East Thames Group Limited
Notes to the financial statements 1 ACCOUNTING POLICIES continued PENSIONS continued
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From the 1st April 2008 defined benefit schemes have been closed to new employees and existing employees not already in the scheme; these employees are eligible to contribute to a money purchase scheme run by Friends Provident. Employer contributions to the pension scheme are charged to the income and expenditure account as incurred. SUPPORTING PEOPLE FUNDING REGIME Charges for support services funded under Supporting People are recognised as they fall due under the contractual arrangements with Administering Authorities. AGENCY MANAGED HOSTELS The Group has brought into its financial statements only income and expenditure under its direct control in respect of agency managed hostels. HOUSING PROPERTIES Housing properties are principally properties available for rent, shared ownership, Rent Now Buy Later and intermediate/ market rent. Completed housing properties are stated at Existing Use Value for Social Housing (EUV-SH). Full revaluations of the properties are undertaken every three years and interim valuations are carried out where there are indications of a significant change in value. Housing properties under construction are stated at cost less related social housing grant and other capital grants. 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 of stock and estates. Shared ownership properties are split proportionally between current and fixed assets based on the element relating to expected first tranche sales. The first tranche proportion is
classed as a current asset and related sales proceeds included in turnover, and the remaining element is classed as fixed asset and included in housing properties at cost, less any provisions needed for depreciation or impairment. Works to existing properties are works which result in an increase in the net rental income, such as a reduction in future maintenance costs, or result in a significant extension of the useful economic life of the property in the business. Only the direct overhead costs associated with new developments or improvements are capitalised. Land donated by local authorities and others is added to cost at the market value of the land at the time of the donation. Where the land is not related to a specific development and is donated by a public body an amount equivalent to the increase in value between market value and cost is added to other grants. Where the donation is from a non-public source, the value of the donation is included as income. SOCIAL HOUSING GRANT Social Housing Grant (SHG) is payable by the Homes & Community Agency (formerly the Housing Corporation) and is utilised to reduce the capital costs of a scheme to a value which may be supported by rental income. Where SHG is received in advance of aggregate expenditure it is disclosed as a short-term creditor. When the SHG is retained following the disposal of property, it is shown under the Disposal Proceeds or Recycled Capital Grant Funds within creditors. SHG is repayable in certain circumstances and in these circumstances is included as a current liability until it is repaid. The repayment of SHG is generally subordinated to the repayment of housing loans, as agreed with the Homes & Communities Agency. Under the requirements of the SORP 2008, capital grants are shown as a deduction from the cost of housing properties on the balance