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annual accounts

2012


Family Mosaic Housing Consolidated financial statements for the year ended 31 March 2012

Contents The Fast Read Who We Are Why We Exist What We Think

3 3 4

Who runs Family Mosaic Board membership and advisors

7

Chairman’s statement

8

Our results Operating and financial review

10

Statement of responsibilities of the Board Corporate governance Report of the independent auditors to the members

23 24 25

How we behave

Our 2012 financial statements Income and expenditure account Balance sheet Cash flow statement Notes to the financial statements

26 27 28 31

Where to find us

64

FINANCIAL STATEMENTS 2012 | 1


2 | FAMILY MOSAIC HOUSING


The fast read For a summary digest of this annual report please read the next 3 pages. The full story is on pages 7 to 63. WHO WE ARE Family Mosaic is a leading housing association providing affordable homes and Care and Support services to those on low incomes, or in need. We have a wide range of services including: Low cost affordable rented housing; Shared Ownership schemes; Support services for Adults with learning disabilities; Mental health; Older people; Young people; Homeless singles; Families. We have over 23,000 properties, serve over 45,000 residents and support a further 8,000 people through our supported housing services. It is important that we deliver quality homes and services, and we aim to be in the top quartile performance amongst our peers in all the areas we operate in. We have around 2,250 staff operating across London, Essex and the south of England. WHY WE EXIST Our mission and values are: 5 Star Services – aiming beyond Government standards; Big but Local – benefiting from being a large organisation but applying that at a local level; We Can – demonstrating a can-do culture; More Homes and Stronger Communities – growth through more new homes each year and expansion of Supported Housing activities which add value to local communities. We are a not for profit business. As such we reinvest all our surplus into our housing stock, and use our financial strength to finance the construction of new homes. We want our homes and communities to be the localities of choice and to that end we use all the skills and technology we can harness to make it happen. We apply the highest design principles, as expressed in our Design Guide, to reduce running costs and create desirable homes. We are also driving efficiencies so we can invest the maximum possible in front line repairs, maintenance and services. This applies to back office functions (where we have one of the lowest cost bases) and procurement, so we achieve value for money and more works.

FINANCIAL STATEMENTS 2012 | 3


The fast read

WHAT WE THINK We have a very strong financial position with plenty of funding and scope for growth. 2011–12 saw the introduction of the Government’s new Affordable Homes Programme which completely changes rent setting, and funding for housing. We are increasing the amount of development for sale in order to keep rents low. Our tenants are going to be affected by changes to how benefits are paid. We have produced a Welfare Reform strategy to guide us in making sure we and our residents manage these changes. As part of that, we are in a pilot scheme with the Department for Work and Pensions to test new arrangements around payments. Budget cuts to care and support services will continue to impact the provision of these services. HOW WE’RE DOING Financial summary Turnover

£181m

9% change

£165m Operating surplus

£48m

11% change

£43m Operating surplus as % of turnover

27% 26%

Net surplus before taxation

£38m

12% change

£34m Borrowings

£653m

11% change

£586m Gearing

43.5%

5.5% change

41.2% Interest cover ratio

3.3 2.8

Arrears

4.6% 5.1%

Void turnaround time (days)

27 29

Number of new homes

1,111 889

4 | FAMILY MOSAIC HOUSING


The fast read

2012 RESULTS This was another good year for us. We reduced costs in our repair programmes and improved our operational efficiency. As a result operating surplus increased from 26% to 27%. CASH FLOW During the year we borrowed a further £67m from our loan book, which has been used to finance the delivery of new homes. Our high operating surplus, combined with sales proceeds, helps keep our borrowing to a minimum. We improved cash collection on rent arrears and debtors. We ended the year with low gearing (compared to sector accepted averages) and £204m of borrowing facilities and cash available for future funding. On a simple basis the cash flows are as follows: Surplus Spend on

Charitable donations Development of new homes Improvements to our stock We had more cash at year end And increased borrowing by

£38m (£2m) (£82m) (£15m) (£6m) (£67m)

WHERE DOES THE RENT GO? Average rent

£98 per week Management costs

£16

Financing

£29 £36 Repairs and maintenance

£17 Development/ Other services

FINANCIAL STATEMENTS 2012 | 5


6 | FAMILY MOSAIC HOUSING


Who runs Family Mosaic BOARD Ian Peacock John Owen Mike Verrier

Chair Deputy Chair Treasurer

Barry McNamara Brendan Sarsfield Cath Shaw Claire Tiney Ian Vaughan Janine Desmond Keith Clancy Pam Aujla Richard Capie Richard Stevens Sam Hall

appointed December 2011

MANAGEMENT TEAM Brendan Sarsfield Dick Mortimer John Gibbons John Schofield Ken Youngman Yvonne Arrowsmith

appointed May 2012 resigned March 2012 resigned September 2011 resigned September 2011

Group Chief Executive Group Development and Asset Management Director Group Director of Corporate Services Group Director of Research & Development Group Finance Director Group Operations Director

COMPANY SECRETARY Heather Renton REGISTERED OFFICE Albion House 20 Queen Elizabeth Street, London, SE1 2RJ Registered under the Industrial and Provident Societies Act, No: 30093R Registered by the Homes and Communities Agency: L4470 ADVISORS Auditors KPMG LLP 1 Forest Gate Brighton Road Crawley, RH11 9PT

Bankers Barclays Bank plc 1 Churchill Place London, E14 5HP

FINANCIAL STATEMENTS 2012 | 7


Chairman’s statement Family Mosaic aims to be a strong organisation helping those in greatest need. The changes to the social housing sector which I described in my Statement last year are beginning to have an effect on the way in which we provide housing and other services. Government grant for new building has fallen sharply and that for fully subsidised rental properties has been cut particularly severely. These grant reductions, delays in the new grant system being introduced and delays in land purchase and planning have led to a precipitate fall in our new starts from over 1,100 units in 2010-11 to 160 in 2011-12. We expect the new build figure to recover, but it is not going back to 1,100 homes unless funding from the government changes. Constraints on local authority budgets have put pressure on supported housing contracts. Where we can make efficiency improvements we will do so and thereby lower costs. However we are not prepared to cut service levels below those we consider to be appropriate, nor will we cross subsidise supported housing from our general needs housing business. If necessary we will not re-tender for contracts. Financially we are in a strong position. Our surplus for the year was £38 million. This surplus is principally used to reinvest in new properties for rent, though we also increased our community development budget from £1 million to £2 million. We hope, through this increased community development spend, to help more of our tenants into jobs and to build flourishing communities for the benefit of our own tenants and their neighbours. Gearing is low at 44%, though this percentage is likely to rise as we fund more of our new build from our own resources rather than Government grant, and interest cover is comfortable. We were pleased to receive a Aa2 credit rating from Moody’s in March 2012. During the year we acquired the ‘In Touch’ Supported Housing business from Hyde Housing Association. This acquisition extends our activities throughout the South East region and helps to give our supported housing business critical mass. The ‘In Touch’ business includes a Handyman service, which provides small scale repairs and other similar jobs for tenants and others. We are considering whether such a service can be introduced into other parts of Family Mosaic, in particular for our own tenants. Also during the year we sold our Temporary Housing activity to Notting Hill Housing Trust. Your Board believes that the sale and purchase of businesses and properties to and from other Housing Associations can improve the efficiency of both parties, to the long term benefit of residents and service users, and we shall continue to search actively for these opportunities. We have devoted considerable management resources to repairs performance. Tenant satisfaction, which is strongly influenced by satisfaction with repairs, failed to improve as expected. During the year our repairs contract with Morrisons came to an end. We are in productive discussions with Mears on amending their contract to our mutual benefit and we are using a greater variety of contractors for specific work. The maintenance sector is operating on low margins and we have to ensure we benefit from both savings and improved quality. The social housing sector is a dynamic, rapidly changing one. While data is collected on many aspects of the sector, there is little evidence of tenants’ likely reactions to the changes which are taking place. We have tried to address this gap by producing research documents on Lifetime Tenancies; Affordable Rent and Personalisation. We hope that these contributions will help inform the debate on these crucial questions.

8 | FAMILY MOSAIC HOUSING


Chairman’s statement

Our staff often work in difficult and demanding conditions. Furthermore current economic conditions have put more pressure on wages and other benefits. We are most grateful for the dedication which our staff show to those in their care, who are often the most vulnerable and needy in society. There were several changes to the Board in 2011-2012. Sam Hall retired after 7 ½ years as a tenant Member and Richard Capie left to take up a post in New Zealand. I am extremely grateful to both Sam and Richard for their energy, wisdom and counsel. Family Mosaic has benefitted greatly from their work. Barry McNamara and Janine Desmond both joined us during the year. Barry has a great deal of experience of Family Mosaic having been a tenant for many years and Janine brings expertise on the supported housing sector. We welcome both of them to the Board.

Ian Peacock

FINANCIAL STATEMENTS 2012 | 9


Our results – Operating and financial review The Board presents this report and Financial Statements for the year ended 31 March 2012. These results once again show us as being financially strong. We use our resources to reinvest in the business and realise our ambitions. DESCRIPTION OF THE BUSINESS As a Group we own and manage 23,245 properties, across 27 London Boroughs, and in Essex. These are mostly provided at very low rents, made possible through capital grants from government, and private sale activity. We have a significant Supported Housing business providing nursing, care and support services to around 8,000 people. These are funded through Supporting People, Health, Adult Social Care and other grants. KEY OBJECTIVES Our vision is to provide QUALITY HOMES and THRIVING COMMUNITIES. OUR VALUES ARE CLEAR Customer Focus, Learning, Effective, Ambitious, Responsive WE HAVE FOUR KEY OBJECTIVES TO ENABLE THIS VISION TO BE MET: To have a WE CAN attitude. To deliver a 5 STAR service. To be BIG BUT LOCAL MORE HOMES, STRONGER COMMUNITIES.

STRATEGY We will continue to influence and lead sector thinking on delivery and strategic issues. This will include looking at the links to health, wealth and well being, and increasing employment for our residents. The sector has and is being subject to big changes, and we are trying to react to these in a thoughtful and considered way.

10 | FAMILY MOSAIC HOUSING

Recent reductions in the level of grant funding available for new homes and the option to charge higher rents on social housing, have changed the sectors’ dynamic. This, combined with welfare reform changes, which will have significant effects on our residents (including in some cases their ability to pay), has resulted in considerable debate as to how we deliver new homes, what we charge for them, and indeed our purpose. We have decided to maintain rents at ‘target’, rather than move to the higher ‘affordable’ levels now available. This has required a big change in our development programme, which now includes private sale to provide the subsidy previously coming from government grant. Because of this increased dependence on sales, and the higher borrowing to support it, our new homes programme is much smaller than previously, and we are more dependant on our sales success to achieve it. We are planning to deliver around 1,600 homes for 2012–15. Roughly half will be Social rent, the rest will be Shared Ownership and private sale. The overall level of new build is roughly half our previous targets. We will monitor outcomes and amend our approach as needed, particularly if we do not achieve expected sales proceeds, since these are vital to our delivery model. Our Care and Support business has been subject to cuts in funding over the past few years. We believe that the services we provide will continue to be needed in the long term and will probably increase. That, combined with the excellence of our services and our confidence in our ability to manage these financially, has led us to continue to target growth opportunities. Repairs and maintenance are key to our customers. We are introducing new partners and management processes to improve service and satisfaction levels. A trial Handyman type service aimed at low level repairs and preventative maintenance is part of this.


OPERATING AND FINANCIAL REVIEW

We are targeting G15 top quartile performance for voids and rent arrears. We have trialled back to back tenant turnaround to minimise void periods with the intention to roll it out across the business. We have a clear strategy to manage Welfare Reform changes to ensure our tenants can pay their rent and sustain their tenancies. As part of that we are one of six Government pilots across the country to trial parts of the new Universal Credit system. This will run up to June 2013, followed by the staged introduction of the new arrangements from October 2013. Our management of service charges and leasehold services has improved, and will continue, through staffing and investment in new systems and processes.

FINANCIAL STATEMENTS 2012 | 11


OPERATING AND FINANCIAL REVIEW

PERFORMANCE IN THE PERIOD We are pleased with the financial performance of the Group.

Repairs costs reduced under our changed contracting arrangements. Service levels have been less than we’d have liked but are beginning to improve.

Overall Net Surplus for the period was £38.4m before tax, 12% up on the previous year.

During the year our maintenance expenditure in total (including capitalised expenditure) amounted to £1,664 per unit (2011: £1,857). Recoverable service charge cost amounted to £377 per unit in the year (2011: £308).

Our Care and Support business had a tough year dealing with Supporting People budget cuts. This necessitated a restructure of pay and conditions to our staff, the costs of which have been provided for in the accounts. As part of our long term growth strategy for this business we acquired In Touch, a Care and Support business based in Kent, Sussex and Hampshire. This reflects our belief in this market, despite the current difficult trading conditions. We sold our London based Temporary Accommodation business at the year end, having decided that we were sub scale in this area and that services would be better provided by a larger player.

We spent £156m on new homes in the year. This represents a spend of £6,796 (2011: £5,029) per unit on new supply. During the year we drew down £67m on our loans to fund our development programme bringing total loans drawn down to £653m. This level of debt equates to ��28,636 per unit owned (2011: £26,497). We continue to benefit from the low interest rate environment, maintaining a high proportion of variable rate loans to maximise this advantage.

Units and Income 23500

200000 180000

23000

160000 22500 140000 22000

120000

21500

100000 80000

21000

60000 20500 40000 £000s Income

Units

2007/8

12 | FAMILY MOSAIC HOUSING

2008/9

2009/10

2010/11

2011/12


OPERATING AND FINANCIAL REVIEW

FINANCIAL REVIEW The Association’s investment in homes is financed predominantly by long term loans, capital grants and its own reserves. We have loan facilities totalling £845m (2011: £797m) with maturity dates running out to 2048 (2011: 2048).

Our Gearing is 43.5% (2011: 41.2%) measured as housing loans net of deferred loan issue costs compared to reserves plus capital grants. This is well within our financial covenants and fairly conservative for the sector. Interest cover is 3.3, again well above the minimum required by our covenants, and up on the previous years.

Group Repayment analysis less than 1 year

0.2%

between 1 and 5 years

5.2%

between 5 and 10 years

10.1%

between 10 and 20 years

44.7%

more than 20 years

39.8%

Our major lenders are Barclays Bank, Lloyds TSB, Nationwide and Santander. All bank debt is fully secured against housing assets.

In anticipation of a potential capital market bond issue, we had our business credit rated by Moody’s during the year. We were scored as Aa2, among the best in sector, and higher than many financial institutions. At present we have adequate loan facilities, having secured an additional £50m from Clydesdale Bank in the year, so the timing of any Bond issue remains to be agreed. This will be determined by market conditions and our forecast requirement for funds.

3.5

We have a Treasury policy which sets out, among other things, how new loans can be raised, the profiling of repayments and the exposure to variable interest rates. At year end variable interest rate loans were 43% (2011: 37%) of our loan book. This is in line with our policy, which is to have a maximum of 80% fixed. We increased the variable element this year in order to retain more flexibility, and we have again benefited from low short term interest rates as a result. One of the key decisions for us is when, or if, to fix, so this is being monitored. Our bank loans have a variety of covenant provisions and definitions which are particular to the loan in question. Financial covenants include interest cover and gearing ratios.

3.0

2.5

2.0

1.5

1.0

2008

2009

2010

2011

2012

Interest cover excluding disposals

FINANCIAL STATEMENTS 2012 | 13


OPERATING AND FINANCIAL REVIEW

KEY INDICATORS Measures Used By The Board We monitor our performance through the use of financial and non financial indicators, which are produced monthly. The following are the key indicators. • Resident Satisfaction • Operating Surplus • Net surplus as a % of Income • Current Arrears % • Net Development Spend • Central Overhead as a % of Income • Management Cost per Unit per Week Resident Satisfaction We measure three components of satisfaction. 1 Overall General Needs satisfaction 2 Repairs satisfaction 3 Supported Housing satisfaction Each month 200 residents are interviewed by an independent specialist about the quality of our housing management service. The results for the current year showed that overall satisfaction for General Needs tenants taken cumulatively over the year is 65%. This is largely static compared to previous years, and we believe is affected by repairs and issues with Service Charge management. The last official STATUS survey (a sector wide consultation done on the same basis by all housing associations) in 2010 showed satisfaction levels of 74% with Family Mosaic as a landlord. A separate independent monthly tracking survey of 200 tenants who have received a Repair in the last month shows satisfaction with this service at 73%. The official STATUS survey in 2010 showed 68% satisfaction with this service. Although this suggests that the repairs service has improved, tenants who have recently received a repair consistently rate the service more highly than tenants as a whole, which is what STATUS measures. In Supported Housing we measure overall satisfaction by surveying every person who receives support

14 | FAMILY MOSAIC HOUSING

over the year. The overall average this year was 97%, maintaining the excellent result achieved last year (97%). The average of these three satisfaction surveys (i.e. General Needs, Repairs, and Supported Housing) is a lead driver for performance. A stepped target is set each year which, if met, will allow performance bonuses to be paid to all staff. The target this year was not met. The table below shows this average tenant satisfaction for the last five years, and shows a generally improving trend, until this year. We believe we have actions in place to improve this. The target for 2013 is 84%.

Resident Satisfaction

2008 77%

2009 80%

2010 82%

2011 83%

2012 82%

Operating Surplus This measures our surplus before property disposals and interest. It is used to measure controllable performance at cost centre and department levels as well as for the organisation as a whole, and we would expect to see this increase over time. As a percentage of turnover our operating surplus is 26.6%. We compare this against the G15 group of fifteen leading London Housing Associations which in 2011 reported an average of 23.3%.

Operating Surplus Actual (£000’s)

2008 £27,229

2009 £25,537

2010 £31,351

2011 £43,150

2012 £48,086

Current Arrears % This measures the amounts of rent owed by current tenants compared to their annual rent charge. Our rent arrears reduced once again in 2012 in a tough environment where income levels are declining and benefit levels are changing. More changes are coming in the future, as the Government seeks to


OPERATING AND FINANCIAL REVIEW

introduce Universal Credit and the direct payment of benefits to tenants. We are part of a pilot scheme to test out these new arrangements. Our medium term target remains as 5% or less, which we are pleased to report has now been achieved. In 2011 we were in the second quartile in the HouseMark G15 peer group benchmarking report, the same as the previous year, as other Associations also improved their performance. In terms of cash collection, we achieved 100% against a target of 100%. Our bad debt costs equates to £30 per unit per year. We are pleased to report that while arrears performance improved, we actually had fewer evictions in the year.

first tranche shared ownership sales). This gives a measure of relative efficiency. Our target is to remain at 10% or less and this was again achieved. Costs this year included costs associated with the acquisition of In Touch. In the HouseMark G15 benchmarking report for 2011 we were in the second quartile for low overheads. This G15 report uses a slightly different measure from ours above, but it gives a good indication of how we compare. Our competitors have generally been getting more efficient in this area, and we recognise the importance of maintaining value for money. We have initiated reviews of our central costs, specifically around the resource required for Care and Support, where the demands have been growing. Central Overhead %

Current Arrears %

2008 8.3%

2009 6.9%

2010 5.7%

2011 5.1%

2012 4.6%

Net Development Spend We target and measure Net Development Spend in the year, which is the total spent on new development, less grants received less proceeds on new build sales units. This is important because this sum predominantly drives the funding requirement of the business. The development team are tasked with managing within the parameters set, to ensure the business stays within banking covenants and the facilities available. During the year net spend amounted to £96m (2011: £56m). Our spend was up as we acquired new sites and progressed significantly on existing schemes. Grant funding is down and will continue to be low as part of the new regime. Grant is now back ended also, paid on completion not acquisition. Central Overhead % We measure the cost of central corporate services (which includes HR, Finance, I.T., Facilities, Communications, Insurance and others) as a % of total income (excluding

2008 8.8%

2009 9.5%

2010 9.5%

2011 9.2%

2012 9.2%

Management cost per Unit per Week This measure looks at the weekly cost of managing our general needs units by comparing the direct costs of managing those units, (such as housing management staff) plus indirect costs in the form of an appropriate share of central overheads, with the number of General Needs units being managed. It is reported monthly and allows us not only to target internal efficiency but also to compare against others. We wish to remain as efficient as possible and with as low a cost base as possible commensurate with service quality to tenants and users. Our cost per unit was among the lowest within the G15 in 2011 (as disclosed in the published accounts) well under the average of £20 per week, but some way off the best performers at around £10/£11 per week.

Management Cost per Unit per Week

2008 £13.57

2009 £14.20

2010 £15.43

2011 £16.13

2012 £16.41

FINANCIAL STATEMENTS 2012 | 15


OPERATING AND FINANCIAL REVIEW

HOUSING SERVICES This year we continued to roll out personalisation through our Neighbourhood Managers, offering greater choice and control to our residents. This has meant that we have been able to support more people with housing moves, helping them link in with health and social services and referring them to our tenancy support team where needed. We have continued to review value for money by re-tendering our Estate gardening and cleaning services. With input from residents we have been able to better specify the service we wish them to receive. We now have a contract manager in post to ensure that quality services are being delivered. Our Neighbourhood Managers have been reviewing the way in which we carry out tenancy audits to stop sub-letting of our properties, this will see a much more targeted approach being adopted in future. We increased the number of residents sitting on our anti-social behaviour forum, this has given us a much better insight into how this impacts on our residents, and the tenant scrutiny panel carried out a review into how we manage anti-social behaviour, both of these initiatives will help us to provide more tailored services in future. In tough economic times we have tailored our social and financial inclusion work to give greater opportunities for our residents, we expanded our employment and training services to give people more opportunities for volunteering, work placements, apprenticeships and employment, and have been building community relationships through our ‘Greening communities’ and ‘Get connected’ projects. Our volunteering service was recognised as providing innovative opportunities by the Mayor of London. We launched our Youth Academy and the Youth team have worked with over 1,000 young people in the year;

16 | FAMILY MOSAIC HOUSING

this has led to some gaining employment and starting their own businesses. They received an award for innovation in youth services by the Tenant Participation Advisory Service. We have also increased the number of our welfare rights officers and now employ a licenced debt advisor to support our residents through the welfare reform changes impacting their benefits. In terms of our housing we took an extra 500 units into management and have helped a further 300 people move from our transfer list. We also carried out a review of our transfer list in terms of value for money and agreed a change in criteria for tenants wanting to join the list to enable the team to concentrate on reducing overcrowding and under-occupation in our properties. SUPPORTED HOUSING 2011/12 has been a difficult year for our Care and Supported Housing services, with significant pressure on public spending, and we have experienced cuts in contract values for almost all of our services. These have ranged from 6-17%. We have worked hard to ensure that the cuts are not felt by our customers and that the quality of services remains high. We embarked on a full Terms & Conditions change process to ensure our services are providing value for money and that all of our care and support contracts are independently financially viable. Despite the pressure on budgets, we have been successful in securing significant new business in the year. The transfer of In Touch Care and Support brought £14m worth of contracts into the Group and expanded our area of operation into the South of England. We were also successful in securing £1.9m of new business for mental health in Hackney and Lambeth, Care Navigator in Kent and have retained £3.9m of existing contracts re-tendered in the year. On the negative side we have lost £1.3m worth of contracts through retendering including our long established TST service in North London, Homelessness service in Southampton and some of our Mental Health services in Lambeth.


OPERATING AND FINANCIAL REVIEW

We have been expanding our personalisation work, increasing the choice and control our customers have over the services they receive, with over 100 customers now ‘purchasing’ their service through individual service funds and personal budgets. Due to the funding cuts we have had to carry out a large re-organisation in Care and Support with significant redundancy payments in the year, and this, alongside the buy out option for terms and condition changes, has meant losses on some contracts in the financial year. The surplus on our properties has offset this. SUBSIDIARIES Charlton Triangle has just embarked on a major reinvestment programme. This year has seen projects commence on replacing lateral mains to all our blocks, upgrading communal lighting, refurbishment of six lifts, major fire safety improvements to all our blocks above six stories and replacement of an old communal boiler in Valiant House, a tower block of 93 flats.

files and processes has also been a priority delivering both service efficiencies and savings on office supplies. Void turnaround has also been reduced significantly with the successful implementation of a ’back to back’ lettings initiative and has seen some properties let on a one day turnaround. More significantly, Charlton Triangle continues to work with over 20 local partner agencies enabling us to lever in a wide range of neighbourhood services which go far beyond a traditional housing management model. Old Oak has concentrated on achieving value for money this year with a thorough governance review to understand what value the Old Oak Board can continue to bring to the Old Oak Ward, now that the stock transfer agreement from Hammersmith and Fulham has expired and the regeneration programme is nearly complete. As part of this process the Board has set out some proposals that represent a new and coherent strategy for Old Oak that will enable it to maximise the advantages it has as a community based Association providing services beyond pure housing management. The proposals link well with Hammersmith and Fulham’s aspirations for Old Oak to take the lead role in deprivation in the local area.

Community development continues to be a major strategic priority as we adapt our services to meet the needs of residents in a changing and challenging environment of welfare and housing reform. Our New Leaf Centre opened in July 2011. Services being offered include employment and training advice, volunteering, health and well being courses with the Primary Care Trust, welfare rights advice, debt advice, counselling and reiki therapy. A local resident is now employed as receptionist/ administrator, and the centre is proving extremely popular with residents. Charlton Triangle was also a key partner with Charlton Athletic Community Trust in a successful bid to run local authority youth services in the area and an expanded range of year round activities is being rolled out in 2012 /13.

In addition to the governance review, Old Oak has reviewed its ground maintenance services to obtain better value for residents. The Board has looked to gain economies of scale and share resources with Family Mosaic Housing, by joining their procurement of new cleaning and grounds maintenance contractors. The grounds maintenance costs are now also charged to the whole of the estate and not just Old Oak tenants, in line with the original intentions of the stock transfer agreement. Both of these initiatives have substantially reduced the service charges to our tenants in line with their requests.

Value for money has been a theme throughout the year. Our volunteering programme, where local residents gain work experience in the local office, now means we rarely have a need for temporary agency staff. Digitisation of

The Community and Children’s Centre has also continued to grow its services increasing revenue funding and attendance figures, most notably with the development of our new job club, senior and junior youth clubs, and

FINANCIAL STATEMENTS 2012 | 17


OPERATING AND FINANCIAL REVIEW

health service provisions. Working with our partners on various initiatives and services, and by sharing resources, we have been able to provide the Old Oak Ward with high quality value for money services that actively engage and help the communities within our Ward to thrive. VALUE FOR MONEY The Board has adopted a Value for Money strategy, which has been in place for two years. The approach is to ensure all staff are aware of the need to deliver effective services, which is a balance of service quality and cost. A range of measures has been agreed to monitor our success, including an overall value for money index. Pleasingly this has shown an improving trend overall. Some individual examples of outcomes during the year include – saving through buying bulk waste containers instead of renting from Local Authorities; a new process for rent statement production (including an electronic version); bringing some training in house that was previously outsourced; and introducing Dulux paint packs for tenants to decorate their own properties when moving in.

There is now a new regulatory code for assessment of our Value for Money activities. Board and Management will be reviewing our approach in light of this. • FACTORS THAT MAY AFFECT FUTURE PERFORMANCE • The government has introduced a programme of welfare reforms, which will affect our tenants financially. This may affect their ability to pay rent, with consequent increases in bad debt losses. We are putting resources in to help our tenants manage the changes, and are part of a pilot scheme being run by the Department for Work and Pensions to test the new arrangements, where we have partnered with Southwark Council. • The ability to raise finance, either from banks or in the capital markets, is by no means certain. We are financially strong, have a good credit rating and are well placed with potential funders. We continue to manage relationships carefully to maintain our strength as a lending proposition.

18 | FAMILY MOSAIC HOUSING

As part of our new ‘Affordable Homes’ development programme, we are increasing the number of units for sale, either as Shared Ownership or for Private Sale. Our ability to sell these units at the right price is a risk to the business. Whilst we have demonstrated our ability to do so, we continue to monitor and manage this closely. Acquisition of land and properties for development has risks. There are uncertainties in development, with the risk that land purchased may be overvalued, costs overrun or sales are not achieved. As a result we can face write-offs of cost and write-downs in value. Our scheme and management assessment processes are aimed at minimising such occurrences. Our Responsive repair service is largely dependant on one contractor. This represents a risk in delivery terms should that partner fail. We monitor their position, and have back up options. Supported Housing is funded by grants such as Supporting People. Grants have been cut, which has affected the viability of schemes. We have robust processes in place to react to and manage such issues. Auto-enrolment of staff in pension schemes as required by legislation may increase our costs, as will funding deficits on existing pension arrangements.

PENSION COSTS The Association participates in the Social Housing Pension Scheme (SHPS). This is a multi-employer scheme, so we do not recognise any fund deficits in our accounts. The Income and Expenditure charge represents only the employer contributions payable. The scheme has a funding deficit which increased following the most recent revaluation and this led to increased contribution rates. Employees who joined us prior to 1 April 2010, if they elected to join, are in the SHPS Career Average Earnings


OPERATING AND FINANCIAL REVIEW

based final salary scheme. Employees joining since then have access to a defined contribution scheme, also under the SHPS umbrella. A number of employees are members of the NHS pension scheme. We pay fixed contributions and the Exchequer funds the scheme. We also have a small number of employees in the Local Government Pension Scheme under which funding deficits or surpluses are recognised in our accounts. PAYMENT OF CREDITORS Our policy is to pay suppliers in accordance with contractual arrangements. EMPLOYEES It has been an important and eventful year for Family Mosaic. We acquired the Supported Housing division of Hyde Group, known as In Touch. This meant we added a further 500 staff to the 1,700 already employed by the Group. In people management terms our year was also defined by the project which changed the Terms and Conditions for all Family Mosaic staff. This meant that 90 staff saw salaries go up, 400 saw their salaries reduce and weekly hours were standardised at 37 ½ hours per week. Our staff have remained focused and true to the We Can spirit of service delivery, throughout this period. We now look forward to a period of morale building to move on from this eventful year to a more stable period. We are committed to equal opportunities for all employees, and this is particularly central to our success because of the diverse communities we serve. We hold the status of Disability Symbol User by the Department for Work and Pensions, recognising our positive approach to employing disabled people.

We see communication as a big part of employee relations. We do this in a number of ways, some of which are ‘cascade’ bulletins which share the issues of the day, successes and items from the Management Team agenda, Group meetings, and other social events. Attracting and retaining good staff is key to our success. We have HR policies and practices that support this. Increasingly we are employing good quality staff from outside the housing sector. HEALTH AND SAFETY The Board recognises its responsibilities on all matters relating to Health and Safety. We have appropriate policies, and provide staff training and education through dedicated Health and Safety officers. BOARD MEMBERS AND MANAGEMENT TEAM Members of the Board and Management Team are set out on page 7. Board Members are drawn from a wide background bringing together professional, commercial and local tenant experience to provide both challenge and support to the Management Team. The Chief Executive of the Association is a member of the Board. Management Team members hold no interest in the shares of the Association and act as Executives within authority delegated by the Board. We have insurance policies that indemnify Board Members and Management Team against liability when acting for the Association. SERVICE CONTRACTS Management Team are employed on the same terms as other staff, their notice periods ranging from 3 to 6 months. Remuneration details are included in note 6 to the Financial Statements.

FINANCIAL STATEMENTS 2012 | 19


OPERATING AND FINANCIAL REVIEW

NHF CODE OF GOVERNANCE We are pleased to report that Family Mosaic complies with the principal recommendations of the NHF Code of Governance (revised 2009), with the exception of the fixed terms of appointment for Board Members which will be clarified at the AGM in September 2012 with the proposal to adopt the National Housing Federation 2011 Model Rules. TENANT INVOLVEMENT We have a wide range of ways that our tenants and customers can participate in decision making across the Group. These include a customer panel, forums and groups, Panel Plus and a Scrutiny Panel. Panel Plus is made up of tenant representatives from each of the Regions we work in, and they have been formally involved in policy changes and strategies in the last year. The Scrutiny Panel are tenant representatives charged with scrutinising the work we carry out, to help us to continuously improve. They have carried out three inspections in the last year; access and customer care, anti-social behaviour and repairs. We have a clear and simple complaints policy that we issue to all tenants. During the year we received 1,082 (2011: 793) formal complaints. We attempt to resolve all complaints as quickly as possible, however, 158 (2011: 96) remained outstanding at year end. We continue to investigate and take action in respect of these, with a view to resolving them professionally and amicably. INTERNAL CONTROLS ASSURANCE The Board acknowledges that it has overall responsibility for establishing and maintaining the whole system of internal control and for reviewing the effectiveness of the system of internal control, both for the Group and for the Association. The system of internal control is designed to manage, rather than eliminate, the risk of failure to achieve business objectives, and can only provide reasonable,

20 | FAMILY MOSAIC HOUSING

and not absolute, assurance against material misstatement or loss. The process for identifying, evaluating and managing the significant risks faced by the Group is ongoing, and has been in place throughout the year and up to the date of approval of the annual report and financial statements. The Board receives and considers reports from management on these risk management and control arrangements at meetings throughout the year. The key elements of the internal control framework include: • Board approved terms of reference and delegated authorities for all Committees • clearly defined management responsibility for the identification, evaluation and control of significant risks • robust strategic and business planning processes • annual review of the Group’s risk map by the Board, with updates at each Board meeting • detailed financial budgets and forecasts for subsequent years • formal recruitment, retention, training and development policies • formal authorisation and appraisal procedures for all significant new initiatives and commitments • regular reporting of key performance indicators to assess progress towards the achievement of key business objectives, targets and outcomes • Board approved whistle blowing and anti-theft and corruption policies • detailed policies and procedures in each area of the Group’s work • a programme of internal audits every year We have a clear policy on fraud, which has been approved by Board, and distributed to all staff. This policy requires a register to be maintained of actual and attempted fraud, with all cases reported to Board. We have had two fraud cases reported, one in the year, and one since year end.


OPERATING AND FINANCIAL REVIEW

The Board has ultimate responsibility for the system of internal control but, within this, it has delegated authority to the Risk Management and Audit Committee to regularly review the effectiveness of the system of internal control. The Board receives reports from this Committee together with minutes of the meetings. The means by which the Risk Management and Audit Committee reviews the effectiveness of the system of internal control include considering risk reports, internal audit reports, management assurances and the external audit management letter. Failings or weaknesses identified from internal audit reports and other work are reported with recommendations to the Risk Management and Audit Committee, and implementation plans are monitored. The Risk Management and Audit Committee has received the Chief Executive’s annual review of the effectiveness of the system of internal control for the Association and its subsidiaries, together with the annual report of the internal auditor, and has reported its findings to the Board. 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. DISCLOSURE OF INFORMATION TO AUDITORS The Board Members who held office at the date of approval of this Board Report confirm that, so far as they are each aware, there is no relevant audit information of which the Association’s auditors are unaware, and each Board Member has taken all the steps that they ought to have taken as a Board Member to make themselves aware of any relevant audit information and to establish that the Association’s auditors are aware of that information.

ANNUAL GENERAL MEETING The Annual General Meeting will be held on 20 September 2012. AUDITORS A proposal to re-appoint KPMG LLP as auditors of Family Mosaic Housing will be tabled at the forthcoming Annual General Meeting. THE FUTURE Our main objective is to continue to improve our services. Most of our services are currently operating at higher levels of service quality than in the past. A key area for us is Leaseholder services and service charge management generally, where we have made significant progress which will continue. We will also be ensuring our repairs and maintenance contracts provide top quality service. Development of new homes will continue, and with a greater requirement for sales to subsidise low rent, sales risks will be managed closely. We are also open to opportunities for stock transfers or mergers that may arise. A key part of our activities is to maintain our financial strength. Accordingly we will be continuing our approach of monitoring and managing income and costs carefully. The changes to welfare being introduced by the Government will impact us and our tenants. We have a strategy to deal with this including involvement in a payments pilot with the Department for Work and Pensions running to June 2013.

FINANCIAL STATEMENTS 2012 | 21


HOW WE BEHAVE

22 | FAMILY MOSAIC HOUSING


HOW WE BEHAVE

Statement of responsibilities of the Board STATEMENT OF THE BOARD’S RESPONSIBILITY IN RESPECT OF THE BOARD’S REPORT AND THE FINANCIAL STATEMENTS The Board is responsible for preparing the Board’s Report and the financial statements in accordance with applicable law and regulations. Industrial and Provident Society law requires the Board to prepare financial statements for each financial year. Under those regulations the Board have elected to prepare the financial statements in accordance with UK Accounting Standards.

Registered Social Landlords General Determination 2006. The Board has general responsibility for taking such steps as are reasonably open to it to safeguard the assets of the Group and the Association and to prevent and detect fraud and other irregularities. The Board is responsible for the maintenance and integrity of the corporate and financial information included on the Association’s website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

The financial statements are required by law to give a true and fair view of the state of affairs of the Group and the Association and of the surplus or deficit for that period. In preparing these financial statements, the Board is required to: • select suitable accounting policies and then apply them consistently; • make judgements and estimates that are reasonable and prudent; • state whether applicable UK Accounting Standards and the Statement of Recommended Practice 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 do so.

Ian Peacock Chair of the Board 18 July 2012

The Board is responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Group and the Association and enable them to ensure that its 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 Requirements for

FINANCIAL STATEMENTS 2012 | 23


HOW WE BEHAVE

Corporate governance CORPORATE GOVERNANCE The Board is committed to high standards of corporate governance and has adopted the National Housing Federation’s code of governance. Family Mosaic meets the Homes and Communities Agency performance standards relating to governance. The organisation is managed and monitored by the Board, a number of Committees (which are listed below) and a Management Team. Membership of the Board and Committees is principally of non-executive members, drawn from all walks of life, including relevant professionals and our tenants. Appointments are made via selection panels. The non-executives receive no remuneration for their services. COMPOSITION OF THE BOARD The Board consists of a maximum of twelve members. The Chief Executive of the Management Team is a member of the Board. COMMITTEE STRUCTURE The Board has set up the following Committees to facilitate the direction of the Association’s affairs: FINANCE AND DEVELOPMENT COMMITTEE This Committee consists of a maximum of eight non-executive members, with Mike Verrier (Treasurer and Board member) as Chair, and meets at least three times a year. The principal function of this Committee is to assess, monitor and maintain the financial viability of the Group, and oversee development activities. RISK MANAGEMENT AND AUDIT COMMITTEE This Committee consists of a maximum of five non-executive members with Richard Stevens (Board Member) as Chair and meets at least three times a year. The Committee ensures that Family Mosaic has in place and operates appropriate controls to safeguard its assets and manage

24 | FAMILY MOSAIC HOUSING

risks. It recommends to the Board the annual report and financial statements. It appoints the internal auditors and recommends to the Board the appointment of external auditors. APPOINTMENTS AND REMUNERATION COMMITTEE This Committee comprises three Board members and meets at least once a year, and as and when required. It has responsibility for the Chief Executive’s remuneration and appraisal, and the appointment of Management Team and Board members. MANAGEMENT TEAM This Team has executive responsibility for the day to day running of the business, and its members are listed on page 7.


HOW WE BEHAVE

Report of the independent auditors REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF FAMILY MOSAIC HOUSING We have audited the financial statements of Family Mosaic Housing for the year ended 31 March 2012 set out on pages 26 to 63. 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 Association’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 23, 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 (APB’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 APB’s website at: www.frc.org.uk/apb/scope/private.cfm.

OPINION ON FINANCIAL STATEMENTS In our opinion the financial statements: • give a true and fair view, in accordance with UK Generally Accepted Accounting Practice, of the state of affairs of the Group and Association as at 31 March 2012 and of the Group and Association surplus for the year then ended; and • have been properly prepared in accordance 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 Requirements for Registered Social Landlords General Determination 2006. MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION We have nothing to report in respect of the following matters where the Industrial and Provident Societies Acts 1965 – 2003, the Industrial and Provident Societies (Group Accounts) Regulations 1969, the Housing and Regeneration Act 2008 and the Accounting Requirements for Registered Social Landlords General Determination 2006 require us to report to you if, 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.

D A Bowen (Senior Statutory Auditor) for and on behalf of KPMG LLP, Statutory Auditor KPMG LLP, Chartered Accountants, 1 Forest Gate, Brighton Road, Crawley, RH11 9PT 19 July 2012

FINANCIAL STATEMENTS 2012 | 25


Financial statements for the year ended 31 March 2012

Consolidated income and expenditure account Group 2012 ÂŁ000 Turnover 3 Operating Costs 3 Operating Surplus 3

Surplus on ordinary activities before taxation 9 Charitable Donations

165,366

166,658

159,218

(132,501)

(122,216)

(119,602)

(116,816)

48,086

43,150

47,056

42,402

8,655

9,123

8,655

8,301

(18,327)

(18,037)

(17,622)

(16,761)

38,414

34,236

38,089

33,942

(2,000)

(1,100)

(2,000)

-

-

3

-

-

36,414

33,139

36,089

33,942

Taxation on ordinary activities 10 Surplus on ordinary activities after taxation

2011 ÂŁ000

180,587

Surplus on property sales 5 Net interest payable and similar charges 8

2011 ÂŁ000

Association 2012 ÂŁ000

All activities are classed as continuing. There is no material difference between the historical cost surplus for the year and the surplus for the year reported in the above Consolidated Income and Expenditure Account.

    

Surplus for financial year Actuarial (loss)/gain on pension scheme25 Total Recognised Surpluses since last report

Reconciliation of Movements in the Association’s funds Opening funds as previously stated Total recognised surpluses relating to year Closing Total Funds

26 | FAMILY MOSAIC HOUSING

Group 2012 ÂŁ000

2011 ÂŁ000

Association 2012 ÂŁ000

2011 ÂŁ000

36,414

33,139

36,089

33,942

(749)

1,631

(749)

1,631

35,665

34,770

35,340

35,573

2012 ÂŁ000

2011 ÂŁ000

2012 ÂŁ000

2011 ÂŁ000

253,824

219,054

231,646

196,073

35,665

34,770

35,340

35,573

289,489

253,824

266,986

231,646


Financial statements for the year ended 31 March 2012

Consolidated balance sheet Group 2012 £000 Housing properties – net cost 11

Association 2012 £000

2011 £000

2011 £000

2,053,146

1,917,638

1,972,327

1,852,610

(1,172,142)

(1,125,056)

(1,141,729)

(1,099,931)

881,004

792,582

830,598

752,679

19,140

17,892

17,975

17,748

-

-

3,585

11

57

57

-

-

900,201

810,531

852,158

770,438

Properties for sale 14

54,863

50,565

10,927

24,394

Debtors 15

34,914

23,184

102,540

65,893

Cash at bank and in hand

12,654

6,579

12,411

5,796

102,431

80,328

125,878

96,083

(53,858)

(47,700)

(52,183)

(45,987)

48,573

32,628

73,695

50,096

Total Assets Less Current Liabilities

948,774

843,159

925,853

820,534

Creditors: Amounts falling due after more than one year 17

658,536

589,263

658,118

588,816

749

72

749

72

659,285

589,335

658,867

588,888

-

-

-

-

289,489

253,824

266,986

231,646

289,489

253,824

266,986

231,646

948,774

843,159

925,853

820,534

Fixed Assets:

Social Housing Grant 11

Other tangible fixed assets 13 Investment in subsidiary 28 Homebuy Loan - net

Current Assets:

Creditors: Amount falling due within one year 16 Net Current Assets

Provisions for Liabilities and Charges 20

Capital and Reserves: Non equity share capital 21 Reserves 22

The notes on pages 30 to 63 form an integral part of these financial statements. The financial statements were approved by the Board on 18 July 2012 and signed on its behalf by:

Chairman

Board Member

Company Secretary

FINANCIAL STATEMENTS 2012 | 27


Financial statements for the year ended 31 March 2012

Consolidated cash flow statement Group 2012 ÂŁ000

2011 ÂŁ000

61,436

38,093

1,518

313

Interest paid

(25,689)

(23,329)

      !!    

(24,171)

(23,016)

Corporation tax paid

-

-

Charitable donations

(2,000)

(1,100)

     "  #  

(2,000)

(1,100)

(1,324)

-

1,186

-

(156,772)

(120,659)

Purchase of other tangible fixed assets

(2,692)

(1,134)

Sales of housing properties and other fixed assets

19,880

15,120

Social Housing Grant received

43,430

48,419

      "

(96,292)

(58,254)

Management of liquid resources

(61,027)

(44,277)

Housing loans received

68,700

17,672

Annual repayments of housing loans

(1,598)

(767)

     

67,102

16,905

INCREASE/(DECREASE) IN CASH IN THE PERIOD

6,075

(27,372)

    !  !!     Interest received

Taxation and charitable donations

" ! Acquisition of subsidiary Cash balance acquired in subsidiary Acquisition and construction of housing properties

Financing

28 | FAMILY MOSAIC HOUSING


Financial statements for the year ended 31 March 2012

Consolidated cash flow statement – continued Group 2012 £000

        !#

Increase / (Decrease) in cash and short term deposits

2011 ÂŁ000

6,075

(27,372)

Increase in loans

(67,102)

(16,905)

Movement in net debt

(61,027)

(44,277)

Net debt at beginning of year

(575,277)

(531,000)

(636,304)

(575,277)

Net debt at end of year

Group 2012 ÂŁ000

              !

Operating surplus

2011 ÂŁ000

48,086

43,150

Depreciation movement

15,973

11,590

Goodwill movement

1,000

-

750

(1,992)

Increase in debtors

(5,455)

(16,987)

Increase in creditors

1,082

2,332

61,436

38,093

As at 1 Apr 2011 ÂŁ000

Group Cash Flow ÂŁ000

As at 31 Mar 2012 ÂŁ000

Cash and short term deposits

6,579

6,075

12,654

Debt due within 1 year

(803)

(275)

(1,078)

(581,053)

(66,827)

(647,880)

(575,277)

(61,027)

(636,304)

Impairment movement

       !

Analysis of net debt

Debt due after 1 year

FINANCIAL STATEMENTS 2012 | 29


Notes to the financial statements for the year ended 31 March 2012

1

LEGAL STATUS The Association is registered under the Industrial and Provident Societies Acts 1965 to 2003 and is registered with the Homes and Communities Agency as a social landlord.

2

ACCOUNTING POLICIES The following accounting policies have been applied in dealing with items which are considered material in relation to the financial statements. Basis of accounting The financial statements are prepared under the historical cost convention and in accordance with applicable accounting standards, with special regard to the Statement of Recommended Practice: ‘Accounting by Registered Social Housing Providers: update 2010’ (the ‘SORP’), and comply with the Accounting Requirements for Registered Social Landlords General Determination 2006. The SORP was adopted in the year, but had no material impact. Basis of consolidation The consolidated accounts incorporate the financial statements of Family Mosaic Housing and its subsidiaries. Please see note 28 for details of the subsidiaries. The acquisition method of accounting is used for acquisitions, whereby the purchase consideration is allocated to the identifiable assets acquired and liabilities assumed on the basis of fair value at the date of acquisition. The results of any acquisitions are brought into the financial statements from the date of acquisition. Where the fair value of consideration paid exceeds the fair value of the net assets acquired, the difference is treated as purchased goodwill. This is amortised over its useful economic life. Turnover Turnover comprises rental income receivable in the year, revenue grants, recharges to other Associations, first tranche proceeds from Shared Ownership and income from service charges. All income is recognised on a receivable basis. Pension costs The expected cost of providing pensions is charged to the income and expenditure account in order to spread the cost over the service lives of employees in such a way that the pension cost is a substantially level percentage of current and expected future pensionable payroll. Housing properties Freehold housing properties are stated at cost. The cost of housing properties is their purchase price together with any costs of acquisition, including the incidental costs of development, interest capitalised up to the date of practical completion and directly attributable development costs. The major separate components that make up a housing property are accounted for separately. Housing properties are split between the structure and those major components which require periodic replacement. Expenditure to replace, enhance or refurbish major components is assessed against life cycle costing principles, and is depreciated in line with the useful

30 | FAMILY MOSAIC HOUSING


Notes to the financial statements for the year ended 31 March 2012

2

ACCOUNTING POLICIES – continued economic life of the component to which it relates. If the components have an estimated life in excess of 10 years they are capitalised and depreciated over their useful life. If the useful life is less than 10 years costs are charged directly to the income and expenditure account. Costs of responsive repairs and planned cyclical maintenance are, to the extent that such cost does not relate to replacing a component, recognised in the income and expenditure account as incurred. Shared Ownership Shared Ownership properties are split proportionately 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 until sold. Sales proceeds are then included in turnover. The unsold balance is classed as a fixed asset with any subsequent sale treated as a disposal of the fixed asset. In mixed tenure schemes which include shared ownership, profits arising from first tranche sales are first applied to reduce any subsidy required on general needs rented housing and thus credited to the cost of those housing properties. Profits over and above the subsidy requirement or on stand alone shared ownership schemes are recognised in the income & expenditure account. Depreciation and Impairment Depreciation is charged so as to write down the value of freehold housing properties, other than freehold land, to their estimated residual value on a straight line basis over their remaining expected useful economic lives as follows: • housing properties 120 years • building envelope and structure 30 years • bathrooms and kitchens 15 years • heating systems 10 years Properties held on long leases are depreciated over their estimated useful economic lives or the life of the lease if shorter. Depreciation is not charged on shared ownership assets. Impairment reviews are carried out on an annual basis in accordance with FRS 11 ‘Impairment of fixed assets and goodwill’. Where necessary appropriate write downs are made. Social Housing Grant (SHG) Social housing grant (SHG) is receivable from the Homes and Communities Agency and is utilised to reduce the capital costs of housing properties, including land costs. SHG due from the Homes and Communities Agency 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 Homes and Communities Agency. SHG 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 or Disposal Proceeds Fund and included in the balance sheet in creditors.

FINANCIAL STATEMENTS 2012 | 31


Notes to the financial statements for the year ended 31 March 2012

2

ACCOUNTING POLICIES – continued Other tangible fixed assets Other fixed assets are included at cost to the Association less depreciation, which is provided on a straight line basis over the periods shown below. • Freehold office premises 50 years • Leasehold office premises remaining life of lease • Renewable energy assets 20 years • Other fixed assets from 3 to 25 years Investments Investments are shown at cost. Leases Rents payable under operating leases are charged to the income and expenditure account on a straight-line basis over the lease term. Rental income under operating leases is credited to the income and expenditure account as it falls due. Agencies The transactions incurred directly by agencies managing the Association’s hostels are not consolidated in the financial statements. Provisions for liabilities and charges The Association makes provision for dilapidations to leasehold office accommodation where the lease has expired. Stocks of properties for resale Shared Ownership first tranche sales, completed properties for outright sale and property under construction are valued at the lower of cost and net realisable value. Cost includes acquisition and development cost together with interest payable. Net realisable value is based on estimated sales price after allowing for further costs of completion and disposal. Sale of housing properties Sales of housing properties are taken into account on the completion date. Where houses are sold, the surplus or deficit in the income and expenditure account is calculated by comparing sales proceeds and the carrying amounts. Temporary Accommodation Temporary Accommodation licences properties from local authorities. Expenditure on properties (including that on bringing properties up to a satisfactory standard initially) is written off over the agreed licence period. VAT Members of the Family Mosaic Housing Group are registered as a VAT group excluding Family Mosaic Thurrock Limited and Family Mosaic Housing Services Limited. A large proportion of Family Mosaic’s income comprises rental income, which is exempt for VAT purposes and gives rise to a partial exemption calculation. Expenditure is therefore shown inclusive of VAT. Recoverable VAT arising from partially exempt activities is credited to the income and expenditure account.

32 | FAMILY MOSAIC HOUSING


Notes to the financial statements for the year ended 31 March 2012

2

ACCOUNTING POLICIES – continued Interest payable The cost of raising loans is amortised over the period of the loan. The deferred cost is offset against the liability and included within creditors: amounts falling due after more than one year, in accordance with FRS 26 ‘Financial instruments: measurements’. The actual interest payable on these loans is charged to the income and expenditure account together with amortisation charges. Interest on loans to finance specific developments is capitalised to the date of practical completion of the scheme. Estimates Provision is made for debts where there is a risk of non-recovery. Former tenants’ arrears are provided for in full. Taxation Family Mosaic Housing along with Old Oak HA, Charlton Triangle Homes HA and In Touch have charitable status and therefore are not subject to Corporation Tax on surpluses derived from their charitable activities. All other subsidiaries are subject to Corporation Tax. These subsidiaries include Family Mosaic Home Ownership Limited, Family Mosaic Housing Services Limited, Family Mosaic Thurrock Limited and Family Mosaic Housing Development Company Limited. The charge for taxation is based on the surplus for the year and takes into account taxation deferred because of timing differences between the treatment of certain items for taxation and accounting purposes. Where possible taxable subsidiaries will make gift aid payments to mitigate Corporation Tax. Deferred tax liabilities are recognised, without discounting, in respect of all timing differences between the treatment of certain items for taxation and accounting purposes which have arisen but not reversed by the balance sheet date, except as otherwise required by FRS 19. Deferred tax assets are only recognised if management believe they will crystallise in the foreseeable future.

FINANCIAL STATEMENTS 2012 | 33


Notes to the financial statements for the year ended 31 March 2012

34 | FAMILY MOSAIC HOUSING


Notes to the financial statements for the year ended 31 March 2012

3

PARTICULARS OF TURNOVER, COST OF SALES, OPERATING COSTS AND OPERATING SURPLUSES/(DEFICITS) 2012 Turnover

2012 Operating costs

£000

£000

2012 Operating Surplus/ (deficit) £000

2011 Turnover

2011 Operating costs

£000

£000

2011 Operating Surplus/ (deficit) £000

Group Social housing lettings 4

155,971

110,565

45,406

138,680

97,781

40,899

18,696

17,262

1,434

20,053

17,528

2,525

-

-

-

995

139

856

3,363

3,967

(604)

3,781

3,745

36

452

707

(255)

329

1,467

(1,138)

484

-

484

652

855

(203)

1,621

-

1,621

876

701

175

180,587

132,501

48,086

165,366

122,216

43,150

Other social housing activities First tranche Shared Ownership sales Leaseback schemes Care Homes providing Nursing Care Other Non-social housing activities Commercial rental income/Other Market Sales/other development income Total

Association Social housing lettings 4

141,702

98,215

43,487

131,575

94,372

37,203

18,696

17,262

1,434

20,053

17,528

2,525

-

-

-

995

139

856

Care Homes providing Nursing Care

3,362

3,965

(603)

3,781

3,745

36

Gift aid from subsidiaries

1,650

-

1,650

1,854

-

1,854

747

160

587

396

1,032

(636)

484

-

484

564

-

564

17

-

17

-

-

-

166,658

119,602

47,056

159,218

116,816

42,402

Other social housing activities First tranche Shared Ownership sales Leaseback schemes

Other Non-social housing activities Commercial Income Lease extension premia Total

FINANCIAL STATEMENTS 2012 | 35


Notes to the financial statements for the year ended 31 March 2012

4a PARTICULARS OF INCOME AND EXPENDITURE FROM SOCIAL HOUSING LETTINGS Housing Accom

Supported Housing

Shared Ownership Accom

Group Temporary Accom

Residential Care Homes

2012

2011

Total

Total ÂŁ000

ÂŁ000

ÂŁ000

ÂŁ000

ÂŁ000

ÂŁ000

ÂŁ000

87,503

12,144

6,697

4,575

49

110,968

103,567

Service and Support income

4,851

5,656

545

427

-

11,479

9,516

Gross rental income

92,354

17,800

7,242

5,002

49

122,447

113,083

(619)

(540)

(57)

(328)

(6)

(1,550)

(1,669)

91,735

17,260

7,185

4,674

43

120,897

111,414

Supporting people income

-

33,337

-

-

-

33,337

25,695

Other revenue grants

-

-

-

2

1,735

1,737

1,571

91,735

50,597

7,185

4,676

1,778

155,971

138,680

6,031

24,705

43

321

1,477

32,577

31,666

Management

14,427

16,526

2,915

844

337

35,049

25,072

Routine maintenance

8,226

1,560

27

691

12

10,516

12,573

Planned maintenance

10,657

1,631

(1)

235

39

12,561

14,212

Bad debts

414

395

34

(154)

-

689

1,199

Property lease charges

350

319

-

2,245

23

2,937

4,089

12,097

1,862

41

461

25

14,486

9,670

-

1,000

-

-

-

1,000

-

750

-

-

-

-

750

(700)

Operating costs on social housing lettings

52,952

47,998

3,059

4,643

1,913

110,565

97,781

Operating $% &  social housing lettings

38,783

2,599

4,126

33

(135)

45,406

40,899

%

42.3%

5.1%

57.4%

0.7%

(7.5%)

29.1%

29.5%

Operating cost per unit – General Needs

ÂŁ3,131

Rent receivable

Voids Net rental income

Turnover from social housing lettings Support services and recoverable service charges

Depreciation of housing properties Goodwill write-off Impairment of housing properties

36 | FAMILY MOSAIC HOUSING


Notes to the financial statements for the year ended 31 March 2012

4b PARTICULARS OF INCOME AND EXPENDITURE FROM SOCIAL HOUSING LETTINGS Association Housing Accom

Supported Housing

Shared Ownership Accom

Temporary Accom

Residential Care Homes

2012

2011

Total

Total ÂŁ000

ÂŁ000

ÂŁ000

ÂŁ000

ÂŁ000

ÂŁ000

ÂŁ000

82,992

12,144

6,697

4,575

49

106,457

96,872

Service and Support income

4,495

4,178

545

427

-

9,645

9,012

Gross rental income

87,487

16,322

7,242

5,002

49

116,102

105,884

Voids

(540)

(540)

(57)

(328)

(6)

(1,471)

(1,575)

86,947

15,782

7,185

4,674

43

114,631

104,309

Supporting people income

-

25,334

-

-

-

25,334

25,695

Other revenue grants

-

-

-

2

1,735

1,737

1,571

86,947

41,116

7,185

4,676

1,778

141,702

131,575

5,107

24,654

43

321

1,476

31,601

30,902

15,594

7,392

2,126

865

348

26,325

24,964

Routine maintenance

7,770

1,560

27

691

12

10,060

11,640

Planned maintenance

9,216

1,631

(1)

235

39

11,120

13,241

Bad debts

358

270

34

(154)

-

508

1,092

Property lease charges

350

315

-

2,245

23

2,933

4,089

11,526

1,862

41

464

25

13,918

9,144

-

1,000

-

-

-

1,000

-

750

-

-

-

-

750

(700)

Operating costs on social housing lettings

50,671

38,684

2,270

4,667

1,923

98,215

94,372

Operating $% &  social housing lettings

36,276

2,432

4,915

9

(145)

43,487

37,203

%

41.7%

5.9%

68.4%

0.2%

(8.1%)

30.7%

28.3%

Operating cost per unit – General Needs

ÂŁ3,310

Rent receivable

Net rental income

Turnover from social housing lettings Support services and recoverable service charges Management

Depreciation of housing properties Goodwill write-off Impairment of housing properties

FINANCIAL STATEMENTS 2012 | 37


Notes to the financial statements for the year ended 31 March 2012

4c SPEND PER SOCIAL HOUSING UNIT

Group 2012 £ Maintenance expenditure

1,664

1,857

Management cost – General Needs

856

841

Service charges

337

308

Overhead costs

633

585

%

%

9.2

9.2

2012 Surplus £000

2011 Surplus £000

Overhead costs as a percentage of income

5

2011 £

SURPLUS ON PROPERTY SALES Sales Proceeds £000

Group Cost of Sales £000

Sales of properties

9,734

2,973

6,761

7,492

Sale of properties to other RPs

3,020

3,172

(152)

(187)

Staircasing of shared ownership properties

5,005

2,959

2,046

1,818

Total

17,759

9,104

8,655

9,123

Association Cost of 2012 Sales Surplus £000 £000

2011 Surplus £000

Sales Proceeds £000 Sales of properties

9,734

2,973

6,761

7,492

Sale of properties to other RPs

3,020

3,172

(152)

(187)

Staircasing of shared ownership properties

5,005

2,959

2,046

996

Total

17,759

9,104

8,655

8,301

38 | FAMILY MOSAIC HOUSING


Notes to the financial statements for the year ended 31 March 2012

6

DIRECTORS EMOLUMENTS AND LOANS The remuneration paid to the directors (who for the purposes of this note include the members of the Board and the Management Team) was as follows: 2012 £000

2011 £000

Total emoluments to directors and former directors (including salaries, fees, expense allowances chargeable to UK tax, and other benefits)

819

941

Emoluments (excluding pension contributions) payable to the highest paid director

184

172

8

13

Total expenses reimbursed not chargeable to income tax

No members of the Board (except the Chief Executive) received any emoluments. The Chief Executive is an ordinary member of the SHPS scheme. Contributions to this scheme are made as per the pension costs note.25 The Chief Executive’s salary equates to £7.92 per unit owned and/or managed (2011: £7.37) The emoluments (excluding pension contributions) of the Management Team are as follows: 2012 £000

2011 £000

Brendan Sarsfield

Group Chief Executive

184

172

Ken Youngman

Group Finance Director

141

129

Yvonne Arrowsmith

Group Operations Director

133

125

Dick Mortimer

Group Development & Asset Management Director

132

121

John Schofield

Group Director of Research & Development

104

102

John Gibbons

Group Director of Corporate Services

76

101

FINANCIAL STATEMENTS 2012 | 39


Notes to the financial statements for the year ended 31 March 2012

7

EMPLOYEE INFORMATION Staff numbers

Group 2012

2011

Association 2012

2011

The average monthly number of employees (including Directors) employed in the year was:

2,191

1,730

1,794

1,708

Full Time Equivalents

1,573

1,277

1,276

1,256

Employee costs

Group 2012 £000

2011 £000

Association 2012 £000

2011 £000

Wages and salaries

49,128

42,004

41,582

41,255

Social security costs

4,078

3,492

3,496

3,427

Pension costs

1,648

951

1,557

923

333

830

229

830

55,187

47,277

46,864

46,435

£24,905

£25,926

Redundancy and compensation for loss of office

Average salary per employee

Number of staff paid over £60,000 p.a.

Salary Bandings

Number of Staff 2012

2011

£60,000 - £69,999

15

19

£70,000 - £79,999

7

5

£80,000 - £89,999

3

4

£90,000 - £99,999

3

1

£100,000 - £109,999

1

2

£110,000 - £129,999

-

3

£130,000 - £139,999

2

-

£140,000 - £149,999

1

-

£180,000 – £190,000

1

1

The gross salary of the highest earner represents 13 times that of the lowest earner (2011: 11 times)

40 | FAMILY MOSAIC HOUSING


Notes to the financial statements for the year ended 31 March 2012

8

NET INTEREST PAYABLE AND SIMILAR CHARGES Group 2012 £000 Interest receivable Interest payable on loans and overdrafts Other finance costs of pension scheme

Less: capitalised

Net interest payable

2011 £000

Association 2012 £000

2011 £000

1,519

313

1,448

1,800

25,619

23,337

24,189

22,956

71

(8)

71

(8)

25,690

23,329

24,260

22,948

(5,844)

(4,979)

(5,190)

(4,387)

19,846

18,350

19,070

18,561

18,327

18,037

17,622

16,761

Interest is capitalised at 4.35% per annum on the net costs of projects under construction.

9

SURPLUS ON ORDINARY ACTIVITIES 2011 £000

Association 2012 £000

2011 £000

1,446

1,848

1,436

1,839

14,528

9,742

13,958

9,215

3,231

4,392

3,231

4,392

Audit of the financial statements

67

64

67

64

Audit of subsidiary financial statements

40

26

-

-

Tax Compliance

12

9

5

9

Tax advice

20

33

4

33

Sundry assurance

33

29

28

29

The surplus is stated after charging: Depreciation of tangible assets Depreciation of housing properties Operating lease charges

Group 2012 £000

Auditors’ remuneration:

Other services:

FINANCIAL STATEMENTS 2012 | 41


Notes to the financial statements for the year ended 31 March 2012

10 TAXATION ON ORDINARY ACTIVITIES Family Mosaic Housing is an exempt charity and not therefore liable to Corporation Tax on charitable activities. Group 2012 £000

2011 £000

Association 2012 £000

2011 £000

UK Corporation Tax charge

-

-

-

-

Removal of tax provision relating to prior years

-

(3)

-

-

Tax charge/(credit)

-

(3)

-

-

Factors affecting tax charge for the current period The tax charges for both periods are different to the standard rate of corporation tax of 26% (2011: 28%). The differences are explained below.

Surplus on activities before tax and after charitable donations

36,414

33,136

36,089

33,942

9,468

9,278

9,383

8,825

(9,546)

(9,648)

(9,383)

(8,825)

Disallowed expenses

-

1

-

-

Depreciation in excess of capital allowances

-

2

-

-

Surplus on property sales in excess of chargeable gain

-

(31)

-

-

12

60

-

-

7

95

-

-

59

243

-

-

-

-

-

-

Tax charge at 26% (2011: 28%) Exempt activities of charitable entity

Tax effect of Joint Venture profits Charges on income in relation to prior periods Unrelieved tax losses and other deductions arising in the period Corporation tax charge/(credit)

A deferred tax asset is only recognised on losses arising if management believe they will crystallise in the foreseeable future.

42 | FAMILY MOSAIC HOUSING


Notes to the financial statements for the year ended 31 March 2012

FINANCIAL STATEMENTS 2012 | 43


Notes to the financial statements for the year ended 31 March 2012

11 HOUSING PROPERTIES

Cost

Social housing properties held for letting £000

Social housing properties under construction £000

Group Completed shared ownership housing properties £000

At 1 April 2011

1,615,242

144,016

173,424

50,188

1,982,870

Schemes completed in the year

110,138

(110,138)

46,424

(46,424)

-

Additions

29,828

101,626

-

53,621

185,075

Disposals

(15,500)

-

(20,106)

-

(35,606)

Reclassification

(25,838)

(3,771)

30,167

(558)

-

1,713,870

131,733

229,909

56,827

2,132,339

At 1 April 2011

60,641

-

79

-

60,720

Charge for the year

14,629

-

(79)

-

14,550

Disposals

(1,339)

-

-

-

(1,339)

At 31 March 2012

73,931

-

-

-

73,931

At 1 April 2011

-

1,750

567

2,195

4,512

Charge for the year

-

500

-

250

750

At 31 March 2012

-

2,250

567

2,445

5,262

930,150

91,380

78,901

24,625

1,125,056

56,576

(56,576)

19,325

(19,325)

-

Additions

-

35,198

-

22,194

57,392

Disposals

(9,049)

-

(1,257)

-

(10,306)

Reclassification

(9,818)

(2,582)

16,531

(4,131)

-

967,859

67,420

113,500

23,363

1,172,142

672,080

62,063

115,842

31,019

881,004

624,451

50,886

93,877

23,368

792,582

At 31 March 2012

Shared Ownership under construction

Total

£000

£000

DEPRECIATION

IMPAIRMENT

SOCIAL HOUSING GRANT At 1 April 2011 Schemes completed in the year

At 31 March 2012 NET BOOK VALUE At 31 March 2012 At 1 April 2011

Interest of £5,844,000 has been capitalised in the year to 31 March 2012 (2011: £4,979,000). The additions to housing properties during the year include £15,508,000 (2011: £16,320,000) in respect of improvement to the existing property stock. The spend per social housing unit on completed social rented schemes was £6,796 (2011: £5,029).

44 | FAMILY MOSAIC HOUSING


Notes to the financial statements for the year ended 31 March 2012

Cost

Social housing properties held for letting £000

Social housing properties under construction £000

Association Completed shared ownership housing properties £000

At 1 April 2011

1,547,885

144,520

173,423

49,343

1,915,171

Schemes completed in the year

110,138

(110,138)

46,424

(46,424)

-

Transfers to/from group entities

(2,379)

(4,468)

-

(4,691)

(11,538)

Additions

26,656

103,846

-

49,681

180,183

Disposals

(15,451)

-

(20,105)

-

(35,556)

Reclassification

(25,838)

(3,771)

30,166

(557)

-

At 31 March 2012

1,641,011

129,989

229,908

47,352

2,048,260

At 1 April 2011

57,970

-

79

-

58,049

Charge for the year

14,037

-

(79)

-

13,958

Disposals

(1,336)

-

-

-

(1,336)

At 31 March 2012

70,671

-

-

-

70,671

As at 1 April 2011

-

1,750

567

2,195

4,512

Charge for the year

-

500

-

250

750

At 31 March 2012

-

2,250

567

2,445

5,262

905,026

91,379

78,901

24,625

1,099,931

Schemes completed in the year

56,576

(56,576)

19,325

(19,325)

-

Transfers to/from group entities

(1,022)

-

-

-

(1,022)

Additions

-

34,925

-

18,185

53,110

Disposals

(9,033)

-

(1,257)

-

(10,290)

Reclassification

(9,818)

(2,582)

16,531

(4,131)

-

At 31 March 2012

941,729

67,146

113,500

19,354

1,141,729

At 31 March 2012

628,611

60,593

115,841

25,553

830,598

At 1 April 2011

584,889

51,391

93,876

22,523

752,679

11 HOUSING PROPERTIES – continued

Shared Ownership under construction

Total

£000

£000

DEPRECIATION

IMPAIRMENT

SOCIAL HOUSING GRANT At 1 April 2011

NET BOOK VALUE

Interest of £5,190,000 has been capitalised in the year to 31 March 2012 (2011: £4,387,000). The additions to housing properties during the year include £12,773,000 (2011: £14,985,000) in respect of improvement to the existing property stock.

FINANCIAL STATEMENTS 2012 | 45


Notes to the financial statements for the year ended 31 March 2012

12

ACCOMMODATION IN MANAGEMENT

Group

Association

2012

2011

2012

2011

General needs

17,034

16,637

15,433

15,032

Supported housing

2,463

2,361

2,463

2,361

Shared ownership

2,918

2,680

2,918

2,525

112

425

112

425

93

109

93

109

22,620

22,212

21,019

20,452

625

525

1,242

1,142

Total

Social housing:

Temporary Accommodation Care Homes providing Nursing Care Total units in management

Accommodation managed by others

13

OTHER TANGIBLE FIXED ASSETS

Group Freehold office premises £000

Leasehold office premises £000

Renewable Energy Assets £000

Other fixed assets £000

£000

16,133

178

-

5,961

22,272

Additions

173

-

1,029

1,490

2,692

Disposals

(8)

(105)

-

(2,634)

(2,747)

16,298

73

1,029

4,819

22,219

At 1 April 2011

937

101

-

3,342

4,380

Charge for year

288

14

-

1,144

1,446

(8)

(105)

-

(2,634)

(2,747)

1,217

10

-

1,852

3,079

At 31 March 2012

15,081

63

1,029

2,967

19,140

At 1 April 2011

15,196

77

-

2,619

17,892

COST At 1 April 2011

At 31 March 2012 DEPRECIATION

Disposals At 31 March 2012 NET BOOK VALUE

46 | FAMILY MOSAIC HOUSING


Notes to the financial statements for the year ended 31 March 2012

13 OTHER TANGIBLE FIXED ASSETS – continued Association Leasehold office premises £000

Other fixed assets £000

£000

16,133

177

5,598

21,908

Additions

173

-

1,490

1,663

Disposals

(8)

(105)

(2,536)

(2,649)

16,298

72

4,552

20,922

At 1 April 2011

937

114

3,109

4,160

Charge for year

288

2

1,146

1,436

(8)

(105)

(2,536)

(2,649)

1,217

11

1,719

2,947

At 31 March 2012

15,081

61

2,833

17,975

At 1 April 2011

15,196

63

2,489

17,748

Freehold office premises £000

Total

COST At 1 April 2011

At 31 March 2012 DEPRECIATION

Disposals At 31 March 2012 NET BOOK VALUE

14 PROPERTIES FOR SALE Group 2012 £000 First Tranche Shared Ownership completed

2011 £000

Association 2012 £000

2011 £000

569

-

569

-

First Tranche Shared Ownership under construction

11,963

13,267

9,560

12,850

Open market properties for sale – Cost

65,613

56,327

1,208

11,731

(23,282)

(19,029)

(410)

(187)

54,863

50,565

10,927

24,394

Open market properties for sale – Grant

FINANCIAL STATEMENTS 2012 | 47


Notes to the financial statements for the year ended 31 March 2012

15 DEBTORS Group 2012 £000

2011 £000

Association 2012 £000

2011 £000

8,652

8,661

8,044

8,175

(3,948)

(4,084)

(3,616)

(3,885)

4,704

4,577

4,428

4,290

Trade debtors

2,155

2,051

1,349

1,840

Other debtors

4,353

1,653

4,311

1,634

Prepayments and accrued income

2,584

2,525

2,037

2,525

20,521

12,378

20,521

12,377

-

-

50,114

28,082

34,317

23,184

82,760

50,748

-

-

19,183

15,145

597

-

597

-

34,914

23,184

102,540

65,893

a) Amounts due within one year Rental debtors Less: provision for bad debts

Grant receivable Amount owed by subsidiaries

b) Amounts due after more than one year Amount owed by subsidiaries Other debtors

16 CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR Group 2012 £000

2011 £000

Association 2012 £000

2011 £000

Housing loans

1,078

803

1,078

803

Recycled Social Housing Grant

1,874

-

1,874

-

Trade creditors

7,195

9,080

7,195

9,080

Other creditors

13,845

12,259

12,015

11,574

500

-

500

-

28,753

25,114

26,880

24,016

613

444

507

309

-

-

2,134

205

53,858

47,700

52,183

45,987

Deferred consideration Accruals and deferred income Disposal Proceeds Fund Amount owed to subsidiary undertaking

Housing loans are secured by fixed charges on the Association’s housing properties.

48 | FAMILY MOSAIC HOUSING


Notes to the financial statements for the year ended 31 March 2012

17 CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR Group 2012 £000

2011 £000

Association 2012 £000

2011 £000

Housing loans

652,334

585,494

652,334

585,494

Less: deferred loan issue costs

(4,454)

(4,441)

(4,454)

(4,441)

647,880

581,053

647,880

581,053

Recycled Social Housing Grant

5,114

4,271

5,114

4,271

Disposals Proceeds Fund

5,542

3,939

5,124

3,492

658,536

589,263

658,118

588,816

Between one and two years

1,664

958

1,664

958

Between two and five years

17,130

12,661

17,130

12,661

585,298

528,548

585,298

528,548

48,242

43,327

48,242

43,327

Housing loans repayable by instalments:

In five years or more Housing loans repayable other than by instalments

Housing loans are secured by fixed charges on the Association’s housing properties. Interest is payable at rates ranging from 0.95% to 12.84%. Debt per unit owned at the end of the year was £28,636 (2011: £26,497). At 31 March 2012 the Group had loan facilities of £845m (2011: £797m).

FINANCIAL STATEMENTS 2012 | 49


Notes to the financial statements for the year ended 31 March 2012

18 RECYCLED GRANT FUND Group

Association

2012

2011

2012

2011

£000

£000

£000

£000

4,271

7,319

4,271

3,999

Grants recycled

2,689

2,360

2,689

2,360

Interest accrued

28

37

28

37

New build

-

(5,146)

-

(5,146)

Major repairs and works to existing stock

-

(299)

-

(299)

Transfer from other Group companies

-

-

-

3,320

6,988

4,271

6,988

4,271

Opening Balance

Inputs to reserve:

Closing Balance

Part of the fund is repayable within one year and part is due after more than one year. Disclosure of the closing balance is shown in both the Notes 16 & 17. 19 DISPOSAL PROCEEDS FUND 2011 £000

Association 2012 £000

2011 £000

4,383

4,783

3,801

4,495

Grants recycled

2,171

3,298

2,096

2,957

Interest accrued

28

28

24

28

-

(544)

-

(544)

(444)

(3,182)

(444)

(3,182)

-

-

135

47

19

-

19

-

6,155

4,383

5,631

3,801

Opening Balance

Group 2012 £000

Inputs to reserve:

Works to existing stock Purchase and development of properties for letting Transfers from other Group Company Other movements Closing balance

Part of the fund is repayable within one year and part is due after more than one year. Disclosure of the prior year balance is shown in both notes 16 and 17.

50 | FAMILY MOSAIC HOUSING


Notes to the financial statements for the year ended 31 March 2012

20 PROVISIONS FOR LIABILITIES AND CHARGES Group and Association Pension Liability Total 25 £000 At 1 April 2011

Pension Pension Liability Liability Main Supporting People Scheme Scheme £000 £000

72

94

(22)

Movement in year

677

617

60

At 31 March 2012

749

711

38

21 NON EQUITY SHARE CAPITAL Group and Association Shares £ Opening Balance

85

Shares cancelled in the year

(32)

Shares issued in the year

-

Closing Balance

53

The shares are all issued and fully paid shares of £1 each. Each member of the Board is entitled to hold one share of £1 in the Association. The shares have limited rights. They carry no entitlement to dividend, they are not repayable and do not participate in a winding up. They carry an entitlement to vote at the Association’s Annual General Meeting and Special General Meetings. 22 RESERVES The Association plans its financial affairs to ensure that each year revenue income exceeds revenue expenditure. This policy ensures that the Association has a margin of safety to manage unexpected expenditure or shortfalls in income. The annual surpluses ensure that Family Mosaic is able to meet its commitment to providers of private finance and to continue to provide social housing. Unlike commercial organisations, the Association’s rules prevent the distribution of reserves. Instead, these are applied to furthering our aims and objectives. In particular they are invested in our housing stock. As at 31 March 2012 the Group and Associations’ reserves were as follows: Revenue Reserves

Group

Association

£000

£000

At 1 April 2011

253,824

231,646

Surplus for year

36,414

36,089

(749)

(749)

289,489

266,986

Actuarial loss on pension scheme liability At 31 March 2012

FINANCIAL STATEMENTS 2012 | 51


Notes to the financial statements for the year ended 31 March 2012

23 LEASE COMMITMENTS The total rental due under operating leases in the next 12 months is as follows: Group 2012 £000

2011 £000

Association 2012 £000

2011 £000

Leases which expire: Within one year

191

1,812

191

1,812

Between two and five years

395

616

395

616

1,000

844

1,000

844

1,586

3,272

1,586

3,272

Over five years

24 CAPITAL COMMITMENTS Group 2012 £000 Capital expenditure that has been contracted for but has not been provided for in the financial statements Capital expenditure that has been authorised by the Board but has not yet been contracted for

2011 £000

Association 2012 £000

2011 £000

120,381

285,387

98,430

222,170

71,034

5,170

16,379

5,170

The commitments will be met out of existing and new loan facilities, grants, and sales proceeds. These Group total commitments of £191,415,000 represent 21% of our total tangible fixed assets at year end. (2011: £290,577,000, 36%). The Group has grants of £31m (2011: £74m) to offset against these commitments, while the Association has £28m (2011: £69m).

25 PENSIONS Social Housing Pension Scheme Family Mosaic Housing participates in the Social Housing Pension Scheme (SHPS). The Scheme is funded and is contracted out of the State Pension Scheme. It is not possible in the normal course of events to identify on a consistent and reasonable basis the share of underlying assets and liabilities belonging to individual participating employers. This is because the Scheme is a multi-employer scheme where the Scheme assets are co-mingled for investment purposes, and benefits are paid from total Scheme assets. Accordingly, due to the nature of the Scheme, the accounting charge for the period under FRS17 represents the employer contribution payable.

52 | FAMILY MOSAIC HOUSING


Notes to the financial statements for the year ended 31 March 2012

25 PENSIONS – continued The Trustee commissions an actuarial valuation of the Scheme every three years. The main purpose of the valuation is to determine the financial position of the Scheme in order to address the level of future contributions required so that the Scheme can meet its pension obligations as they fall due. The last formal valuation of the Scheme was performed as at 30 September 2008 by a professionally qualified actuary using the projected unit method. The market value of the Scheme’s assets at the valuation date was £1,527 million. The valuation revealed a shortfall of assets compared with the value of liabilities of £663 million, equivalent to a past service funding level of 69.7%. The Scheme actuary has prepared an actuarial report that provides an approximate update on the funding position of the Scheme as at 30 September 2010. Such a report is required by legislation for years in which a full actuarial valuation is not carried out. The funding update revealed an increase in the assets of the Scheme to £1,985 million and indicated a reduction in the shortfall of assets compared to liabilities to approximately £497 million, equivalent to a past service funding level of 80%. The Scheme’s 30 September 2011 valuation is currently in progress and will be finalised by 31 December 2012. The results of the valuation will be included in next year’s disclosure note. Early indications show an increasing deficit, which will need to be considered. Pensions Trust – Growth Plan Family Mosaic Housing also participates in the Pensions Trust’s Growth Plan (the Plan). The Plan is funded and is not contracted out of the state scheme. The Plan is a multi-employer pension plan. Contributions paid into the Plan up to and including September 2001 were converted to defined amounts of pension payable from Normal Retirement Date. From October 2001 contributions were invested in personal funds which have a capital guarantee and which are converted to pension on retirement, either within the Plan or by the purchase of an annuity. The rules of the Plan allow for the declaration of bonuses and / or investment credits if this is within the financial capacity of the Plan assessed on a prudent basis. Bonuses / investment credits are not guaranteed and are declared at the discretion of the Plan’s Trustee. The Trustee commissions an actuarial valuation of the Plan every three years. The purpose of the actuarial valuation is to determine the funding position of the Plan by comparing the assets with the past service liabilities as at the valuation date. Asset values are calculated by reference to market levels. Accrued past service liabilities are valued by discounting expected future benefit payments using a discount rate calculated by reference to the expected future investment returns. The rules of the Plan give the Trustee the power to require employers to pay additional contributions in order to ensure that the statutory funding objective under the Pensions Act 2004 is met. The statutory funding objective is that a pension scheme should have sufficient assets to meet its past service liabilities, known as Technical Provisions.

FINANCIAL STATEMENTS 2012 | 53


Notes to the financial statements for the year ended 31 March 2012

25 PENSIONS – continued

If the actuarial valuation reveals a deficit, the Trustee will agree a recovery plan to eliminate the deficit over a specified period of time either by way of additional contributions from employers, investment returns or a combination of these. The rules of the Plan state that the proportion of obligatory contributions to be borne by the Member and the Member’s Employer shall be determined by agreement between them. Such agreement shall require the Employer to pay part of such contributions and may provide that the Employer shall pay the whole of them. Family Mosaic paid contributions at the rate of nil% during the accounting period. Members paid contributions at a rate they determine under additional voluntary conditions. As at the balance sheet date there were 12 active members of the Plan employed by Family Mosaic. Family Mosaic continues to offer membership of the plan 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 Plan is a multi-employer scheme where the assets are co-mingled for investment purposes, and benefits are paid from the total plan assets. According, due to the nature of the Plan, the accounting charge for the period under FRS17 represents the employer contribution payable. The valuation results at 30 September 2008 were completed in 2009 and have been formalised. The valuation of the scheme was performed by a professionally qualified actuary using the Projected Unit Method. The market value of the Plan’s assets at the valuation date was £742 million and the Plan’s Technical Provisions (i.e past service liabilities) were £771 million. The valuation therefore revealed a shortfall of assets compared with the value of liabilities of £29 million, equivalent to a funding level of 96%. The financial assumptions underlying the valuation as at 30 September 2008 were as follows:

Investment return pre retirement Investment return post retirement Actives/Deferreds Pensioners Bonuses on accrued benefits Rate of price inflation

% p.a. 7.6 5.1 5.6 0.0 3.2

In determining the investment return assumptions the Trustee considered advice from the Scheme Actuary relating to the probability of achieving particular levels of investment return. The Trustee has incorporated an element of prudence into the pre and post retirement investment return assumptions such that there is a 60% expectation that the return will be in excess of that assumed and a 40% chance that the return will be lower than that assumed over the next 10 years. The preliminary triennial valuation results as at 30 September 2011 were received in March 2012 but, as the valuation will not be finalised until later this year, this disclosure note must still refer to the 2008 valuation results as the last completed valuation.

54 | FAMILY MOSAIC HOUSING


Notes to the financial statements for the year ended 31 March 2012

25 PENSIONS – continued The Scheme actuary’s preliminary result for 30 September 2011 shows that the Plan’s assets at that date were £780m and the Plan’s Technical Provisions (i.e. past service liabilities) were £928m. The valuation therefore revealed a shortfall of assets compared with the value of liabilities of £148m, equivalent to a funding level of 84%. 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. The Pensions 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 Plan (which would effectively amend the terms of the recovery plan). A copy of the recovery plan in respect of the September 2008 valuation was forwarded to The Pensions Regulator on 18 December 2009, as is required by legislation. Following a change in legislation in September 2005 there is a potential debt on the employer that could be levied by the Trustee of the Plan and the Pensions Act 2011 has more recently altered the definition of Series 3 of the Growth Plan so that a liability arises to employers from membership of any Series except Series 4. The debt is due in the event of the employer ceasing to participate in the Plan or the Plan winding up. The debt for the Plan as a whole is calculated by comparing the liabilities for the Plan (calculated on a buy-out 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 Plan. 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 Plan’s liability attributable to employment with the leaving employer compared to the total amount of the Plan’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 Plan liabilities, Plan 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. Family Mosaic Housing has been notified by the Pensions Trust of the estimated employer debt on withdrawal from the Plan based on the financial position of the Plan as at 30 September 2011. As of this date the estimated employer debt was £0.2m. Local Government Pension Scheme Family Mosaic Housing also is one of a number of employers that participates in the Local Government Pension Scheme, which is a defined benefit scheme based on final pensionable salary. There are 39 active members, 15 deferred members and 8 pensioners in the main scheme, plus 5 active members in a separate supporting people scheme. This scheme is closed to new members of staff. Family Mosaic Housing Association’s contribution rate over the accounting period was 19% of Pensionable Pay for the main scheme and 15% for the supporting people scheme.

FINANCIAL STATEMENTS 2012 | 55


Notes to the financial statements for the year ended 31 March 2012

25 PENSIONS – continued LOCAL GOVERNMENT PENSION SCHEME – continued The fund is valued every three years and the most recent actuarial valuation was carried out as at 31 March 2010. Liabilities are valued on an actuarial basis using the projected unit method which assesses the future liabilities discounted to their present value. The principal assumption used by the actuaries for FRS17 purposes were: 31 March 2012

31 March 2011

31 March 2010

% p.a.

Real%

% p.a.

Real%

% p.a.

Real%

Price Increases (RPI)

3.3

-

3.5

-

3.9

-

Salary Increases

4.7

1.4

5

1.5

5.4

1.5

Pension Increases

2.5

-0.8

2.7

-0.8

3.9

-

Discount Rate

4.6

1.3

5.5

1.9

5.5

1.5

CPI has been assumed at 0.8% below RPI.

56 | FAMILY MOSAIC HOUSING


Notes to the financial statements for the year ended 31 March 2012

25 PENSIONS – continued Assets The return on the Fund, on a bid value basis, for the year to 31 March 2012 is estimated to be 8% for the main scheme and 8% for the supporting people scheme. Local Government Pension Scheme, Main Scheme The estimated employer asset share (bid value) is as follows: 31 March 2012

31 March 2011

£000

%

£000

%

2,990

57

2,738

55

Gilts

105

2

647

13

Cash

52

1

100

2

Other

2,098

40

1,494

30

Total

5,245

100

4,979

100

1 April 2012 % p.a

1 April 2011 % p.a.

1 April 2010 % p.a.

Equities

6.3

7.4

7.5

Gilts

3.3

4.4

4.5

Cash

3.0

3.0

3.0

Other

6.3

7.4

7.5

31 March 2012 £000

31 March 2011 £000

31 March 2010 £000

Present Value of Funded Obligation

5,941

5,060

6,446

Fair Value of Scheme Assets (bid value)

5,245

4,979

4,186

696

81

2,260

15

13

16

711

94

2,276

Equities

The expected return on assets was as follows. Asset Class

Assets and liabilities on the balance sheet of Family Mosaic Housing are analysed below: Net Pension Asset as at

Net liability Present value of unfunded obligation Net liability in Balance Sheet

FINANCIAL STATEMENTS 2012 | 57


Notes to the financial statements for the year ended 31 March 2012

25 PENSIONS – continued Local Government Pension Scheme , Main Scheme – continued The balance sheet amounts for the previous four years were as follows: 31 March 2012 £000

31 March 2011 ÂŁ000

31 March 2010 ÂŁ000

31 March 2009 ÂŁ000

31 March 2008 ÂŁ000

(5,956)

(5,073)

(6,462)

(3,289)

(3,340)

Scheme Assets

5,245

4,979

4,186

2,456

2,619

% &

(711)

(94)

(2,276)

(833)

(721)

1

786

-

-

(311)

38

152

736

(441)

329

Amounts for the current and previous four periods

Defined Benefit Obligation

Experience adjustments on scheme liabilities Experience adjustments on scheme assets

Amounts recognised in Income and Expenditure and reconciliations of reserve movement: Year to 31 March 2012 ÂŁ000 107

Year to 31 March 2011 ÂŁ000 153

276

313

(341)

(322)

-

(580)

42

(436)

380

238

Actual return less expected return on scheme assets

38

(83)

Experience (loss)/gain

(1)

1,021

Changes in assumptions underlying the present value of the Scheme liabilities

(724)

651

Actuarial (loss)/gain recognised

(687)

1,589

Employer Contributions

112

157

Net movement in reserves

617

(2,182)

Current service cost Interest on obligation Expected return on Scheme assets Past service cost Total Actual return on Scheme assets The actuarial losses/gains recognised are as follows:

58 | FAMILY MOSAIC HOUSING


Notes to the financial statements for the year ended 31 March 2012

25 PENSIONS – continued Local Government Pension Scheme, Supporting People Scheme – continued Assets and liability on the balance sheet of Family Mosaic Housing in respect of the Supporting People Scheme are as follows: Employer Asset share – Bid Value – Supporting People Scheme 31 March 2012

31 March 2011

£000

%

£000

%

209

57

173

55

Gilts

7

2

41

13

Cash

4

1

6

2

Other

147

40

94

30

Total

367

100

314

100

Equities

Assets and liabilities on the balance sheet of Family Mosaic in respect of the supporting people scheme are as follows: 31 March 2012 £000

31 March 2011 £000

Present Value of Funded obligation

405

292

Fair Value of scheme assets (bid value)

367

314

Net liability/(asset) in Balance Sheet

38

(22)

31 March 2012 £000

31 March 2011 £000

31 March 2010 £000

(405)

(292)

(305)

Scheme Assets

367

314

272

Surplus/(Deficit)

(38)

22

(33)

2

(5)

43

Net Pension Asset as at

The balance sheet amounts for the current and previous two periods were as follows: Net Pension Asset as at Defined Benefit obligation

Experience adjustments on Scheme assets

FINANCIAL STATEMENTS 2012 | 59


Notes to the financial statements for the year ended 31 March 2012

25 PENSIONS – continued Local Government Pension Scheme, Supporting People Scheme – continued Amounts recognised in Income and Expenditure and reconciliation of reserve movement: Year to 31 March 2012 £000

Year to 31 March 2011 £000

Current service cost

24

29

Interest on obligation

17

21

(23)

(20)

-

(24)

Total

18

6

Actual return on Scheme assets

25

288

2

(5)

Changes in assumptions underlying the present value of the Scheme liabilities

(64)

47

Actuarial (loss)/gain recognised

(62)

42

Employer Contributions

20

19

Net movement in reserves

60

(55)

Expected return on Scheme assets Past service cost

The actuarial losses/gains recognised are as follows: Actual return less expected return on scheme assets

NHS Pension We have 48 staff who are members of the NHS Pension Scheme. Staff pay between 5% and 6.5% in contributions and we as the Employer pay 14%. The NHS Pension Scheme does not have a real pension fund but as a statutory scheme benefits are fully guaranteed by the Government. Contributions from both members and Employers are paid to the Exchequer which meets the cost of scheme benefits. The Exchequer also pays for the cost of increasing benefits each year by the rate of inflation. This extra cost is not met by contributions from scheme members and Employers. 26 CONTINGENT LIABILITIES At 31 March 2012 there were £nil of contingent liabilities in respect of claims arising in the ordinary course of business. (2011: £nil).

60 | FAMILY MOSAIC HOUSING


Notes to the financial statements for the year ended 31 March 2012

27 RELATED PARTY TRANSACTIONS One member of the Board during the year was an employee of the London Borough of Hackney, a local authority having nomination rights over tenancies for certain Group properties. This member has now resigned. All transactions with the council are on normal commercial terms and no advantage is provided by this position. Tenants who are members of the Board have tenancies which are on normal commercial terms and as such their position does not afford them any additional benefits compared with other tenants. 28 SUBSIDIARY UNDERTAKINGS Group

Association

2012 £000

2011 £000

2012 £000

2011 £000

Investment in assets and liabilities

-

-

824

-

Investment in shares

-

-

2,761

11

-

-

3,585

11

Family Mosaic Housing exerts dominant influence over the affairs of: Charlton Triangle Homes This is a company registered under the Companies Act and also with the Charity Commission and the Homes & Communities Agency. The Association took the transfer of 1,246 properties from the London Borough of Greenwich on 29th March 1999 and has undertaken a substantial programme of repairs, improvement and upgrade of the properties transferred. At the current date over 1,000 properties have been refurbished and 173 new homes have been built. Family Mosaic Housing exercises control through nominees on the Board. Old Oak Housing Association This is a company registered under the Companies Act, the Charity Commission and the Homes & Communities Agency. The Association was established initially to manage 669 properties transferred to Family Housing Association on the 17th March 1999. The properties which were transferred were subject to refurbishment over a five year period. The original programme of works has now been completed and the properties are to remain in the ownership of Family Mosaic, though further works will be done on properties where tenants declined to have work done under the original programme. Family Mosaic Housing exercises control through nominees on the Board. Family Mosaic Home Ownership This is a not-for-profit Registered Provider formed in 1989 under the Industrial and Provident Societies Act, specialising in the development and sale of shared ownership homes and homes for sale on the open market. The appointment and dismissal of all Board Members is controlled by Family Mosaic Housing.

FINANCIAL STATEMENTS 2012 | 61


Notes to the financial statements for the year ended 31 March 2012

28 SUBSIDIARY UNDERTAKINGS – continued In Touch This is a charity registered with the Charity Commission and under the Companies Act. In Touch was acquired in 2011 from the Hyde Group and manages care and support contracts and Home Improvement Agencies across the south of England, complementing Family Mosaic’s Care and Support business. Family Mosaic controls the appointment of the Trustees. Service Charge Management Companies Family Mosaic Housing has a majority shareholding in three small companies which exist to administer service charges on three estates where there are owner-occupiers in addition to Family Mosaic tenants.

Harris Lodge Residents Company Ltd (Private Company limited by share guarantee with no share capital). Oxley Close (Number Two) Residents Company Ltd (Family Mosaic Housing owns 91% of the share capital). Maple Lodge Residents Company Ltd (Family Mosaic Housing owns 94% of the share capital). Family Mosaic Housing Development Company Ltd A development trading company limited by shares (ÂŁ2,760,000 share capital). Family Mosaic Thurrock Limited A development company limited by guarantee (no shares). Family Mosaic Housing Services Limited: A trading company limited by shares (ÂŁ1,000 share capital). Family Mosaic Housing acquired In Touch with effect from 31 July 2011 for cash consideration of ÂŁ1,324k, with up to a further ÂŁ500k of contingent consideration payable after one year. Net Assets acquired

ÂŁ000

Debtors

1,824

Cash at bank and in hand

1,186

Creditors

(2,186) 824

Goodwill

1,000 1,824

#' Cash Deferred consideration Total consideration

62 | FAMILY MOSAIC HOUSING

1,324 500 1,824


Notes to the financial statements for the year ended 31 March 2012

28 SUBSIDIARY UNDERTAKINGS – continued The Board has considered the fair value of the assets acquired and has concluded that this is equal to their book value. During the year, the above acquisition contributed £9,480k of the Group’s income, £8,892k of expenses and £588k of operating surplus. In Touch made a deficit after tax of £68k in the year ended 31 March 2012 (2011: £55k deficit), of which a £410k deficit arose in the period from 1 April 2011 to 31 July 2011. The summarised statement of financial activities for the period from 1 April 2011 to the effective date of acquisition is as follows: £000 Total incoming resources

4,992

Net incoming resources before charitable donations

(160)

Charitable donations

(250)

Net incoming resources after charitable donations

(410)

There were no recognised gains or losses in the period ended 31 July 2011 other than the deficit of £410k above. The goodwill of £1,000k arising on the acquisition was fully written off in the year reflecting the short term nature of the contracts acquired with In Touch. 29 INCORPORATION The Association is registered with the Homes and Communities Agency and prepares its financial statements under the Accounting Requirements for Registered Social Landlords General Determination 2006. It is incorporated under the Industrial and Provident Societies Act 1965 and registered in England.

FINANCIAL STATEMENTS 2012 | 63


Where to find us www.familymosaic.co.uk Telephone: 020 7089 1000

Head Office Albion House 20 Queen Elizabeth Street London SE1 2RJ

Pitsea Pembroke House 11 Northlands Pavement Pitsea Essex SS13 3DX

Charlton Triangle Homes 9-10 Cedar Court Fairlawn Cherry Orchard Estate London SE7 7EH

Old Oak HA Old Oak House 43-45 Erconwald St London W12 0BP

In Touch Frederick House 42 Frederick Place Brighton BN1 1EA

64 | FAMILY MOSAIC HOUSING


Paintings by Christopher Corr Concept and Design by Andrew Kingham & Matthew Grenier



Family Mosaic financial accounts 2012