS ON DISPOSAL OF HOUSING ASSETS - GROUP

Proceeds of sales

Cost of sales Transfer from Disposal Proceeds Fund

Surplus for year

6. ACCOMMODATION IN MANAGEMENT

Shared ownership

further Other tranches

('staircasing') £'000

3,538

(1,917) ( 455)

1,166

property sales £'000

904

(1,785)

(881)

2013

£'000

627 2,178 1,073

115 214

4,207

2013 Total £'000

4,442

(3,702) (455)

285

2012

£'000

640 2,233 1,097

118 116

4,204

2012 Total £'000

2,833

(1,618) (242)

973

The number of units of accommodation in management at 31 March for each class of accommodation is as follows :

General housing accommodation Market rented accommodation Supported housing accommodation Shared ownership accommodation Accommodation managed on behalf of other associations Leasehold schemes for the elderly Key Worker accommodation Other

40

Group Association 2013 2012 2013 2012

No. No. No. No.

23,067 21,591 307 266

3,985 5,437 2,218 2,188

1,214 1,294 111 111 701 701 125 128

31,728 31,716




7. OPERATING SURPLUS

Group Association

2013 2012 2013 2012 '000 '000 'ODD 'ODD

This is arrived at after charging:

Depreciation of housing properties 13,561 12,362

Depreciation of other tangible fixed assets 2,341 1,684

Impairment 567 73

Auditor's remuneration - for audit services 109 172 8 7

- for non-audit services 24 127

Bad and doubtful debts 879 323

Operating lease rentals

- land and buildings 2,483 2,737

- other 406 401

8. INTEREST RECEIVABLE AND OTHER INCOME


£'000 £'000 £'000 £'000

Interest receivable 1,083 842 3 5

9. INTEREST PAYABLE AND SIMILAR CHARGES


£'000 £'000 £'000 £'000

Loan issue costs amortised 70 106

Loans and bank overdrafts 19,132 18,259 Interest accrued on Disposal Proceeds and

Recycled Capital Grant funds 8 (9)

Net finance expense on pensions (note 10) 512 1,142

Interest payable capitalised on housing properties (153) (281)

19,569 19,217

Interest is capitalised using an average monthly interest rate, ranging from 0.87% to 4.8%.

41




10. EMPLOYEES Group Association

2013 2012 2013 2012 No. No. No. No.

Average monthly number of employees expressed as full time equivalents: Administration 341 253 132 114 Development 24 19 16 9 Housing, support and care 835 932 111 99

1,200 1,204 259 222

2013 2012 2013 2012 £'000 £'000 £'000 £'000

Staff costs: Wages and salaries 32,827 30,015 10,568 7,611 Social Security costs 2,626 2,278 945 599 Other pension costs 3,692 2,171 1,002 875

39,145 34,464 12,515 9,085

The Social Housing Pension Scheme (SHPS)

Your Housing Group Limited participates in the Social Housing Pension Scheme (SHPS). The scheme is funded and is contracted out of the state scheme. The Your Housing Group Limited SHPS scheme covers Your Housing Group Limited and four subsidiary companies. A number of other Your Housing Group Limited subsidiary companies also participate in SHPS, but are administered separately by SHPS.

SHPS is a mUlti-employer defined benefit scheme. Employer participation in the Scheme is subject to adherence with the employer responsibilities and obligations as set out in the "SHPS House Policies and Rules Employer Guide".

The Scheme operated a single benefit structure, final salary with a 1/60th accrual rate until 31 March 2007. From April 2007 there are three benefit structures available, namely:

Final salary with a 1/60th accrual rate. Final salary with a 1/70th accrual rate. Career average revalued earnings (CARE) with a 1/60th accrual rate.

From April 2010 a further two benefit structures have been available, namely:

Final salary with a 1/80th accrual rate. Career average revalued earnings with a 1/80th accrual rate .

A defined contribution option was made available from 1 October 2010.

An employer can elect to operate different benefit structures for their active members their new entrants. An employer can only operate one open benefit structure at anyone time. An open benefit structure is one which new entrants are able to join.

The Group has elected to operate the 1/60th accrual rate final salary benefit structure or 1/60th accrual rate career average revalued earnings benefit structure for active members as at 1 April 2010 and the 1/60th accrual rate career average revalued earnings benefit structure for new entrants from 1 April 2010. Until this date only the 1/60th accrual rate final salary benefit structure was offered.

42



10. EMPLOYEES (CONTINUED)

The Trustee commissions an actuarial valuation of the Scheme every 3 years. The main purpose of the valuation is to determine the financial position of the Scheme in order to determine the level of future contributions required, in respect of each benefit structure, so that the Scheme can meet its pension obligations as they fall due. From April 2007 the split of the total contribution rate between member and employer is set at individual employer level, subject to the employer paying no less than 50% of the total contribution rate. From 1st April 2010 the requirement for employers to pay at least 50% of the total contribution rate no longer applies.

The actuarial valuation assesses whether the Scheme's assets at the valuation date are likely to be sufficient to pay the pension benefits accrued by members as at the valuation date. Asset values are calculated by reference to market levels. Accrued pension benefits are valued by discounting expected future benefit payments using a discount rate calculated by reference to the expected future investment returns.

During the accounting period the Your Housing Group parent entity paid contributions at the rate of between 6.0% and 19.8% for Defined Benefit schemes and between 3.8% and 6.8% for Defined Contribution schemes. Member contributions varied between 8.0% and 13.1% for Defined Benefit schemes and 3.0% for Defined Contribution schemes.

As at the balance sheet date there were 289 active members of the Scheme employed by the Group. The annual pensionable payroll in respect of these members was £9,849,921. The Group continues to offer membership of the Scheme to its employees.

During the accounting period Arena Housing Association Limited paid contributions at the rate of between 6.0% and 7.2% for Defined Benefit schemes. Member contributions varied between 8.0% and 12.7% for Defined Benefit schemes.

As at the balance sheet date there were 76 active members of the Scheme employed by the Group. The annual pensionable payroll in respect of these members was £2,109,758. The Group continues to offer membership of the Scheme to its employees.

During the accounting period Headrow Limited paid contributions at the rate of between 6.0% and 7.2% for Defined Benefits schemes. Member contributions varied between 8.3% and 13.1% for Defined Benefit schemes.

As at the balance sheet date there were 17 active members of the Scheme employed by the Group. The annual pensionable payroll in respect of these members was £435,245. The Group continues to offer membership of the Scheme to its employees.

During the accounting period Tung Sing Limited paid contributions at the rate of between 6.0% and 6.7% for Defined Benefit schemes. Member contributions varied between 10.9% and 12.7% for Defined Benefit schemes.

As at the balance sheet date there were 6 active members of the Scheme employed by the Group. The annual pensionable payroll in respect of these members was £190,316. The Group continues to offer membership of the Scheme to its employees.

It is not possible in the normal course of events to identify on a reasonable and consistent basis the share of underlying assets and liabilities belonging to individual participating employers.

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.

43




The last formal valuation of the Scheme was performed as at 30 September 2011 by a professionally qualified actuary using the Projected Unit Method. The market value of the Scheme's assets at the valuation date was £2,062 million. The valuation revealed a shortfall of assets compared with the value of liabilities of £1,035 million, equivalent to a past service funding level of 67.0%.

The Scheme Actuary has prepared an Actuarial Report that provides an approximate update on the funding position of the Scheme as at 30 September 2012. Such a report is required by legislation for years in which a full actuarial valuation is not carried out. The market value of the Scheme's assets at the date of the Actuarial Report was £2,327 million. The Actuarial Report revealed a shortfall of assets compared with the value of liabilities of £1,241 million, equivalent to a past service funding level of 65%.

The financial assumptions underlying the valuation as at 30 September 2011 were as follows:

Valuation Discount Rates Pre-retirement Non pensioner Post retirement Pensioner Post retirement

Pensionable earnings growth Price inflation Pension increases

Pre 88 GMP Post 88 GMP Excess over GMP

%pa

7.0 4.2 4.2 2.5pa for 3yrs, then 4.4 2.9

0.0 2.0 2.4

Expenses for death in service insurance, administration and Pension Protection Fund (PPF) levy are included in the contribution rate.

The valuation was carried out using the following demographic assumptions

Mortality pre-retirement - 41% SAPS Sl Male / Female All Pensioners (amounts), Year of Birth, CMI_2009 projections with long term improvement rates of 1.5% p.a. for Males and 1.25% p.a. for Females.

Mortality post retirement - 97% SAPS Sl Male / Female All Pensioners (amounts), Year of Birth, CMI_2009 projections with long term improvement rates of 1.5% p.a. for Males and 1.25% p.a. for Females.

The long-term joint contribution rates required from April 2013 required from employers and members to meet the cost of future benefit accrual were assessed at:

Benefit structure Long-term joint contribution rate (% of pensionable salaries)

Final salary with a 1/60tn accrual rate 19.4 Final salary with a 1/70tn accrual rate 16.9 Career average revalued earnings with a 1/60th accrual rate 18.1

If an actuarial valuation reveals a shortfall of assets compared to liabilities the Trustee must prepare a recovery plan setting out the steps to be taken to make up the shortfall.

44




Following consideration of the results of the actuarial valuation it was agreed that the shortfall of £1,035 million would be dealt with by the payment of deficit contributions as shown in the table below:

A cash amount equivalent to 7.5% of From 1 April 2013 to 30 Members' Earnings per annum September 2020 (payable monthly and increasing by 4.7% per annum

each 1 April)

A cash amount equivalent to 3.1% of From 1 October 2020 to 30 Members' Earnings per annum September 2023 (payable monthly and increasing by 4.7% per annum

each 1 April)

From 1 April 2013 to 30 £30,640,000 per annum

September 2026 (payable monthly and increasing by 3% per annum each 1 April; first increase on 1 April 2014)

These deficit contributions are in addition to the long-term joint contribution rates set out in the table above.

The Scheme Actuary will provide an approximate update on the funding position of the Scheme as at 30 September 2013. Such a report is required by legislation for years in which a full actuarial valuation is not carried out. The results of this approximate update will be available in Spring 2014 and will be included in next year's Disclosure Note.

Employers that participate in the Scheme on a non-contributory basis pay a joint contribution rate (i.e. a combined employer and employee rate).

Employers that have closed the defined benefit section of the Scheme to new entrants are required to pay an additional employer contribution loading of 2.5% to reflect the higher costs of a closed arrangement.

A small number of employers are required to contribute at a different rate to reflect the amortisation of a surplus or deficit on the transfer of assets and past service liabilities from another pension scheme into the SHPS Scheme.

New employers that do not transfer any past service liabilities to the Scheme pay contributions at the ongoing future service contribution rate. This rate is reviewed at each valuation and new employers joining the Scheme between valuations up until 1 April 2010 do not contribute towards the deficit until two valuations have been completed after their date of joining. New employers joining the Scheme after 1 April 2010 will be liable for past service deficit contributions from the valuation following joining. Contribution rates are changed on the 1 April that falls 18 months after the valuation date.

A copy of the recovery plan, setting out the level of deficit contributions payable and the period for which they will be payable, must be sent to the Pensions Regulator. The Regulator has the power under Part 3 of the Pensions Act 2004 to issue scheme funding directions where it believes that the actuarial valuation assumptions and/or recovery plan are inappropriate. For example the Regulator could require that the Trustee strengthens the actuarial assumptions (which would increase the Scheme liabilities and hence impact on the recovery plan) or impose a schedule of contributions on the Scheme (which would effectively amend the terms of the recovery plan). A response regarding the 30 September 2011 valuation is awaited.

As a result of pension scheme legislation there is a potential debt on the employer that could be levied by the Trustee of the Scheme. The debt is due in the event of the employer ceasing to participate in the Scheme or the Scheme winding up.

45




The debt for the Scheme as a whole is calculated by comparing the liabilities for the Scheme (calculated on a buyout basis i.e. the cost of securing benefits by purchasing annuity policies from an insurer, plus an allowance for expenses) with the assets of the Scheme. If the liabilities exceed assets there is a buy-out debt.

The leaving employer's share of the buy-out debt is the proportion of the Scheme's liability attributable to employment with the leaving employer compared to the total amount of the Scheme's liabilities (relating to employment with all the currently participating employers). The leaving employer's debt therefore includes a share of any 'orphan' liabilities in respect of previously participating employers. The amount of the debt therefore depends on many factors including total Scheme liabilities, Scheme investment performance, the liabilities in respect of current and former employees of the employer, financial conditions at the time of the cessation event and the insurance buy-out market. The amounts of debt can therefore be volatile over time.

The Group has been notified by the Pensions Trust of the estimated employer debt on withdrawal from the Social Housing Pension Scheme, based on the financial position of the Scheme as at 30 September 2012. As of this date the estimated employer debt for the Your Housing Group Scheme was £52,281,657 (30 September 2011: £50,451,028), and the estimated employer debt for the consolidated Your Housing Group was £82,789,406.

Greater Manchester Pension Fund

2 employees (2012: 2) are members of the Greater Manchester Pension Fund (GMPF) . The GMPF is a defined benefit scheme and is not considered material to the Association. At 31 March 2013 the net pension liability was £50,000 (2012: £3,000) . Contributions to the scheme during the year ended 31 March 2013 were £10,478 (2012: £4,493).

Scottish Equitable Defined Contribution Pension Scheme

Arena Future Limited contributes to a defined contribution pension scheme managed by Scottish Equitable pic. This scheme was transferred from Green Apprentices Limited and has 2 members, both ex Green Apprentices Limited employees.

The employer contributions for the period were £4,055. At 31 March 2013, a balance of £338 was held in respect of March 2013 contributions scheduled for payment in April 2013.

Staffordshire County Council Pension Fund

Staffordshire County Council manages and administers the Staffordshire County Council Pension Fund for approximately 33,000 public and voluntary sector members. Moorlands Housing participates in this scheme. The scheme is a defined benefit final salary scheme, the assets of which are held in a separate trustee administered fund.

The total pension cost for Moorlands Housing was £498,000 (2012: £426,000) covering 79 employees (2012:73). The pension cost is assessed in accordance with the advice of a qualified actuary using the projected unit valuation method and is not materially different from that arising from the current employer's contribution rate. The latest full actuarial valuation of the scheme was at 31st March 2008. The next formal valuation of the scheme is due in March 2013.

46




Assumptions as at 31 March

Price increases Salary increases Expected return on assets

Discount rate

Expected return on assets as at 31 March

Equities

Bonds Property Cash

Net pension liability at

Estimated employer assets

Present value of scheme liabilities

Present value of unfunded liabilities

Total value of liabilities

Net pension liability

31 March

2013

£'000

11,542

(15,970)

(45)

(16,015)

(4,473)

47

2013 2012 %p.a. % p.a.

2.8 2.5 5.1 4.8 5.3 5.7

4.5 4.8

2013 2012 %p.a. %p.a.

5.7 6.2 3.6 3.3 3.9 4.4 3.0 3.5

31 March 31 March

2012 2011

£'000 £'000

9,871 9,261

(13,122) (11,832)

(42) (37)

(13,164) (11,869)

(3,293) (2,608)




Analysis of amount charged to operating profit:

Current service cost

Past service cost

Total operating charge

Analysis of the amount charged to finance costs:

Expected return on employer assets

Interest on pension scheme liabilities Losses/(gains) on curtailments and settlements

Total finance costs

Reconciliation of defined benefit obligation

Opening defined benefit obligation Current service cost

I nterest cost

Contributions by members Actuariallosses/(gains)

Past service costs due to change in inflation assumption Losses on curtailments and settlements

Estimated unfunded benefits paid

Estimated benefits paid

Closing defined benefit obligation

Reconciliation of fair value of employer assets

Opening fair value of employer assets

Expected return on assets

Contributions by members

Contributions by the employer Contributions in respect of unfunded benefits

Actuarial (Iosses)/gains

Unfunded benefits paid

Benefits paid

Closing fair value of employer assets

48

2013 2012

£'000 £'000

347 318

347 318

2013 2012

£'000 £'000

568 645

(635) (657)

30

(37) (12)

2013 2012

£'000 £'000

13,164 11,869 347 318

635 657

112 107 2,071 475

30

(2) (2)

(342) (260)

16,015 13,164

2013 2012 £'000 £'000

9,871 9,261 568 645 112 107

410 346 2 2

923 (228) (2) (2)

(342) (260)

11,542 9,871




Amounts for the current and previous accounting periods

Fair value of employer assets

Present value of defined benefit obligation

Deficit

Experience gains/(Iosses) on assets

Experience gains/(Iosses) on liabilities

2013 2012

£'000 £'000

11,542 9,871

(16,015) (13,164)

(4,473) (3,293)

923 (228)

15 (117)

Amount recognised in Statement of Total Recognised Surplus and Deficits (STRSD)

2013 2012 £'000 £'000

Actuarial gains/(Iosses) (1,148) (702)

Cumulative actuarial gains/(Iosses) (4,016) (2,868)

Arena Housing Group Pension Scheme

2011 2010 2009

£'000 £'000 £'000

9,261 8,307 5,634

(11,869) (14,294) (7,738)

(2,608) (5,987) (2,104)

46 (2,062) (2,173)

519 1 (1)

2011 2010 2009 £'000 £'000 £'000

1,914 (3,839) (1,238)

(2,166) (4,080) (241)

The Association operates the Arena Group Pension Scheme, a defined benefit pension plan, for some of its

employees.

Assumptions as at 31 March 2013 2012

%p.a. %p.a.

Inflation assumption 3.45 3.35

Salary increases 4.45 4.35

Expected return on assets 4.05 5.30

Discount rate 4.40 5.05

Expected return on assets as at 31 March 2013 2012

% p.a. %p.a.

Equities 4.28 4.81

Index linked gilts 2.53 2.86

Corporate Bonds 3.53 3.86 Property 4.28 4.81

Cash 0.25 0.25

49




Weighted average life expectancy for mortality tables used to determine benefit obligations:

Retiring today: Males

Retiring in 20 years: Males

Analysis of amounts recognised in the balance sheet:

Net pension liability as at

Estimated employer assets

Present value of scheme liabilities

Net pension liability

Analysis of amount charged to operating profit:

Current service cost Past service cost

Total operating charge

Analysis of amount charged to finance costs:

Expected return on scheme assets Interest on pension scheme liabilities

Total finance costs

No. of years 2013

22.4

24.2

2013 £'000

19,062

(24,666)

(5,604)

2013 £'000

2013 £'000

(708) 1,153

445

Amounts recognised in Statement of Total Recognised Surplus and Deficits (STRSD):

Actuarial gains/(Iosses) Cumulative actuarial gains/(Iosses)

50

2013 £'000

(777) (4,470)

No. of years 2012

21.2

23.1

2012 £'000

18,140

(23,472)

(5,332)

2012 £'000

698

698

2012 £'000

(887) 1,130

243

2012 £'000

(1,379) (3,693)




Reconciliation of defined benefit obligation:

Opening defined benefit obligation Current service cost Interest cost Contribution by members Actuariallosses/(gains) Past service costs Losses/(gains) on curtailments and settlements Benefits paid

Closing defined benefit obligation

Reconciliation of fair value of employer assets:

Opening fair value of employer assets Expected return on assets Contribution by members Contribution by the employer Actuarial gains/(Iosses) Benefits paid

Closing fair value of employer assets

Amounts for the current and previous accounting periods:

2013 £'000

Fair value of employer assets 19,062 Present value of defined benefit 24,666 obligation Deficit (5,604) Experience gains/(Iosses) on assets 1,205 Experience gains/(Iosses) on liabilities 1,968

Contributions:

2012 £'000

18,140 23,472

(5,332) (103)

2013 2012 £'000 £'000

23,472 21,032

1,153 1,130

1,982 1,276 698

(1.941) (664)

24,666 23,472

2013 2012 £'000 £'000

18,140 17,070 708 887

950 950 1,205 (103)

(1,941) (664)

19,062 18,140

2011 2010 2009 £'000 £'000 £'000

17,070 15,790 11,540 21,032 22,053 14,187

(3,962) (6,263) (2,647) 167 2,950 (2,786)

(686)

The Association expects to contribute £1,050,000 to the Arena Group Pension Scheme during the 2013/14 financial year in respect of the shortfall in funding. A formal valuation as at 31 March 2011 was carried out and contributions have been reviewed as part of this process.

51



10.

11.

EMPLOYEES (CONTINUED)

Summary of pension deficits: 2013 2012 £'000 £'000

Staffordshire county council pension fund (4,473) (3,293) Arena housing group pension scheme (5,604) (5,332)

(10,077) (8,625)

Summary of amounts disclosed in Statement of Total Recognised Surplus and Deficits (STRSD):

2013 2012 £'000 £'000

Staffordshire county council pension fund (1,148) (702) Arena housing group pension scheme (777) (1,379)

(1,925) (2,081)

BOARD MEMBERS AND EXECUTIVE MANAGEMENT TEAM

The Directors of the Group are its Board members.

The emoluments of the highest paid director, excluding pension contributions, were £160,000 (2012: £160,000 relating to the former Harvest's Chief Executive's salary). The Your Housing Group's Chief Executive is an ordinary member of the pension scheme. He receives no enhanced or special terms. He has no individual pension arrangements to which any part of the Group makes a contribution.

The emoluments of the Executive and Non-executive directors members were:

Basic Benefits Pension 2013 2012 salary in kind contributions Total Total £'000 £'000 £'000 £'000 £'000

Executive directors 765 19 41 825 321 Non-executive directors 118 118 60

883 19 41 943 381

The Executive directors include all of the senior executive team of the Group. The comparative numbers show the Executive and Non-executive directors for former Harvest Housing Group Limited as these were the appointed directors of the Group at this time.

52




11. BOARD MEMBERS AND EXECUTIVE MANAGEMENT TEAM (CONTINUED)

The full time equivalent number of Directors and senior staff who received emoluments (excluding pension contributions):

2013 Total £'000

£60,001 to £70,000 11

£70,001 to £80,000 7

£80,001 to £90,000 5 £90,001 to £100,000 3

£100,001 to £110,000 £110,001 to £120,000 2 £120,000 to £130,000 1 £130,000 to £140,000 1

£140,000 to £150,000 2

2012 Total £'000

3

4

1 3

2

The pension contributions are the costs paid by Your Housing Group on behalf of the Executive Board members.

Common Board

Your Housing Group operates a Common Board structure, the Common Board operates on behalf of 4 different entities - Your Housing Group Limited, Arena Housing Group Limited, Frontis Homes Limited and Manchester & District Housing Association Limited.

All of the Common Board members have a role in addition to their Board role; they either chair a Committee, chair a Subsidiary or are a Committee member. Their level of remuneration reflects these additional responsibilities.

Kathy Cowell Mark Tattersall John Eccles Lynn Foster Gordon Ibbotson Patrick Sharman Neil Singleton Kevin Stewart Mavis Wareham Bridget Johnson Margaret Lloyd Mike Ridley

2013 Total £'000

25 13 13 13 13 11

8 10 9 3

118

2012 Total £'000

20

10 10

5

5 5 5

60

There are four Committees which operate on behalf of Your Housing Group and all of its subsidiaries - Audit & Risk, Governance & Staffing, Operating Board and Growth . Rather than try to allocate these costs across the Group, for simplicity they are included in full in Your Housing Group's financial statements, but it is important to note that all parts of the Group benefit from their work.

53




The Growth Committee consists entirely of Common Board members and therefore no additional payments are listed here. The chairs of these committees are members of the Common Board and therefore their remuneration is listed above.

Audit and Risk Committee 2013 2012 Total Total £'000 £'000

Geoffrey Bean 6 5 Jean Hill 5 5 Roy Kunar 5 Trevor Mathew-Jones 5 Pam Smith 5 Mavis Wareham Gordon Ibbotson

26 10

Governance and Staffing Committee

2013 2012 Total Total £'000 £'000

Helen Connor 5 5 Ted Gunby 5 5 Majid Hussain 5 5 Margaret Lloyd 9 10 Christine McLoughlin 6 Laurie Mullen 6 5 Kathy Cowell Lynn Foster

36 30

54




Operating Board

Some members of the Operating Board are also members of other boards or committees, where this is the case, and they are paid via this other position, their payment is not repeated here.

David Exall Dave McGaw Jayne Boote David Tomlinson Jack Carter Adrian Carridice-Davids Henry O'Carroll John McKenna Eric Hodgson Fred Varden John Eccles

55

2013 Total £'000

5 3 3 3 3 3 5 2 7 3

37

2012 Total £'000

5 5

10




12. TAX ON SURPLUS ON ORDINARY ACTIVITIES

Taxation charge for the year Adjustment for prior periods

Total current tax

Share of joint venture tax charge

Deferred taxation Origination and reversal of timing differences - deferred tax asset - deferred tax liability

Group 2013

£'000

272 (59)

213

112

325

1 (67)

259

Association 2012 2013 2012

£'000 £'000 £'000

326 7 21

333 21

85

418

12 23

453

The standard rate of tax for the year based on the UK standard rate of corporation tax is 24%. The actual tax charge for the current and previous year differs from the standard rate for the reasons set out in the reconciliation below.

Surplus/(Deficit) on ordinary activities before tax

Theoretical tax at 24% (2012: 26%)

Effects of:

Expenditure not tax deductible Accelerated capital allowances Adjustment for prior periods Difference between capital gain for accounts and tax Tax losses carried forward Tax free income due to charitable activities

56

Group 2013

£'000

8,122

1,949

80 11

(59) 55

301 (2,124)

213


£'000 £'000 £'000

6,778 73 972

1,762 18 25

(12) (18)

7 3 (12) 19

1 (1,426) (13)

333 21



13.1 TANGIBLE FIXED ASSETS - HOUSING PROPERTIES - GROUP

Cost At 1 April 2012 Additions - works to existing properties Additions - new properties developed Interest capitalised Reclassifications ( Note 15.1) Schemes completed in year Transfer from/(to) current assets Disposals

At 31 March 2013

Depreciation At 1 April 2012 Charge for year Reclassifications Schemes completed in year Disposals

At 31 March 2013

Impairment At 1 April 2012 Charge for year

At 31 March 2013

Housing properties held

for letting £'000

1,137,294 15,898

7,958 19

1,907 7,658

(175) (13,667)

1,156,892

128A50 12,992 (1,057)

43 (5,186)

135,242

295 567

862

Housing properties

under construction

£'000

57

27,957

16,362 66

(16,519) (7,658)

20,208

33 57

9 (43)

56

Low cost home

ownership held

for letting £'000

66,647 84 62

5 7,077 1,603

(596) (2,079)

72,803

2,625 500

1,071 16

6

4,218

Low cost home

ownership under

construction £'000

1,505

3,877 21

(317) (1,603) (1,146)

2,337

12 12

(16) (2)

6 ·

Total £'000

1,233,403 15,982 28,259

111 (7,852)

(1,917) (15J46)

1,252,240

131,120 13,561

23

(5,182)

139,522

295 567

862



13.1 TANGIBLE FIXED ASSETS - HOUSING PROPERTIES - GROUP (CONTINUED)

Social Housing Grant At 1 April 2012 Additions Reclassifications Social Housing Grant repaid/recycled Schemes completed in year

At 31 March 2013

Other Capital Grant At 1 April 2012 Additions Reclassifications Schemes completed in the year

At 31 March 2013

Net Book Value At 31 March 2013

At 31 March 2012

Housing Housing properties properties

held under

for letting construction £'000 £'000

433A46 8,886 149 1,740

(8,796) (1,575) (4,573) lA61 (lA61)

421,687 7,590

41,691 3,821 6,770

11A03 (3,746) 75 (75)

59,939

539,162 12,562

527,692 15,217

58

Low cost Low cost home home

ownership ownership held under

for letting construction Total £'000 £'000 £'000

15,647 447 458,426 11 565 2A65

3,339 (317) (7,349) (155) (4,728)

242 (242)

19,084 453 448,814

1,872 47,384 115 6,885

(437) 129 7,349 129 (129)

1,679 61,618

47,822 1,878 601A24

46,503 1,046 596,178




13.1 TANGIBLE FIXED ASSETS - HOUSING PROPERTIES - GROUP (CONTINUED)

Additions to housing properties during the year include capitalised interest of £111,000 (2012: £36,000) using an average monthly interest rate, ranging from 0.87% to 4.8%. Total accumulated capitalised interest to date is £7,722,000.

The Association is unable to analyse the cost of housing land and buildings between freehold and other tenures, nor is it able to provide a reasonable estimate except at excessive cost. It is considered that the effect of this omission is negligible.

59



13.2 MAJOR REPAIRS EXPENDITURE ON EXISTING PROPERTIES - GROUP

Capitalised major repairs works Revenue major repairs works

13.3 CUMULATIVE SOCIAL HOUSING GRANTS - GROUP

Capital grants Revenue grants

60

2013 2012 £'000 £'000

15,982 13,929 5,068 8,425

21,050 22,354

2013 2012 £'000 £'000

448,814 452,706 1,649 1,649

450,463 454,355




14. OTHER TANGIBLE FIXED ASSETS - GROUP Freehold Short Furniture, Computer Computer Motor Total

office leasehold fixtures, and software vehicles property property fittings, telephone

office equipment equipment

£'000 £'000 £'000 £'000 £'000 £'000 £'000

Cost At 1 April 2012 9,817 482 6,005 4,240 1,316 201 22,061 Additions 419 90 830 1,889 29 3,257 Transfer (to)/from current assets (7) (402) 359 (50) Disposals (25) (3) (986) (3,592) (4,606)

At 31 March 2013 10,204 569 5,447 2,896 1,316 230 20,662

Depreciation At 1 April 2012 3,095 257 2,785 2,878 688 162 9,865 Charge for year 210 81 771 1,091 157 31 2,341 Recategorisation (1,406) 405 679 (322) Disposals (22) (3) (984) (3,593) (4,602)

At 31 March 2013 1,877 335 2,977 1,055 845 193 7,282

Capital Grant At 1 April 2012 and 31 March 2013 381 381

Net book value At 31 March 2013 7,946 234 2,470 1,841 471 37 12,999

At 31 March 2012 6,342 225 3,220 1,362 628 39 11,816

61



15.1 FIXED ASSET INVESTMENTS - GROUP

Market Joint rented

Joint venture properties venture Investmen held for

Investment Gilts t fund letting Other Total s £'000 £'000 £'000 £'000 £'000 £'000

Cost/Valuation At 1 April 2012 12 629 2,160 1,299 4,100 Additions 57 323 380 Unrealised (31) (31) movement Reclassifications 7,875 7,875 Repayments (140) (140)

At 31 March 2013 12 598 2,077 7,875 1,622 12,184

The gilts investment is stated at market value of £597,357 (2012: £628,830). It relates to funds invested and held on the Group's behalf by Funding for Homes Limited and invested in 8%% gilt 2017. The historic cost of this investment was £450,000.

At 31 March 2013 "Other" fixed asset investments comprises of £1,407,000 (2012: £1,079,000) of costs relating to the retained equity secured against properties sold under the shared equity initiative. The' remainder of other fixed asset investments at 31 March 2013 relates to a £215,000 (2012: £215,000) five year term loan to Arawak Housing Association, and a £Nil (2012: £5,000) loan to Care and Repair.

Joint Venture Undertakings The Group holds a 25.5% interest in the ordinary share capital of Grove Village Holdings Limited, a company registered in England and Wales. During the year 2007 the company provided a long-term investment fund to Grove Village Limited of £952,066, the balance on this fund at 31 March 2013 was £608,031.

The Group also has a 49% interest in the ordinary share capital of a joint venture, Resolve 106 Limited. This company was dormant during the year.

The Association holds a 33.3% interest in the ordinary share capital of Avantage (Cheshire) Holdings Limited, a company registered in England and Wales. During the year 2010 the company provided a longterm investment fund to Avantage (Cheshire) Limited of £1,711,136, the balance on this fund at 31 March 2013 was £1,480,820.

The Group held a 50% interest in the ordinary share capital, with the investment being held by Your Housing, in a joint venture undertaking, Orchard Retirement Villages Limited. This company was wound up during the period.

15.2 FIXED ASSET INVESTMENTS - ASSOCIATION

On 19 October 2012 Orchard Retirement Villages limited was wound up and the company dissolved. The Association's investment in 2012 of £Nil reflected the 50% joint venture holding in Orchard Retirement Villages Limited, which was held at cost less provision for impairment.

62



15.2 FIXED ASSET INVESTMENTS - ASSOCIATION (CONTINUED)

Investments in associated companies

The following entities were 100% subsidiaries (unless otherwise stated) of Your Housing Group Limited at 31 March 2013:

15.3

16.

Name of undertaking Country of Description of shares registration held

Derwent and Solway England Non-equity £1 shares 1

Housing Association Limited

Frontis Homes Limited England Non-equity £1 shares1

Manchester and District England Non-equity £1 shares 1

Housing Association Limited

Moorlands Housing Limited England Non-equity £1 shares 1

Arena Housing Group England Non-equity £1 shares 1

Limited

Your Housing Limited England Equity £1 Share

Ascent LLP England 51% control

lThe shares provide members with the right to vote at general meetings but do not provide any rights to dividends or distributions. The members' liability is limited to £1 on the winding up of the Association.

JOINT VENTURES - GROUP

The group had the following aggregate interests in joint ventures:

2013 2012 £'000 £'000

Share of gross assets 24,661 24,864 Share of gross liabilities (23,070) (23,438)

Share of net assets 1,591 1,426

PROPERTIES HELD FOR SALE - GROUP

First tranche Other

Outright shared shared Sale ownership ownership

properties properties properties 2013 2012 £'000 £'000 £'000 £'000 £'000

Cost 1,480 3,818 454 5,752 5,746

63



17. DEBTORS

Due within one year Arrears of rent and service charges Less: provisions for bad and doubtful debts

Amounts due from group undertakings - trade debtors (note 28) Amounts due from group undertakings - other (note 28) Other debtors

Group 2013 2012 £'000 £'000

6A42 6,022 (2,127) (1,929)

4,315 4,093

10,036 10,486

14,351 14,579

18. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

Group 2013 2012 £'000 £'000

Restated

Bank overdraft 1,916 583 Bank loans (note 21) 9,503 3,762 Amounts due to group undertakings (note 28) Rent and service charges received in advance 4,812 3,522 Trade Creditors : Contractors for capital works and unpaid retentions 4,861 7,805 Social Housing Grant received in advance 776 377 Recycled Capital Grant Fund (note 19) 2,237 497 Disposal proceeds fund (note 20) 10 111 Corporation tax 171 Other taxation and social security 971 1,000 Other creditors and accruals 23,647 17,825 Cheshire PFI- Deferred Income 689 360 Deferred income - services 50

49,472 36,013

Association 2013 2012 £'000 £'000

1,511

4,868 1,608 1,520 1,102

6,388 4,221

Association 2013 2012 £'000 £'000

1,623 51

59

551 443 2,967 2,333

5,141 2,886

All trade creditors are paid within one calendar month unless specific payment terms are agreed in the contract.

64




19. RECYCLED CAPITAL GRANT FUND - GROUP

2013 2012

£'000 £'000

At 1 April 2012 3,322 3,075

Grants recycled 1,649 573 Interest accrued 38 17

Transferred to sundry creditors Purchase/development of properties (42) (343)

At 31 March 2013 4,967 3,322

Due in less than one year 2,237 497 Due in greater than one year 2,730 2,825

4,967 3,322

20. DISPOSAL PROCEEDS FUND - GROUP

2013 2012 £'000 £'000

At 1 April 2012 408 1,270 Net sale proceeds recycled 684 311 Acquisition of dwelling for letting (132) (1,174)

Interest accrued 1

At 31 March 2013 961 408

Due in less than one year 10 111

Due in greater than one year 951 297

961 408

65



21. CREDITORS: AMOUNTS DUE AFTER MORE THAN ONE YEAR

Funding for Homes Limited loans Bank and building society loans

Less: loan issue costs

Less: due within one year (note 18)

Disposals Proceeds Fund (note 20) Recycled Capital Grant Fund (note 19) Deferred income - deferred debenture premium Finance Lease obligations Other creditors

Grou'p

2013 2012 £'000 £'000

9,297 9,357 487,832 434,119

497,129 443,476

(1,483) (1,463)

495,646 442,013

(9,503) (3,801)

486,143 438,212

951 297 2,730 2,825

2 351 1,054 1,049 2,054 1,169

492,934 443,903

Association 2013 2012

£'000 £'000

Included within other creditors due after more than one year is an amount of £1,997,000 due to Staffordshire Moorlands District Council (SMDC) owed by subsidiary undertaking Ascent Housing LLP. SMDC is a member of Ascent Housing LLP and has 49% of the voting rights of that entity.

Debt is repayable as follows:

Within one year Between one and two years Between two and five years After five years

9,503 6,572

53,218 426,353

495,646

3,762 3,874

19,287 415,051

441,974

The bank and building society loans are secured by fixed charges on individual properties. The Funding for Homes Limited loan is secured by fixed charges on individual properties.

The bank, building society and Funding for Homes Limited loans are payable at varying rates of interest from 0.73% to 12.60% with a weighted average of 3.92%. The maturity range is between 2013 and 2043.

66




22. PROVISIONS FOR LIABILITIES AND CHARGES

Property Demolitions At 1 April 2012 Charge to income and expenditure account

At 31 March 2013

Deferred taxation At 1 April 2012 Charge to income and expenditure account

At 31 March 2013

Total provisions

Analysis of deferred tax balances Capitalised costs Accelerated capital allowances

Provision for rollover relief

Discounted provision for deferred tax

67

Group 2013 2012

£'000 £'000

260 92 260

352 260

Group 2013 2012

£'000 £'000

434 411 (67) 23

367 434

Group 2013 2012

£'000 £'000

719 694

Group 2013 2012

£'000 £'000

258 248 (8) 20

250 268 117 166

367 434


£'000 £'000


£'000 £'000


£'000 £'000


£'000 £'000




23.1 RESERVES - GROUP

Total Repairs & Major Designated Revaluation Revenue Renewals Repairs Investment Reserves Reserve Reserve

£'000 £'000 £'000 £'000 £'000 £'000

At 1 April 2012 4,403 1,728 6,000 12,131 7,046 178,783 Prior period adjustment 751 751

At 1 April 2012 as restated 5,154 1,728 6,000 12,882 7,046 178,783 Surplus for the year 7,686 Actuarial gain on pension scheme (note 10) (1,925) Unrealised deficit on revaluation (31)

Reclassification 54 Tenant service charges received 3,136 8 3,144 Transfer to revenue reserves (238) (2,700) (2,938) (35) 2,973

At 31 March 2013 8,052 1,736 3,300 13,088 6,980 187,571

68



23.2 RESERVES - ASSOCIATION

Revenue reserve

At 1 April 2012 Surplus for the year

At 31 March 2013

23.3 RESERVES

Designated Reserves

2013 2012

£'000

1,657 52

1,709

£'000

685

972

1,657

These reserves were created for the development of new housing initiatives and strategies, to fund future stock re-investment programmes and to provide for major repairs.

Revaluation reserve

This reserve has arisen as a result of the revaluation of certain housing properties and office premises as well as the inclusion of investments at value.

Revenue reserve

Revenue reserves are retained to fund improvements to housing stock where existing major repairs reserves are not yet accumulated to fund works on older stock and to enable the Group to continue to

develop housing for people in housing need.

24. RECONCILIATION OF MOVEMENTS IN GROUP'S AND ASSOCIATION'S FUNDS

Opening funds at 1 April 2012 Prior year adjustment

Opening funds at beginning of year as

restated Surplus for the financial year Actuarial deficit Reclassification Tenant service charges received Revaluation in the year Minority Interests

Closing funds at 31 March 2013

69

Group 2013 2012

£'000 £'000

198,711

198,711

7,686 (1,925)

(8)

3,144 31

(360)

207,279

187,233 751

187,984

12,783 (2,081)

25

198,711


£'000 £'000

1,657 685

1,657 685

52 972

1,709 1,657



25. FINANCIAL COMMITMENTS

Capital commitments

Expenditure contracted less certified

Expenditure authorised but not yet contracted

Financed by

Social Housing Grant Other grant Loans Property sales

Operating lease commitments

2013 £'000

35,479

7,478

42,957

2,839

32,135 7,983

42,957

Group Association 2012 2013 2012

£'000 £'000 £'000

26,880

4,806

31,686

3,615

22,086 5,985

31,686

At 31 March 2013 the Group was committed to making the following payments during the next year in respect of operating leases:

Land and buildings, leases expiring: Within one year More than five years

Motor vehicles, leases expiring: Within one year One to five years

70

Group 2013

£'000

272 2,495

2,767

10 156

166


£'000 £'000 £'000

201 2,372

2,573

82 360

442



26.1 RECONCILIATION OF OPERATING SURPLUS TO NET CASH INFLOW FROM OPERATING ACTIVITIES -GROUP

2013 2012 £'000 £'000

Operating surplus 25,842 30,163 Share of joint venture operating result 21 97 Depreciation of tangible fixed assets 15,580 13A97 Difference between pension charge and cash contributions (985) (29) Impairment 567 180

41,025 43,908 Working capital movements (Decrease)/increase in properties for sale (6) 5A91 Shared equity advances (328) (347) Increase in stock (34) (17) Decrease/(increase) in debtors 228 (3,902) Increase in creditors 5,267 6,853

Net cash inflow from operating activities 46,152 51,986

26.2 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT - GROUP

2013 2012 £'000 £'000

Increase in cash 51,823 7,137 Cash outflow from repayment of debt finance Cash inflow from increase in debt finance (52J31) (30,325) Cash outflow from movement in liquid resources 4,889 10,748

Decrease/(increase) in net debt 3,981 (12A40)

Non cash adjustment 81

Net debt at beginning of year (385,653) (373,294)

Net debt at end of year (381,672) (385,653)

71




26.3 ANALYSIS OF NET DEBT - GROUP

Cash at bank and in hand Bank overdrafts

Current asset investments Debt due in less than one year Debt due in greater than one year

Total

At 1 April 2012 Cash flow £'000 £'000

29A09 53,156 {583} {1,333}

28,826 51,823

26,753 4,889 {3,801} {5,741}

{437A31} {46,990}

{385,653} 3,981

27. ANALYSIS OF MOVEMENTS IN SOCIAL HOUSING CAPITAL GRANT - GROUP

At 1 April 2012 Recycled on disposal Cash received

At 31 March 2013

72

Non cash At 31 movement March

£'000 2013 £'000

82,565 {1,916}

80,649

31,642 {9,542}

{484A21}

{381,672}

2013 2012

£'000 £'000

458A26 449,533 {14,240} {586}

2A65 9A79

446,651 458A26



28. GROUP UNDERTAKINGS & RELATED ORGANISATIONS

Transactions with group undertakings are on a disbursement basis with no profits or losses arising on these transactions.

The subsidiary undertakings consolidated within the Your Housing Group financial statements as at 31 March 2013, all of which were owned by the Your Housing Group Limited, unless otherwise stated, were as follows:

Name of Undertaking

Arena Development & Construction Limited

1

Arena Future Limited1

Arena Homes Limited1

Arena Options Limited1

Arena Housing Group Limited

Ascent Housing LLP4

Avantage (Cheshire) Holdings Limited

7

Avantage (Cheshire) Limited9

Derwent and Solway Housing Association Limited

Frontis Homes Limited

Grove Village Holdings Limited

8

Grove Village Limited lO

Headrow Limited1

Leasowe Community Homes10

Nature of Undertaking

Company incorporated and limited by shares under the Companies Act 2006

Registered Industrial and Provident Society




Limited Liability Partnership








Company incorporated and limited by guarantee under the Companies Act 2006

73

Principal Activity

Dormant company

Provider of property services

Dormant Association

Dormant Association

Registered provider of social housing


Holding company

Provider of extra care housing under PFI contract



Holding company

Provider of extra care housing under PFI contract





28. GROUP UNDERTAKINGS & RElATED ORGANISATIONS (CONTINUED)

Manchester and District Housing Association Limited

Moorlands Housing Limited

Outlook Homes Limited3

Partington Housing Association Limited2

Resolve 106 LimitedS

Tung Sing Housing Association Limited!

Your Housing Limited

Key to numbering:










Property investment

Management of social housing

Dormant company


Dormant company

1 Entity is a wholly-owned subsidiary undertaking of Arena Housing Group Limited. 2 Entity is a wholly-owned subsidiary undertaking of Manchester and District Housing Association

Limited. 3 Entity is a wholly-owned subsidiary undertaking of Frontis Homes Limited. 4 Entity is 51% owned by Your Housing Group Limited. 5 Entity is 49% owned by Frontis Homes Limited. 6 Entity is 33.3% owned by Manchester and District Housing Association Limited . 7 Entity is 25.5% owned by Manchester and District Housing Association Limited . 8 Entity is 100% owned by Avantage (Cheshire) Holdings Limited . 9 Entity is 100% owned by Grove Village Holdings Limited . 10 Entity is 51% owned by Arena Housing Group Limited.

During the year ended 31 March 2013, Manchester and District Housing Association Limited charged Grove Village Limited (a wholly owned subsidiary of Grove Village Holdings Limited) £722,156 (2012: £728,550) of management fees in respect of the Plymouth Grove estate.

At 31 March 2013, Manchester and District Housing Association Limited was owed £72,610 (2012: £73,249) by Grove Village Limited for services provided by the Association and £569,357 (2012: £637,777) in respect of subordinate debt invested by the Association.

During the year ended 31 March 2013, Manchester and District Housing Association Limited charged £1,653,485 (2012: £1,593,672) of marketing and management fees in respect of Cheshire PFI to Avantage (Cheshire) Limited (a wholly owned subsidiary of Avantage (Cheshire) Holdings Limited). At 31 March 2013 Manchester and District Housing Association Limited was owed £158,092 (2012 : £152,374) by Avantage (Cheshire) Limited for services provided by the Association and £1,480,820 (2012: £1,534,998) in respect of subordinate debt invested by the Association. In the year ended 31 March 2013 Manchester and District paid Avantage (Cheshire) Limited £2,403,020 (2012: £2,314,921) in respect of the operating lease rentals for five sites in Cheshire.

74



29. CONTINGENT LIABILITIES

At 31 March 2013 the Manchester & District Housing Association Limited has a contingent liability in respect of the fixed asset investment (with a market value of £628,830) which is held as security for the Funding for Homes Limited (FFH) loan.

In the unlikely event that any member of FFH defaults on their loan, part or all of this investment may be used to cover the cost of this default. All Members of FFH own or manage in excess of 5,000 housing units.

30. GIFT AID

Gift aid in the amount of £800,000 (2012 : £500,000) was paid to the parent Association, Your Housing Group in the year from Frontis Homes Limited.

31. RESTRUCTURING COSTS

These costs relate to the reorganisation of staff, offices and services, as a result of the merger between Arena Housing Group and Harvest Housing Group on 2 April 2012.

32. PRIOR YEAR ADJUSTMENT

Following the detailed review of the accounting policies of the newly created Your Housing Group an adjustment has been made to align the policy to the treatment of the service charges fund set out in further detail below:

a) amounts set aside in respect of service charges payable by tenants to cover future maintenance costs have been reclassified from creditors to designated reserves within Manchester and District Housing Association Limited. Comparatives for the year ended 31 March 2012 have been restated in respect of the obligations associated with these funds as below:

Income and expenditure account - surplus for the year At 31 March 2012 as previously reported Operating costs - major repairs expenditure At 31 March 2012 as restated

Designated reserves At 31 March 2012 as previously reported Effect of prior year adjustment At 31 March 2012 as restated

Creditors due within one year At 31 March 2012 as previously reported Effect of prior year adjustment At 31 March 2012 as restated

75

Year to 31 March

2012 £'000

12,973 (190)

12,783

As at 31 March

2012 £'000

12,131 751

12,882

36,451 (438)

36,013




32. PRIOR YEAR ADJUSTMENT (continued)

Creditors due in more than one year 31 March 2012 as previously reported Effect of prior year adjustment - service charges At 31 March 2012 as restated

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YOUR HOUSING GROUP LIMITED Report and Financial Statementss3-eu-west-1.amazonaws.com/24jobs-recruiters/5/YHG Financial Statements... · YOUR HOUSING GROUP LIMITED Report and Financial