Trent & Dove Annual report and accounts for the year ended 31st March 2020

Annual report accounts for the year ended 31 March 2020 Transforming, Homes, Lives & Neighbourhoods

Registered Society under the Co-operative and Community Benefit Societies Act Reg No. 30668R Registered Provider of Social Housing Reg No. L4311.

Registered office Trinity Square Horninglow Street Burton upon Trent Staffordshire DE14 1BL www.trentanddove.org

Auditors

Principal solicitors

Principal banker

KPMG LLP

Anthony Collins

Lloyds Bank plc

One Snow Hill

134 Edmund Street

PO Box 908

Snow Hill Queensway

Birmingham

125 Colmore Row

Birmingham

B3 2ES

Birmingham

B4 6GH

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Trent & Dove

B3 2DS

Contents 1. About Trent & Dove ......................................................... 4

- Our background

- Our vision and values

- Our strategic objectives

- Who’s who on the Board

- Who’s on our Executive Management Team

2. Our Chair’s report..............................................................10 3. Our Chief Executive’s report....................................14 4. Our Board’s report............................................................18

- Overall role of the Board

- Board structure and composition

- Individual members’ roles and commitments

- Code of governance compliance

- Review of governance effectiveness

5. Risk management............................................................26

- Risk management framework

- Our approach to risk

- How we manage risk

- Our principal risks and uncertainties

6. Audit and risk assurance ..........................................36 7. Governance and remuneration............................42 8. Operations and scrutiny............................................ 46 9. Our performance in 2019-20....................................50

- Group Financial Performance

- Key Performance Indicators

- Value for Money Metrics

10. Independent Auditor’s report.............................. 64 11. Financial statements................................................... 68

Annual report and financial statements 2020

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About Trent & Dove Here to make a difference Trent & Dove Housing Limited is a non-profit registered provider of social housing, incorporated under the Co-operative and Community Benefit Societies Act 2014. It is governed by a Board, whose members include independent non-executive directors and Trent & Dove customers.

We were established in March 2001 after tenants of East Staffordshire Borough Council voted in favour of a large-scale voluntary transfer of their homes to a new organisation. Our main activities today are still about managing those properties but also developing new social housing.

Trent & Dove currently owns 6,236 homes and offers these to customers to rent or part-buy through shared ownership. Alongside this, we now provide a range of extra services to help customers access new skills, training or employment.

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We have two commercial subsidiary companies: • First Housing Limited, which Trent & Dove acquired in 2009 and is mainly involved in managing 21 commercial shops; and • Trinity Housing Developments Limited, which was incorporated in March 2019. Its main activity is to support Trent & Dove Housing Ltd in its development activities.

More details are available in each of the subsidiaries’ annual reports and financial statements for the year ended 31 March 2020. These are on our website.

Driven by our vision and values We remain committed to our strategic plan for 2017-2022, which sets out an exciting vision for Trent & Dove and our customers. We are now in the fourth year of the plan and the results of the first three years are in the performance section of this report on pages 50 to 51

OUR MISSION: Transforming Homes, Lives and Neighbourhoods We are driven to make a difference to people’s lives and reduce homelessness in our region.

MEASURE: Trent & Dove neighbourhoods - a great place to live.

OUR IDENTITY AND OPERATING AREA: Regional place shaper We work in East Staffordshire, South Derbyshire and North West Leicestershire.

MEASURE: We can reach all our customers within one hour from our base in Burton upon Trent.

Our values are:

We demonstrate these by:

Passion

Persistent enthusiasm

Integrity

Being authentic

Excellence

Being the best we can

Local and regional focus

Dedicated to our communities

People and partnerships

Being human in our relationships

MEASURE: Trent & Dove – a great place to work.

Annual report and financial statements 2020

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Strategically focused We continue to focus on these four strategic objectives in a considered and balanced way:

• Growth – increasing the number of homes in our region • High standards – investing in our existing homes and ensuring we remain compliant with the requirements of our regulator • Sustainability and a great place to work – including financial modelling against a challenging external backdrop, organisation-wide business improvement, value for money and a sustainable workforce that is skilled and motivated • Investment in the community – including measuring value for money and the impact of this work.

Who’s who on the Board Mark Lewis, Chair As well as being our Chair, Mark chairs Action for Kids, a national children’s charity that provides services for young people with physical and learning disabilities. Mark is also the Chief Financial Officer of the Fair Banking Foundation, a charity dedicated to encouraging and helping banking institutions to improve the financial well-being of their customers. In addition, he is a member of the National Housing Federation’s national group of board members.

Mark is a qualified finance professional with over 30 years’ experience of working within Financial Services, mainly with major international banks, including 10 years in finance director / commercial director roles.

Afzal Ismail, Vice Chair Chair of the Audit and Risk Assurance Committee and a member of the Governance and Remuneration Committee Afzal is an Executive Director for a large national housing group. He graduated with an honours degree in mathematics and is a qualified accountant, as well as a Fellow of the ACCA (Association of Chartered Certified Accountants).

Afzal is also a member of the Institute of Internal Auditors. He is regularly invited to speak at national conferences on governance and risk management issues and has extensive previous experience of being a board member and chairing audit committees.

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Gary Middleton Senior non-executive director, Chair of the Governance and Remuneration Committee and a member of the Audit and Risk Assurance Committee Gary is an Economics graduate, holds a master’s degree in business administration and is a Fellow of the Chartered Institute of Bankers.

He has held several senior leadership roles in the banking sector and has significant experience of real estate finance, restructuring, asset management and recovery.

Gary is passionate about the provision of quality, affordable housing and the key role that housing associations have in delivering this.

Geoff Prior Non-executive director and a member of the Audit and Risk Assurance Committee Geoff has more than 35 years of experience within the housing sector working for Gentoo, Thirteen Group and Northampton Partnership Homes.

He brings extensive experience of operating at director level across all asset management functions.

Anita Wanowicz Non-executive director and Chair of the Operations Committee Anita is currently studying for an MA in Social Work and has an MA in Sociology.

Throughout her career she has supported a variety of people and families in challenging situations, including those who are vulnerable. Anita has worked in different sectors, including education and care and for charities supporting families.

Anita has a real passion and desire to influence important decisions relating to the community she lives in.

Mark Ashby Non-executive director, Vice Chair of the Operations Committee and a member of Governance and Remuneration Committee Mark has worked for more than 10 years providing care and teaching support for students with a range of learning or speech and hearing difficulties. He also has several years’ experience working in the prison service.

Annual report and financial statements 2020

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Kathryn Robb Non-executive director, a member of the Governance and Remuneration Committee and Chair of Trinity Housing Developments Ltd. Kathryn is a senior housing professional with 30 years’ sector experience ranging from front line service delivery to strategic development and leadership. She holds a Post Graduate in Housing Studies and is a corporate member of Chartered Institute of Housing.

She has extensive experience in securing new business opportunities and funding bids, merger and stock transfer negotiations, and establishing effective multiagency partnerships.

Ursula Bennion, Chief Executive Ursula has extensive experience, spanning a 25-year career in housing.

She has worked across the sector in a wide variety of roles ranging from her first job as a trainee housing officer to Director of Business Development and now as Chief Executive. During this time, Ursula has worked both with traditional housing associations and also large scale voluntary transfers. This has provided her with a wealth of experience in dealing with the challenges and opportunities facing the affordable housing sector.

Ursula is passionate about working in partnership with our customers and stakeholders. She has a clear focus on delivering excellent services and homes and is looking to expand Trent & Dove’s role as a placeshaper in our region.

In her role as an Executive Director, Ursula supports the Board of Directors to ensure that the organisation has clear, strategic direction and strong leadership.

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Board member update In September 2019, two members of the Board who had served during the previous financial year (2018-19) retired from their roles; Sophie Churchill and Sally Gibson. In line with its succession planning policy and approach, the Board undertook an extensive recruitment exercise and appointed two new non-executive directors and a co-optee, who are due to join on 1 July 2020.

Who’s on our Executive Management Team Chief Executive

Ursula Bennion

Finance Director

Jan Griffiths

People and Performance Director

Tracy Pepper

Property Director

Mark Gormley

Development Director

Charlie Riley

Neighbourhoods Director

Rachel Chudley

Appointed April 2019

Company Secretary

Catherine Slater

Annual report and financial statements 2020

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Our Chair’s report Mark Lewis, Chair

This has been a year for putting tenants centre stage of all our activities and working together with the Government, National Housing Federation and our valued partners to deliver more homes, transform lives and create strong communities.

Unimaginable change It is impossible to complete

Colleagues are working

impact on rent collection, arrears

my review of the year without

from home in line with the

and the additional costs that

mentioning the massive impact

recommendations from

COVID-19 has created.

that COVID-19 is having on our

Government that have resulted

tenants, services, colleagues,

from the COVID-19 crisis. We have

our financial stability and the

a strong crisis management plan

wellbeing of our region.

in place and have already taken

These are exceptional times.

Due to the restrictions on nonessential travel and the need to shield vulnerable people, we have had to focus on delivering essential services.

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Trent & Dove

measures to protect our tenants and colleagues throughout the duration of the pandemic. In addition, we have stress-tested the inevitable medium-term financial effects such as the

It will take time for our nation to recover, but rest assured that Trent & Dove will continue to deliver for our tenants and our staff during these difficult times.

Other external environment factors While we thought 2018-19 was

Having a government with

this year. That reinforces the

all about Brexit, who would have

a larger majority in place is

need for continued investment

thought it would be nearly nine

welcome, as this should provide

in our existing homes and

months later in January 2020

the clarity around policies and

neighbourhoods while ensuring

that we finally left the European

funding that is required to deliver

that our valued partners meet

Union? There is still much to do

more homes for those that need

their responsibilities by ensuring

to finalise the separation and to

them. However, the impact of

that culverts are cleared, flood

complete the trade agreements

COVID-19 and the subsequent

defences are reinforced and

by the end of December 2020,

rescue packages still need time

that the drains are kept clear

but we will continue with our

before we can see the long-term

and flowing.

preparation work and be ready

effect on individual jobs and the

to deal with the ongoing

wider economy.

changes in legislation and operating practices.

Locally, we also experienced extreme flooding in our area

Our operating environment We pressed ahead with our 20172022 strategic plan to build more homes, successfully delivering a further 139 in our region.

Although we did not meet our annual target of 179 homes due to adverse weather conditions and some planning delays, which may impact our ability achieve our target of 1,400 new homes by 2022. This could mean that the five-year target is reached a year later.

During 2019 we also analysed the information from the stock condition survey carried out the previous year. The Board subsequently approved a new investment profile for the next 30 years including more spend on roofs, pointing, and replacing kitchens and bathrooms.

To make sure that we can continue delivering our strategic plans – both in terms of new housing and investment in our existing homes – we raised £30

million of new funding with

to ensure that customers’ voices

Yorkshire Building Society. This

are heard and that decisions are

gives us additional capacity on

influenced by their views.

top of the £30 million raised from THFC in 2018.

During 2019 the Board also asked the Executive to introduce a

In terms of regulation of housing

new property standard that will

providers, 2019 was a significant

be over and above the existing

year. With a sector focus on the

homes standard. This will ensure

national ‘Together with Tenants’

that our tenants are living in

charter, the Board has reinforced

not just acceptable homes but

the terms of reference for our

good homes.

tenant-led operations committee Annual report and financial statements 2020

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Stakeholder perceptions In 2019 we published the results of our independent stakeholder survey. Seeking opinions from more than 50 key partners, I was delighted to see that on the key measures we scored well. The top five measurable statements were:

STATEMENT

OUT OF 5

Trent & Dove has an excellent reputation

4.67

Trent & Dove people come across as passionate, enthusiastic and determined to be the best they can and Trent & Dove people act with integrity and I trust them to do what they say they will do

4.63

Trent & Dove people are excellent ambassadors for the business

4.56

Trent & Dove staff provide tenants and customers with outstanding services that achieve high satisfaction ratings

4.44

Trent & Dove is a regional leader in providing high quality desirable housing in safe, clean neighbourhoods that meet people’s needs and expectations and Trent & Dove’s executive and board provide strong leadership

4.42

However, we continue to learn from the feedback.

We also kept our sector knowledge fresh as a result

Our areas for improvement include sharing our

of Kate Henderson, Chief Executive of the National

wider ambitions for growth, discussing with

Housing Federation, attending our Board strategy

partners our immediate and longer term risks, and

day in September 2019. This was to provide sector

working harder to promote our employer brand.

insights, to discuss the challenges that we face and to listen to our ideas and innovative thoughts for the future.

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Trent & Dove

Board effectiveness

Thank you

In late 2019 we asked specialist consultants,

In finishing my annual review, I want to

Savills, to carry out an independent review of

specifically thank all of the representatives

governance that will help us to understand

on our Operations Committee, customer

how we can further improve the effectiveness

panels and volunteers, whose valuable

of the Board. This work is still in progress and

insights and guidance allow us to

we will report on the outcome in due course.

understand evolving customer needs and

I am personally looking forward to leading

to become the best that we can be.

the Board in 2020-21 in what is my sixth year

On behalf of the Board, I would once again

as Chair. The Board and Executive team are

like to thank all Trent & Dove colleagues

continuing their journey from “good to great�

and partners for their commitment

and have once again provided the fantastic

to helping us deliver our strategic

support, insight, challenge and positivity which

objectives and making a real difference

Trent & Dove so richly deserves.

in transforming homes, lives and neighbourhoods.

Mark Lewis, Chair Trent & Dove

Annual report and financial statements 2020

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Our Chief Executive’s report Things may not be the same for some time, but we are unshaken in our drive to work together with tenants to transform homes, lives and neighbourhoods.

One Trent & Dove, better every day.

Ursula Bennion, Chief Executive

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Trent & Dove Trent & Dove

Dedicated to our communities As I reflect on 2019-20, I am – like many people in

meant we have been able to sustain many of our

the UK – working at home, ensuring we continue

services, including our emergency repairs, our call

to provide services to our tenants, motivate a

centre, our income and housing support teams

dispersed workforce and support our Board

and, crucially, Firstcall our telecare service for

in making the appropriate decisions to keep

elderly, vulnerable and disabled customers.

Trent & Dove operating in an ever-changing environment.

Our partnership working has also been tested but reinforced. We have some great examples of

It’s difficult to say whether we were in a good

work in the community and in our wider region

position to help respond to this pandemic but

which I share later in this review. As outlined in

fortunately in 2019 we reviewed and updated our

the Chair’s report, our stakeholder involvement

crisis management framework (as outlined in our

and engagement continues to be a priority, with

strategic plan). Sadly, it was tested in February

good results. I am also very proud of what Trent

following extreme weather and flooding. This not

& Dove is continuing to achieve in such difficult

only resulted in us needing to rehouse several

circumstances, but my thoughts of course are

tenants, but it was a real test of our internal

with our tenants and colleagues who may have

systems and processes.

lost loved ones or been personally affected by the

That learning was timely. As a result, working

coronavirus in other ways.

through the challenges of the COVID-19 crisis has

Review of 2019-20 – delivering our mission Transforming Homes As set out in the Chair’s review, we continue to

In terms of further growth, we are still working

make good progress on building new homes and

to identify appropriate stock transfers, stock

completed 139 during the year and a further 27

acquisitions and potential strategic partnerships

shared ownership properties.

in our region. Where housing associations are

However, we could not achieve our target to have built 172 new homes due to an exceptionally wet autumn. Delays in planning also resulted in slower scheme approvals and starts on site and if this

rationalising stock within our operating areas or have been affected by the impact of COVID-19, we are taking a pragmatic approach when deciding whether to put forward bids.

continues, it may stop us achieving our target of

In 2019, Trent & Dove formed Trinity Housing

1,400 homes by 2022. This could mean that we

Developments Limited to support Trent & Dove in

reach that number a year later, although new

its developement activities.

business opportunities continue to come forward and once we return to post-pandemic “normal”, we will make all efforts to reach this five-year target.

Looking ahead, we have numerous developments on site at present and exciting new schemes in the pipeline for 2020-21. I would like to take this opportunity to thank our developers, contractors and consultants for their wonderful support.

Annual report and financial statements 2020

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Transforming Lives The pandemic has already been

hand in hand with our customers

employment. Our partnerships

and will continue to be the focus

to optimise collecting their rents

with Citizens Advice Bureau and

of our work for 2020-21.

and service charges while also

MIND also delivered debt advice

ensuring they have access to

and mental health support to

advice and assistance when they

customers in need.

We continue to ensure all tenants have access to advice and guidance about how to pay their

The year also saw the launch,

rent and also get the support they

In the same year, we introduced

with East Staffordshire

need if impacted by coronavirus.

the first phase of a Customer

Borough Council, of a homeless

We particularly concentrated

Relationship Management

programme called Housing

on contacting more vulnerable

system (CRM). This enables

First, with the aim of achieving

people to ensure they have

our contact centre to act as

sustainable tenancies for five

the assistance they need and

the first point of contact for

people who were rough sleepers.

signposted them to partners and

customers needing help with any

During 2020-21, we are working

other services where appropriate.

question or query while having

with the council to secure

all their details immediately to

funding for the second year of

hand. During 2020-21, we will

that service.

Numbers of Universal Credit (UC) applications are increasing significantly, and we fully expect and have forecasted a dip in our income due to the impact on some tenants’ ability to pay their rent.

Before the pandemic, we implemented a Revenue Sustainment Strategy during 2019. This ensures that we work

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need it.

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implement phase two, adding further service improvements, including an online applications function.

Finally, we supported our local food bank and worked with colleagues to raise funds for several charities including The

We continued to offer

MS Society and Children in Need.

employability support through

There will be a strong focus in

our “DAVE programme�

2020-21 in strengthening those

supporting 30 people during

local partnerships, including

the year to achieve sustained

the YMCA.

Transforming Neighbourhoods

In summary

We remain committed to

It was positive to note that our

While it has been a challenging

ensuring that 100% of our homes

apprenticeship programme

and unsettling year externally, I

meet the housing regulator’s

continues to attract local young

am pleased to be able to provide

Home Standard and Decent

people who need a secure route

a positive outline of Trent & Dove’s

Homes Standard. So, I am

to full-time employment. In 2019,

performance. To keep pace with

delighted that in 2019, the Board

we had eight apprenticeships,

the changing environment, we

approved a new Trent & Dove

and are targeting a further two in

updated our strategic plans and

Homes Standard, which goes

2020-21.

targets earlier in 2020-21 and this

beyond both.

can be found on our website.

For others in need of extra

In 2019 we engaged in the

support, our Firstcall service

In summary, I would like to thank

National Housing Federation

continued to provide essential

all of our customers, partners,

‘Together With Tenants’

support, relieving pressure

stakeholders and colleagues.

consultation exercise and have

on local health services and

As we say in our plan, the ‘&’ in

adopted the six principles from

delivering significant reductions in

Trent & Dove is very important

the subsequent green paper.

ambulance call-outs in our region.

to us because it signifies the

In the same year, our tenant-

additional services we provide

led Operations Committee

across our communities. We

influenced key areas such as the development of our Customer Promise, the performance of our contact centre and our work on stigma under the ‘Together With Tenants’ programme.

A Great Place to Work During 2019-20, we continued to monitor the “One Trent & Dove” programme with a focus

welcome your support, feedback and ongoing challenge to ensure the organisation continues to ‘Transform Homes, Lives & Neighbourhoods’.

on colleague communication

We continued to support our

and engagement. The Board

community cafés, having

also reviewed the Executive and

refurbished Winshill’s in 2019. We

Non-Executive remuneration

also recognise the many projects

policies, and benchmarked Chief

Ursula Bennion,

undertaken and individual

Executive and Board pay.

Chief Executive

contributions made each year through our community impact awards gala evening, now in its 14th year.

But it was the human touch that is such an important part of our values that showed what everyone at Trent & Dove is made

One of our key measures of

of. I am so very proud of the

success is how many hours our

commitment and determination

colleagues themselves dedicate

shown by colleagues during the

to voluntary work. While we

local floods earlier in the year

aim to increase the number of

and again in their tremendous

hours to 7,500 during 2020-21,

response to the coronavirus.

volunteering is temporarily on

Without them, Trent & Dove

hold until coronavirus restrictions

would not have been able to

are lifted.

continue to support our tenants and the wider community.

Annual report and financial statements 2020

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Our Board’s report Mark Lewis, Chair

The Board is responsible for the long-term stewardship of Trent & Dove and for directing and overseeing its activities to make sure that homes and services are provided which meet the needs of our customers now, and into the future. To achieve this, the Board recognises its wider duty to care for the interests of customers, colleagues and stakeholders by maintaining a strong focus on governance and risk management and firmly embedding these principles in our organisational culture.

Overall role of the Board The Board is responsible for

the Board reaffirmed

The Board is responsible

the long-term leadership of the

its commitment to the

for making sure that the

organisation. It sets the strategic

Statement of Strategy and to

organisation has effective

priorities, focus and objectives

its core strategic objectives of

leadership, and that leaders

which shape the work Trent

“transforming homes, lives and

have the resources they need

& Dove undertakes and the

neighbourhoods”.

to achieve strategic objectives,

services it provides.

To achieve this, the Board

means developing specific

recognises its wider duty

and measurable targets and

of stewardship – to care for

actions aimed at promoting

the interests of customers,

long-term sustainable growth,

colleagues and stakeholders by

while meeting the needs of our

maintaining a strong focus on

customers and communities. It

governance, financial viability

guides the decision-making of

and risk management, and firmly

the Board, sets the operational

embedding these principles as

direction and objectives for its

part of our organisational culture.

leaders, and directs the activities

During the financial year,

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For the Board, strategy

Trent & Dove

of colleagues who deliver frontline services.

within the context of wider value for money considerations.

Each year, the Board reviews and approves the organisation’s financial plan and budget for the year ahead, and continually identifies and monitors organisational activity for risks which could affect achieving strategic objectives or key financial targets.

The Board continuously

and each committee sets out the

monitors that the organisation

purpose and role of each group in

is functioning as it should

our governance structure and the

by reviewing performance

matters it is authorised to review

information (via Key Performance

and approve. The Board receives

Indicators), financial reporting

regular reporting from each

data and risk management data

committees on their activities

at every Board meeting.

and from the Chief Executive and

The Board discharges some of its responsibilities directly, and delegates others to its three committees and its Executive and senior management teams

Executive Directors which explain when and how these delegated authorities have been used to achieve objectives on the Board’s behalf.

to undertake on its behalf. The Terms of Reference of the Board

Board structure and composition The Board currently has eight

The Board is assisted by the

on strategy, capital expenditure

members – one Executive

Company Secretary, who provides

and business priorities.

Director (Trent & Dove’s

advice on governance, legal

Chief Executive) and seven

and regulatory matters, and

Non-Executive Directors.

by external advisors, such as

More information about the

the organisation’s internal and

background, skills and experience

external auditors. All members of

of each Board member can be

the Board – executive and non-

found on pages 6-8 of this report.

executive – make decisions by

All non-executive directors

working together and achieving

are independent in nature,

a general consensus. Although

character and judgment and

executive directors participate

had no prior links or associations

at Board meetings from time

with Trent & Dove before being

to time in order to present

appointed, apart from the Chair

performance reports on key

and Vice Chair of the Operations

items for decision and discussion,

Committee, who are tenants of

their main responsibility is for

Trent & Dove.

executing the Board’s decisions

The Board has three supporting committees; Audit and Risk Assurance, Governance and Remuneration and Operations.

The key function and purpose of the Board and each committee is set out in figure one, on page 20.

Annual report and financial statements 2020

19

BOARD Responsible for leading the organisation and setting its Strategic direction and priorities.

Governance & Remuneration Committee

Audit & Risk Assurance Committee

Responsible for making sure that the organisation meets the Governance requirements set by our Regulator and for overseeing the remuneration of all paid staff, including Board members and Executive Directors.

Responsible for making sure that there is a risk management and internal control framework in place, and that these are operating effectively. Also appoints, and oversees the work of, the organisation’s internal and external auditors.

See page 43 for more information about the role and work of this committee during the financial year.

See page 38 for more information about the role and work of this committee during the financial year.

Operations Committee

Comprising solely of Trent & Dove Customers, the role of this committee is to review and monitor how services are delivered by reviewing performance data, cost information and service review data provided via tenant scrutiny activities. As Trent & Dove’s key forum for tenant involvement and engagement, the Committee and its members play a key role in holding management to account.

See page 48 for more information about the role and work of this committee during the financial year.

Each committee undertakes activities and exercises key functions which the Board has delegated to them. They each have clear terms of reference and their remit for decisionmaking and approvals is set and regularly reviewed by the Board. Reports from the Chairs of each committee can be found on pages 36, 42 and 46.

The Board’s key forum for tenant involvement, engagement and consultation is the Operation Committee. As all members are Trent & Dove customers, it plays a key role in scrutinising service delivery and performance. It is supported in this task by the Tenant Scrutiny Forum, a tenant working group that conducts in-depth service reviews and reports its findings back to the committee for consideration.

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Trent & Dove

Individual members’ roles and commitments Board members are recruited for their broad skills, knowledge and experience and for the value and insight they can bring as a result of their leadership and operational experience in their fields.

All non-executive directors are appointed for

of leaders and the business via bi-monthly Key

an initial term of three years. Reappointment

Performance Indicators and progress monitoring

following the initial term is not automatic and they

and constructively challenges performance where

are required to satisfy continuing independence

this is appropriate.

and performance-related criteria before they are appointed for a second, three-year term.

Any term beyond six years is subject to rigorous annual review which takes into account the need to progressively refresh the Board. The longestserving member is currently the Vice Chair, who will have been in post six years in September 2020. In October 2019, the Board took the decision to extend the term of the Vice Chair for a further 12 months beyond this to play a key role in planning for the succession of the Chair, who is currently due to

All members are expected to continuously develop and update their knowledge, skills and experience so that they can continue to make informed and positive challenges and contributions to discussions. Trent & Dove supports this by offering access to independent professional advice and by encouraging members to participate and attend conferences, training days, workshops, strategy days and on-site ‘back to shop floor’ meetings with operational teams.

retire in September 2021.

All the members of our Board are expected to contribute a culture of clear and open debate, so that informed and prudent decision-making can take place. The Board monitors the performance

Annual report and financial statements 2020

21

Time and other significant commitments The time commitment required from non-executive directors is currently between 16 and 20 days a year. This includes attending Board and committee meetings, preparing for meetings and taking part in strategy days. The Board meets six times a year, holding four main meetings and two strategy days. Each committee meets as many times as is necessary to discharge the duties and responsibilities they have under their Terms of Reference. Each member’s attendance at Board meetings during the financial year is shown here.

BOARD AND COMMITTEE MEETING ATTENDANCE - 2019/20 Name of Board Member

Board

Board Strategy Days

Audit & Risk Assurance

Governance & Remuneration

Operations Committee

Current Board members: Mark Lewis Afzal Ismal Gary Middleton Anita Wanowicz Mark Ashby Kathryn Robb Ursula Bennion Geoff Prior Members who retired during the financial year: Sally Gibson Sophie Churchill

Each Board meeting has a planned agenda

The other significant commitments of the Chair

which allows enough time to discuss key areas

and non-executive directors were disclosed to

such as strategy and risk management. They

the Board before their appointments and are

usually include a themed workshop or strategy

summarised in the board biographies section,

presentation from colleagues, and this helps to

starting on page 6. There were no occasions during

continually improve the operational knowledge of

the financial year where the Board considered that

the Board, providing the information and context

any of their external commitments interfered with

they need to inform its decision-making. The Board

or impeded their ability to exercise their duties

also seeks input from professional experts and/or

and responsibilities effectively. Conflicts of Interest

an external adviser when necessary and where it

are noted at the start of each Board meeting and

helps to supplement their knowledge of technical,

are actively managed by the Board and Company

legal, audit or accountancy matters.

Secretary, with members abstaining from discussions or decision-making where an actual or perceived conflict may exist.

22

Trent & Dove

Statement of Compliance with the Regulator of Social Housing (RSH) Standards All registered providers of

have effective governance

as “In-Depth Assessments” and

social housing must be able to

arrangements in place that

providers receive regulatory

demonstrate that they comply

“deliver their aims, objectives

gradings based on their

with and adhere to the outcomes

and intended outcomes for

compliance. Trent & Dove

and specific expectations set

tenants and potential tenants

undertook its last In-Depth

out by the Regulator in its

in an effective, transparent and

Assessment during the 2018-19

seven Regulatory Standards;

accountable manner”. It also

financial year and was awarded

Governance and Financial

requires them to “manage their

the highest possible gradings of

Viability, Value for Money,

resources effectively, to make

G1 V1 for compliance.

Rent, Tenant Involvement and

sure their viability is maintained

Empowerment, Home, Tenancy

whilst ensuring that social

and Neighbourhood and

housing assets are not put at

Community. More information

undue risk”.

about the content and purpose of each of these can be found on the website for the Regulator of Social Housing.

Each year the Regulator requires providers to assess their own compliance with the standard and assure customers and

Approximately every three years,

stakeholders that the Regulator’s

all providers are inspected by

expectations continue to be met.

the Regulator to make sure that they continue to meet the

The Governance and Financial

requirements of the Governance

Viability Standard requires

& Financial Viability Standard

registered providers to

in full. Inspections are known

Following the organisation’s annual review of compliance, the Board is pleased to confirm that during the year ended 31 March 2020, Trent & Dove complied with all applicable outcomes and specific expectations of the Governance and Financial Viability Standard and its accompanying Code of Practice. In addition, the organisation also reviewed its compliance with the other Regulatory Standards and the Board is satisfied that the requirements of all seven are being met in full.

Annual report and financial statements 2020

23

Statement of Compliance with our Code of Governance Trent & Dove adopted the National Housing Federation’s Code of Governance, which is the most commonly used one in our sector.

Each year the Board reviews compliance with the Code in order to assure itself that all the principles and provisions are being met in full. During the financial year the Board also commissioned an internal audit of the organisation’s compliance to provide enhanced assurance. This found that the Code was being complied with in full for all testing areas and the auditor returned a significant assurance opinion with no recommendations

During the financial year ended 31 March 2020, the Board is therefore satisfied that Trent & Dove has complied with all relevant principles and provisions of the National Housing Federation’s Code of Governance.

being raised.

Review of governance effectiveness Each year, the Board carries out an annual evaluation of board, committee and individual director performance and process. Every three years this is facilitated by an external provider, as recommended by our adopted Code of Governance. This external review enables us to obtain an independent perspective of Board effectiveness to help us continuously improve. The last external review was conducted during 2015-16 by Savills, with the next externally facilitated review scheduled to take place early in 2020-21. The Board is due to receive the results in July 2020 and the key outcomes of this exercise will be reported in full in the annual report and financial statements for the year ended 31 March 2021.

24 Trent & Dove 24 Trent & Dove

Annual report and financial statements 2020 25 Annual report and financial statements 2020 25

Risk management and internal control Risk management framework

Trent & Dove’s risk management framework is designed to improve the likelihood of achieving our strategic objectives while: a) protecting the interests of our customers, partners and key stakeholders; b) enhancing the quality and integrity of our decision-making; and c) safeguarding our customers, colleagues and assets, including our money, property and reputation.

The Board is responsible for reviewing and

The Audit and Risk Assurance Committee plays

approving the framework and for identifying the

a key supporting role in helping the Board to

key strategic and emerging risks which could

monitor the effectiveness of the framework and the

impact the way we operate. It retains responsibility

performance of the risk tolerances on an ongoing

for setting policy and monitoring how the

basis. The committee monitors the integrity of

framework operates and is the key decision-maker

the internal control framework and manages

in respect of the level and nature of the risks it

and oversees the audit process, including the

allows the organisation to be exposed to.

appointment of internal and external auditors and

The Board defines its approach or ‘appetite’ to risk-taking on an annual basis, carefully identifying

and financial statements.

the amount and extent of the risk it will tolerate.

More information about the committee’s role and

In doing so, it sets strict ‘risk appetite’ parameters

activities start from page 36 of this report.

called risk tolerances, inside which all financial and operational decision-making undertaken by the organisation must take place.

26

the production and integrity of the annual report

Trent & Dove

Our approach to risk We acknowledge that no activity is free from risk. Our approach to risk management focuses on early identification of key risks and proactive response, so we can reduce the likelihood of uncontrolled risk having a detrimental impact on the organisation achieving its strategic and operational objectives.

In order to pursue opportunity, and deliver our strategic objectives, our organisational approach is to be risk aware, but not risk averse. We seek to identify the threats we face in our operating environment – such as threats to our operating model, future performance, solvency and liquidity – so we can maximise opportunities that arise, while taking measured and responsive actions to control detrimental exposure where this is necessary.

Identification of risk

Monitoring and reporting

OUR RISK MANAGEMENT APPROACH

Control effectiveness

Assessment and evaluation

Determination of response

Our robust approach to risk management as shown here helps us to: • consistently deliver high quality services and support to our customers without delay or disruption; • keep our customers, colleagues and partners safe; • provide homes and support neighbourhoods which are pleasant and healthy to live in; • protect and maintain our assets, adding value where we can; • meet our obligations to funders and stakeholders; • remain financially strong; • build and maintain excellent relationships with our partners; • provide our colleagues with a great place to work.

27 Annual Annualreport reportand andfinancial financialstatements statements2020 2020 27

During the financial year the Board reviewed and strengthened its risk management processes and reporting capabilities so that risk can continue to be appropriately managed.

To do this we: • procured a specialist electronic risk management solution to allow for accurate thematic analysis, risk reporting and aggregation of risk exposure; • trained all our senior management team and mid-level team leaders on operational risk management techniques and practices; • created a new operational risk forum at senior management level – the Risk and Assurance Group – to act as the key driving force behind review and scrutiny of operational level risks. This new group will begin its work during the 2020-21 financial year; and • continued to develop our suite of reporting methodologies to the business and Board, using risk management Key Performance Indicators and the risk performance dashboard.

As with all Trent & Dove processes, we regularly review and assess our approach to ensure that it continues to meet the needs of the business and the expectations of our Regulator.

How we manage risk Risk management is a “business as usual” activity for our Board, Executive and senior management team. We stress-test our financial and operational plans at regular intervals using risk-based scenario testing and the Board’s Audit and Risk Assurance Committee reviews the performance and integrity of our internal control framework on a quarterly basis in order to continuously improve the strength of our internal controls.

28

Trent & Dove

We operate a holistic risk management system that is applied throughout the business, as set out here.

TOP DOWN Oversight

Board • Has overall responsibility for the approach to risk management and internal control; • Sets ‘Risk Appetite’ – how much risk our organisation is willing to accept in key areas;

Identification of risk

• Owns the Strategic Risk Register – a log of our principal risks and uncertainties;

Mitigation of risk at

Audit & Risk Assurance Committee (ARAC)

group level

• Has oversight of the risk management process; • Reviews performance of internal control and assurance framework; • Reviews reports from our internal and external auditors; • Provides quarterly assurance to the Board that an internal control framework is in place and operating effectively.

Executive Management Team (EMT) • Reviews, and operationally manages, the Board’s Strategic Risk Register; • Tracks, monitors and report on any changes to strategic risks to ARAC; • Receives assurance from SMT that operational risks are being effectively controlled

BOTTOM UP Identification of risk Assessment of risk Mitigation of risk Reporting

and mitigated.

Senior Management Team (SMT) • Champions the risk management framework and operational processes; • Reviews and provides assurance for the operational risks falling under their remit; • Reviews and provides assurance to EMT that the highest operational risks

All leaders and colleagues • Carry out risk identification, assessment and mitigation; • Follow the guidance and approaches set out in the Risk Management Policy and guidance; • Undergo risk management training.

Annual report and financial statements 2020

29

Our arrangements include:

• setting

an organisational stance on in our risk management policy, and giving colleagues

guidance and support to understand, identify and manage risk effectively using our risk management framework guides; • identifying

the level of risk the organisation is willing to accept – our risk appetite - before it

poses a threat to the delivery of our strategic or operational objectives. As explained earlier, the Board sets this and reviews it annually to make sure it responds to any changes in our strategic objectives, market and sector conditions or in law or regulation; • having

two risk registers which identify the different kinds of risk our organisation faces. Our

Strategic Risk Register contains the risks which could prevent us achieving our strategic objectives and our Operational Risk Register sets out how we manage and control the risks to our operational services and processes; • reviewing

any risk that sits outside the Board’s Risk Appetite to decide if this is something we

want to carry on doing or if there are any internal controls and processes we could put in place to reduce the extent to which a risk materialises and the impact it could have; • periodically

checking internal controls are in place and working effectively by obtaining

assurance from leaders and colleagues who own them. We use the ‘Three lines of defence’ assurance model which encourages colleagues to identify both internal and external sources of assurance for each of their risks; • taking

swift and decisive action to review our actions and adjust our plans and processes when

risks start growing beyond acceptable levels – our “risk tolerances”; • training

our Board committee members, Executive, Senior Management Team and nominated

colleagues around the business on risk management practices, so they can be ‘risk champions’ for our approach; • monitoring

and reporting on the performance of our framework using risk management Key

Performance Indicators, a Risk Performance Dashboard, internal control breach reporting, and by reporting and reviewing the strategic and operational risk registers; and • Stress-

and scenario-testing the assumptions in our financial plans, particularly for matters

which are beyond our operational control, such as interest rate rises, Brexit and welfare reform.

30

Trent & Dove

Internal Control The Audit and Risk Assurance Committee (ARAC) monitors and reviews the effectiveness of the organisation’s internal control framework on behalf of the Board. It does this on a quarterly basis via review of assurance reports which provide in-depth information and assurance regarding the operation and effectiveness of the internal controls in place across the business.

Our internal control framework is designed to: • effectively and comprehensively manage, rather than eliminate, risk; • provide appropriate systems and processes for preventing and/or detecting fraud, financial loss, reputational loss and loss of personal data belonging to customers, colleagues or third-parties; • provide appropriate systems to prevent and/ or detect the potential for harm to customers, colleagues and stakeholders, including putting appropriate health & safety and safeguarding protocols in place; and • to provide reasonable, but not absolute, assurance against material misstatement or loss.

As part of its quarterly review of the framework, the committee receives assurance about: • risk performance and response, including confirmation that operational risk registers have been reviewed by each functional area; • the integrity of the internal control framework, reports from internal and external auditors; • the operational performance monitoring framework, including confirmation that key performance indicators, customer feedback and complaints have been regularly reviewed; • probity incidents, including any actual or suspected cases of fraud, money-laundering or financial impropriety.

• statutory and regulatory compliance, including the organisation’s compliance with all relevant legal requirements and obligations; and • compliance with the organisation’s policy and financial control frameworks.

Business Assurance and External Audit is an important way the ARAC obtains assurance that internal controls are in place and working. At the start of each financial year, our Business Assurance provider and external auditor work with us to put a work plan in place to review and test the controls in our biggest risk areas, or in areas of strategic importance.

During the financial year ending 31 March 2020, no significant failings or weaknesses were identified by either our Business Assurance provider or external auditor. The Board confirm that the internal control framework was in place and operating effectively.

Annual report and financial statements 2020

31

Our principal risks and uncertainties The Board’s ongoing review of principal (or strategic) risks ensures that we are able to reflect on the challenges facing our business and remain equipped to meet these challenges by mitigating exposure to risks the organisation cannot adequately predict or control.

At the start of each financial year, the Board review the principal Strategic risks and uncertainties facing the organisation and ensure these remain appropriate for the financial year ahead. The Board tracks and monitors the performance of these risks on an ongoing basis, receiving a Strategic Risk Performance Report to every Board meeting. The Board consider the principal risks and uncertainties affecting the organisation to be as follows:

RISK

WHY IS THIS A RISK FOR US?

KEY CONTROLS

Death or serious injury to customers, colleagues or third-parties

Landlord H&S remains a key sector risk; it featured prominently in the RSH’s recently published Sector Risk Profile and there are anticipated to be a number of key developments during 2020-21 and 2021-22 which could impact the way that HAs will need to manage and maintain their stock and run services. As well as the ongoing COVID-19 impact, these include: the outcomes from Phase 2 of the Grenfell Enquiry, anticipated in Autumn 2020; the establishment of a new HSE “Safer Building Regulator”, which as a key outcome from Phase 1 of the Grenfell enquiry is anticipated to bring more sanctions and responsibilities for the sector, and the progress of the new Building Safety and Fire Safety Bills through Parliament, which aim to introduce a new legislative regime for building and fire safety monitoring. Safety of our customers and colleagues remains high on our priorities and the identified areas will be assessed as part of our current H&S framework including policies, process and systems.

• H ealth & Safety policy and processes;

A key Strategic Objective for the Board during 2019/20 was the restatement of the organisation’s five-year Asset Management Strategy and its associated Investment Plan.

This was approved by the Board in September 2020 and set out a number of key objectives for the organisation in two main areas; the continuous improvement of the responsive repairs and cyclical maintenance services and the additional investment in existing stock to ensure our properties continue to meet, and where possible exceed, MCHLG’s Decent Homes Standard. Delivering outstanding service by investing in existing homes and maintaining our compliance performance remains one of the Board’s core strategic objectives for 2020-21.

• B oard ownership of Asset Management Strategy, and accompanying Investment Plan;

We do not manage our assets to their full potential

32

Trent & Dove

• M andatory training for all leaders and staff in key roles; • A nnual H&S performance summary; • A nnual report of H&S performance to Board; • E MT scrutiny of all H&S incidents, reporting of H&S OTIs; • S ix monthly review of key controls and processes by the Internal Auditor.

• P erformance reporting to Board, and oversight of key VfM and financial controls

by Audit & Risk Assurance Committee and Operations Committee; • B oard and committee monitoring of key Asset Management key performance indicators and performance statistics; • S ix-month review and testing of key asset management controls as part of internal audit process.

RISK

WHY IS THIS A RISK FOR US?

KEY CONTROLS

We do not collect the optimum income attainable

Income collection remains a key risk for the organisation, as Universal Credit continues to be rolled out in our key operating areas and as the COVID-19 National Pandemic continues to put our customers’ household incomes under significant strain for the foreseeable future.

Arrears performance will continue to remain a key organisational risk during 2020/21 in order to maximise the income available to support our business and strategic plans, enable our customers to sustain their tenancies and provide the revenue streams to enable Trent & Dove to engage in its social impact and community initiatives.

• P erformance reporting to Board and oversight of key performance indicators and performance metrics by Board and Operations Committee;

Growth, by increasing the number of homes in our region and reducing homelessness, remains one of the Board’s core strategic objectives for 2020-21. The Board continue to closely monitor the seven-year development target, first set in December 2017, and, in particular, the revised target set out in the Business Plan to deliver 897 homes from 2019/20 to 2023/24.

• B oard ownership and approval of Development Strategy;

Development programme is not delivered

• A nnually Stress-testing the impact of higher arrears, bad debts and income reduction on our financial plan and budgets via a range of single and multi-variant scenarios; • I nvestment in learning and development to provide the right skills for colleagues to support customers facing reduced incomes; • P artnerships with organisations who can provide financial support and advice to our customers.

• R eporting to each Board meeting on implementation of Strategy targets and deliverables; • B oard review of key performance key performance indicators and performance outturn projections at each Board meeting; • A sufficient pipeline of new land led scheme; • C omprehensive horizon-scanning of external commercial operating environment for opportunities and threats, including housing market performance, mortgage availability, government policy and the researching and monitoring of new construction techniques.

Benefits anticipated under ICT programme are not delivered / realised

Crisis Management: COVID-19 National Pandemic

During 2019/20 the organisation made significant investments in continuously improving ICT infrastructure to modernise the way we work and help us engage with our Tenants more effectively. During 2020/21 there will be a continued focus on moving to “Cloud-based services” and technologies in order to enable and realise anticipated efficiency savings. In addition, projects relating to implementing agile working across the business are both key to meeting our accommodation challenges and our Value for Money targets for 2020/21.

• B oard setting and leading on development of ICT Transformation Strategy;

The Crisis Management Plan was invoked at the end of March 2020 in response to the Covid-19 National Pandemic and the government’s decision to invoke nationwide social-distancing measures to reduce virus spread and manage NHS capacity to respond. The organisational response to the pandemic continues to be led by the Executive Management Team, with oversight from the Board. This risk provides assurance to the Board regarding the measures being taken to control and mitigate the impact of COVID-19 posed to the organisation. It is anticipated that this risk will remain one of the Board’s top risks during 2020/21 as the organisation transitions back to ‘Business as usual’.

• C risis Management Plan invoked, with organisational response strategically led by the Board and operationally led by Executive Management Team;

• P erformance monitoring to each Board meeting including project implementation and budget updates; • B oard oversight of completed projects including benefits-realisation and VfM.

• P rogress and performance reporting received by the Board at regular interviews as part of standing Board Agenda items and interim reporting; • I mpacts on business plan modelled as part of annual Stress-testing exercise and outcomes reported to the Board.

Annual report and financial statements 2020

33

In addition to the principle risks in the table on pages 32-33, the Board also kept a close eye on the developing situation around Brexit, and the UK Government’s preparations for exiting the European Union on 31 December 2020. This involved the Board reviewing its existing controls and assurances to manage potential impacts on: •

tenants, leaseholders and service users, particularly those with EU citizenship;

•

procurement methodologies and our supply chains – particularly those which had the potential to impact our repairs and maintenance services or development activities;

•

our financial and liquidity arrangements, including those for income and arrears collection; and

•

impacts on staffing and resourcing.

Where necessary, internal controls were strengthened – or new controls developed – to mitigate against a hard or ‘No Deal’ Brexit and safeguard the continuity of service provision for colleagues and stakeholders.

As well as the risks identified, to ensure that we are prepared for the challenges ahead, 2020/21 will also see the Board managing the risks around: • Driving forward with our land-led development programme, supported by our in-house Development team; • Reviewing our digital offer to customers by integrating our internal ICT systems to enable greater accessibility for customers to our services; • Implementing agile working practices more widely across the business.

34

Trent & Dove

Annual report and financial statements 2020

35

Audit and Risk Assurance Report of the Audit and Risk Assurance Committee

ARAC’s core purpose is to provide assurance to the Board that internal controls are in place to manage and mitigate the key risks the organisation faces. Central to this is ARAC’s role in overseeing and scrutinising the effectiveness of the organisation’s audit and risk management frameworks – and continuously improving these to strengthen organisational resilience.

Afzal Ismail, ARAC Chair

Committee Role and Purpose ARAC has delegated authority from the Board of Trent & Dove Housing for monitoring and overseeing the organisation’s Risk Management Framework and for providing assurance, via the and internal and external audit programme and financial reporting processes, that key internal controls are in place across the organisation and operating effectively.

The Committee currently has three Non-Executive members – myself, and my Board colleagues Gary Middleton and Geoff Prior. In addition, the Committee currently carries a vacancy following the retirement of Sally Gibson in September 2019. It is anticipated that this vacancy will be filled in July 2020, when two new Non-Executive members and a Co-optee join the Board of Trent & Dove Housing.

36

Trent & Dove

The Committee is supported operationally by key colleagues from the organisation’s governance and finance functions and by professional audit and business assurance advisors from KPMG and Mazars. We also have access to financial resources to obtain additional independent professional advice when we feel it is necessary. In this way, we always have access to the most relevant and insightful technical expertise to help us discharge our regulatory and financial reporting duties.

During the financial year ended 31 March 2020, the Committee met four times as outlined in our Terms of Reference, and attendance at these meetings is set out in the Report of the Board, starting on page 18.

Internal Audit and Business Assurance ARAC are responsible for managing the relationship with our internal auditor, Mazars, who were appointed in 2017 for a period of 3 years to 31 March 2020. In June 2020, the Committee extended Mazars’ contract for a fourth year, to 31 March 2021. A key objective for the Committee during 2020/21 will therefore be the retendering of the internal audit contract for the start of the 202122 audit year

The Internal Audit service currently consists of

to Trent & Dove other than the core internal

quarterly compliance testing of key internal

audit service, and, following consideration, the

controls, alongside individually-scoped Significant

Committee is satisfied that the key personnel

Risk Reviews - in-depth reviews of the internal

involved in delivering the service demonstrate the

controls for particular operational processes or

appropriate levels of independence and objectivity.

areas. During the financial year 2019/20, the internal auditor carried out 9 Significant Risk Reviews on behalf of the Committee in the following operating areas: Data Protection (GDPR); Welfare Reform; Performance Management; HR; Core Financial Controls; Key Internal Controls; Fraud Awareness; Procurement and Firstcall (our telecare service). The reviews provided assurance regarding the suitability and robustness of key internal controls in these areas, alongside recommendations for continuous improvement.

The Committee is responsible for monitoring and reviewing the effectiveness of the internal audit service in the context of the Group’s overall risk management framework, and for ensuring that the internal auditor’s independence is not impaired, taking into account relevant professional

The Committee reviews the output reports prepared by the internal auditor at each meeting and monitors the recommendations raised to make sure that any proposed remedial actions are reasonable and appropriate and are implemented in a timely and comprehensive manner.

Each year the Committee meets with the internal auditor without management present to talk through any areas of concern that the Committee or auditor may have, and to obtain an objective view of the performance of the internal control framework. This process aids continuous improvement of Committee processes and contributes towards the Committee’s ability to assess the suitability and independence of the internal auditor.

and regulatory requirements. During 2019/20 the internal auditor did not provide any services

Annual report and financial statements 2020

37

Risk Management One of the Committee’s key functions during the financial year has been to oversee the management of the Board’s Risk Management Policy and Framework. This work has included:

•

Reviewing our organisational Risk

the Board by reviewing Quarterly

Appetite, particularly in areas of

Assurance Reporting from the

highest strategic risk to the business,

Executive and Senior Management

and making recommendations for

Team.

amendments or additions to the Board for consideration; •

•

reviewed and re-designed in full during the financial year to ensure

Governance and Financial Viability and

the organisation has the controls and

flagging areas of concern (if any) to the

assurances in place to respond quickly

Board for consideration;

and effectively to major incidents as

Monitoring the Risk Management

Strategic and Operational risks; Reviewing and periodically updating our Corporate or “Strategic” Risk Register and identifying whether each risk currently sits inside or outside the Board’s agreed Risk Appetite; Reporting on the strength of the Internal Control Framework to

38

Management Plan, which was

Rules” or “Risk Tolerances” for

including those for the management of

•

Reviewing the organisation’s Crisis

Monitoring the organisation’s “Golden

Framework key performance indicators,

•

•

Trent & Dove

they occur. The Plan was successfully “live-tested” twice during the year; firstly, in February 2020, when several of our properties in Burton upon Trent were flooded, and again in March 2020, when the Government announced the COVID-19 national lock-down. The Committee will continue to review the CMP on an annual basis to make sure it remains up-to-date and is continuously improved.

As a result of the work undertaken during the year, the Committee considers that risk is being assessed thoroughly, and is being acknowledged and mitigated effectively, at all levels in the organisation. The Report of the Board, starting on page 18, sets out what the organisation considers its Principal or ‘Highest Strategic’ risks to be, and provides details of how these risks are being controlled and mitigated.

External Audit ARAC are also responsible for appointing,

On an annual basis, the Committee reviews the

re-appointing and removing the Group’s external

independence of the external auditor, to make sure

auditor, approving their remuneration and terms

that it remains independent in nature, character

of engagement and reviewing service quality and

and judgment and that our relationship with them

performance. KPMG were appointed in 2017 for

remains objective, reasonable and proportionate.

a period of 3 years to 31 March 2019. In December

KPMG do not provide any non-audit services

2019, the Committee extended KPMG’s contract for

to Trent & Dove Housing and the Committee

a fourth year, to 31 March 2020.

are satisfied that the key personnel involved in

KPMG is invited to attend each Committee meeting to provide progress updates against

delivering the service demonstrate the appropriate levels of objectivity and independence.

the annual External Audit Plan. Once a year the Committee meets with the External Auditor without management present and this allows the Committee to independently assess the effectiveness of our external audit arrangements and obtain an independent view of the strength of our financial controls.

Annual report and financial statements 2020

39

For the financial year ended 31 March 2020, the key issues ARAC considered in relation to the financial statements were: • Valuation of LGPS net liability • Revenue recognition – fraud risk related to revenue recognition • Management override of controls The Committee are satisfied that the report produced by the external auditor is fair, balanced and • Regulatory compliance, litigation and claims understandable and provides the information necessary for stakeholders to assess the organisation’s performance and strategy.

• position, Recoverability of stock and work in progress • Impact of COVID-19 The Committee are satisfied that the report produced by the external auditor is fair, balanced and understandable and provides the information necessary for stakeholders to assess the organisation’s position, performance and strategy.

2020/21 Priorities Looking forward, the work of the Committee during

The Committee would like to extend their thanks to

2020/21 will predominantly focus on:

management, our professional advisors and to all

• re-tendering our internal and external audit services; • evolving our business assurance processes including undertaking an assurance mapping

the colleagues who have serviced and supported the Committee during the financial year. The Committee would also like to thank Sally Gibson, who retired from the Committee in September 2019, for her commitment and service.

exercise to add value to the internal control process, including playing a greater role in monitoring operational compliance with the Regulatory Standards; and • implementing any recommendations raised for the Committee during the Board’s triennial Governance Effectiveness Review.

40

Trent & Dove

Afzal Ismail Committee Chair

41 41 Annual report and financial statements 2020 2020 Annual report and financial statements

Governance and remuneration Report of the Governance and Remuneration Committee

Gary Middleton, Chair

The GRC plays a key role in ensuring that high standards of governance and accountability are being met across the organisation, while offering our colleagues at all levels fair pay and the very best conditions and opportunities for growth.

Role of the committee The purpose of the committee is to consider all matters relating to: • the remuneration and emoluments of all paid staff, the Executive team and Non-Executive Directors; • the review and identification of skills and competencies required by the Board and the Executive team, including planning for the succession of key Board and Executive roles; • the effectiveness of the Board and its committees, including developing plans for their continuous improvement; and • new Board and Executive appointments, recommending suitable candidates to the Board for consideration.

42

Trent & Dove

Looking back – the committee’s work during 2019-20 The committee has undertaken the following work during the financial year to discharge the responsibilities set out in its Terms of Reference:

1. Undertaken the annual review of Board skills and competencies, in order to identify any skills

6. Reviewed the CEO’s remuneration and benchmarked against peers

gaps and recommend measures for addressing these gaps. This resulted in: a) The recruitment of two new Non-Executive Directors (NEDs), who will join the organisation on 1 July 2020 and replace two NEDs who retired during the financial year, Sophie Churchill and Sally Gibson; and b) The appointment of a new Board

7. Cyclically reviewed Trent & Dove’s Non-Executive and Executive Remuneration Policies and recommended changes to the Board in line with sector best practice. This included reference to sector benchmarking and independent external advice. Remuneration for NEDs is benchmarked regularly against our sector peers and the pay of Executive Directors

Co-optee, who will add to the composition

is structured to attract, motivate and retain the

of skills on the Board and assist future Board

talented individuals we need to continue to deliver

succession planning.

our organisational objectives successfully. More

2. Overseen the recruitment process for, and made recommendations to the Board regarding, the appointment of a new Chair for the Board’s Operations Committee. Anita Wanowicz was appointed in September 2019 on the retirement of the previous Chair, Sally Gibson.

3. Overseen the 2019 Annual Board appraisal process, including reviewing NED feedback to aid the continuous improvement of Board processes. All continuous improvement points raised are added to a rolling ‘Governance Action Plan’, with the Committee closely monitoring how they are being implemented.

4. Agreed the process and Scope for the triennial externally facilitated Governance Effectiveness Review. The review is due to finish in July 2020 and our progress in implementing the outcomes raised will be reported in the Annual Report and Financial Statements for the year ended 31 March 2021.

5. Reviewed and recommended the basis for the

information about NED and Executive Director pay can be found in the Notes to the Financial Statements, starting on page 74.

8. Cyclically reviewed Trent & Dove’s Non-Executive Director Training Policy , incorporating sector best practice.

9. Monitored the implementation of the “One Trent & Dove” leadership and development programme This programme, developed internally and delivered by external training and coaching providers, is provided for all Trent & Dove colleagues across all levels in the organisation. Consisting of key skills workshops and coaching sessions, it aims to provide all colleagues with an opportunity to work alongside others in different teams to reinforce their understanding of our organisational mission and values and continuously improve and develop core teamworking competencies. At financial year end, all Trent & Dove colleagues successfully participated in Phase 1 of the programme, with Phase 2 being rolled out during 2020/21.

2019/20 Colleague Annual Pay Award to the Board; including reviewing the performance monitoring components and organisational targets which make it up.

Annual report and financial statements 2020

43

Looking Forward – the committee’s work in 2020/21 During 2020-21 the committee’s work will focus on:

1. Overseeing the implementation of the recommendations raised during the triennial externally facilitated Governance Effectiveness Review, which will include a full cyclical review of our Governance Framework and Board and Committee Terms of Reference; and 2. Continuously developing the Board’s Skills, Succession and Renewal Plan, including overseeing the succession-planning for the Board’s Chair, Vice Chair, Senior Non-Executive Director and the Vice Chair of the Board’s Operations Committee who are all currently due to retire in the next two years.

Finally, on behalf of the Board, the Committee would like to extend its thanks to Sophie Churchill and Sally Gibson who retired as NEDs during the financial year. In particular, the Committee would like to extend its thanks to Sophie Churchill, who chaired the Committee until September 2019. Sophie and Sally’s commitment and hard work has been much appreciated and has significantly contributed to the organisation’s ability to “transform homes, lives and neighbourhoods”. The Committee looks forward to welcoming two new NEDs and a Co-Optee to the organisation in July 2020 as it continues its mission and objectives into 2020-21.

Gary Middleton Chair of the Governance & Remuneration Committee

44

Trent & Dove

Annual report and financial statements 2020

45

Operations and scrutiny Report of the Operations Committee

Trent & Dove has always had a strong commitment to listening to, and representing, the tenant voice. In 2014, the Board established the Operations Committee – comprising wholly of Trent & Dove tenants and leaseholders – to play a key role in scrutinising operational service delivery and holding management to account. The Committee continues to remain the Board’s first key point of consultation to inform service delivery, development and expenditure and the Committee continues to play a key role in developing future customer strategy.

Anita Wanowicz, Committee Chair

46

Trent & Dove

Purpose of the committee The Operation Committee’s role is to make sure that the operational processes carried out by all areas of the business meet the targets set by the Board and that customer views, opinions and satisfaction shape the way in which services are delivered.

The Committee currently has seven The purpose of the Committee is to make sure that all the services provided by Trent & Dove: • meet customer expectations, and can be used and understood in ways which are accessible to all; • continuously improve and develop, by taking account of customer views, opinions and feedback; • are delivered in cost-effective ways which represent ‘value for money’; and • consider accepted good practice to meet the customer service expectations set out by the

members.

Three Committee members, Sally Gibson, Clive Keen and Gerry North, retired during the financial year in line with Committee successionplanning procedures and a key focus for the Committee in 2020/21 will be reviewing the current size and composition of the Committee to determine whether there is a need for new members to be recruited.

Regulator of Social Housing.

Annual report and financial statements 2020

47

Our work during 2019/20 The following work has been undertaken by the Committee during the financial year to discharge the responsibilities set out in its Terms of Reference:

• A review of customer engagement

Compliance with the RSH Consumer

Strategy. This resulted in the identification

Regulatory Standards;

and commissioning of new customer feedback and survey tools which will be rolled out in full during 2020/21; • Conducting the annual review of customer safeguarding processes and policies, to continuously improve and develop existing internal controls and operating procedures; • Overseeing the organisation’s response to the NHF’s ‘Together with Tenants’ initiative, including receiving assurance from the organisation about the work being undertaken to meet the requirements of the new ‘Together with Tenants’ Charter and exploring initiatives such as ‘Tackling Stigma’ and ‘Celebrating thriving communities’; • Reviewed Operational key performance indicators, including H&S and HR performance; • Reviewed and monitored key operational risks across the organisation;

48

• Reviewed the Self-Assessment of

methodologies set out in the Customer

Trent & Dove

• Instigated periodic Service Reviews, which for 2018/19 included reviewing the Contact Centre experience and Customer Service Standards culminating in the approval of the new ‘Customer Promise’; • Communicated and engaged with Resident Involvement groups, including the Tenant Scrutiny Forum; • Reviewed and monitored the number and performance of complaints received, and what the organisation is doing in response to learning from complaints; • Recommended to the Board a suggested rent and service charge approach for 2020/21; and • Reviewed and approved key policies affecting tenants.

Looking Forward – 2020/21 During 2020/21 the work of the Committee will include: • Implementing the outcomes of the Board’s triennial externally facilitated Governance Effective Review; • Continuing with focused scrutiny of service, performance and operational delivery; and • Forging closer links to resident engagement groups and operational teams across the business.

Special thanks to the Tenant Scrutiny Forum Although not part of our formal governance structure, the Tenant Scrutiny Forum plays a key role in reviewing and scrutinising service and policy development before the details come up to the Committee for review and approval. In this way, the Forum plays a valuable role in making sure that the tenant voice is heard, and in shaping and challenging our plans so that our proposals become the very best they can be. On behalf of my fellow Committee members, I would like to thank all the tenants who are involved in our tenant involvement and engagement activities for their continued dedication, enthusiasm and commitment.

Finally, on behalf of the Committee, I would also like to extend the committee’s special thanks to Sally Gibson, who retired as Chair of the Committee in September 2019, and to Committee members Clive Keen and Gerry North who also retired during the financial year. Sally, Clive and Gerry’s contributions to the Committee since the Committee’s inception in 2014 have directly helped to shape the homes, lives and neighbourhoods of Trent & Dove customers. The Committee look forward to developing their work further in 2020/21.

Anita Wanowicz Chair of Committee

Annual report and financial statements 2020

49

Our performance in 2019-20 Group financial performance Our key financial objectives are: •

Achieving VfM through cost control and income maximisation, thus ensuring the subsequent surpluses are used to contribute to our four strategic objectives;

•

Ensuring that all funders covenants are fully met;

•

Ensuring the association’s short and medium term liquidity is monitored, sustained and reported.

Our accounting policies are set out on pages 73-79 The summarised elements from the financial statements are:

STATEMENT OF COMPREHENSIVE INCOME 2019/20 £m

2018/19 £m

2017/18 £m

27.9

27.2

26.5

(19.0)

(17.4)

(17.7)

Operating surplus from lettings

8.9

9.8

8.8

First tranche shared ownership surplus

0.3

1.1

0.6

(0.3)

(0.6)

(0.5)

-

0.1

0.2

Surplus on asset disposals

2.0

1.7

1.0

Movement in fair value

(0.1)

0.1

0.3

Operating surplus

10.8

12.2

10.4

Net interest charge

(4.5)

(4.8)

(3.9)

6.3

7.4

6.5

Turnover from lettings Lettings operating costs

Other social housing activities suplus / (deficit) Non social housing activities

Surplus before taxation

•

Increase in turnover from lettings due to increase in unit numbers

•

Reduction in operating surplus from lettings due to increased consultancy costs following stock condition survey

•

Continued increase of surplus on asset disposals due to units lost under RTB / RTA sales

The benchmarking of these results can be seen in the VfM statement at page 55.

50

Trent & Dove

STATEMENT OF FINANCIAL POSITION 2019/20 £m

2018/19 £m

2017/18 £m

Housing properties at cost

232.1

210.8

191.9

Depreciation

(47.6)

(43.7)

(40.1)

Housing properties net book value

184.5

167.1

151.8

4.6

3.2

3.2

(24.4)

(22.3)

(20.9)

Net current (liabilities) / assets

(3.7)

5.5

30.2

Assets less current liabilities and grants

161.0

153.5

164.3

Reserves

46.9

39.8

34.6

Pension

3.9

4.8

2.8

Other long-term liabilities

(2.1)

(0.9)

1.9

Net debt

112.3

109.8

125.0

Funding

161.0

153.5

164.3

Other fixed assets Long-term grant liabilities

•

2019/20 saw a total of £19.5m being spent on the supply of new properties and £3.7m on improvement works to existing properties

•

The valuation received from Staffordshire County Council resulted in a £0.9m decrease in the pension liability.

Annual report and financial statements 2020

51

FINANCIAL COVENANTS

Net debt per unit

Interest cover

Funder

Current min / max

19/20 Actual

18/19 Actual

Lloyds

£32,000

£17,869

£16,540

Yorkshire

£32,000

£17,468

£16,198

Lloyds

100%

358%

349%

Yorkshire

125%

358%

349%

Year on year perfomance

At 31 March 2020 Trent & Dove’s total group borrowing totalled £112.3m as shown below

TREASURY MANAGEMENT Drawn £m

Available £m

Facility £m

81.4

6.2

87.6

-

20.0

20.0

THFC

30.9

-

30.9

Total

112.3

26.2

138.5

Lloyds Bank Yorkshire Bulding Society

All borrowing is in sterling so attracts no currency risk and all cash reserves are deposited in line with the treasury strategy.

Liquidity remains a key focus for the organisation and at March 2020 we had: •

Cash and cash equivalents immediately accessible of £4.1m

•

£26.5m in undrawn secured funding facilities (including Revolving Credit Facilities)

•

£93.1m of unencumbered housing properties available to be used as future security.

Our liquidity ratio at 31st March 2020, which includes all contractually committed and Board approved development spend, was in excess of 60 months.

52

Trent & Dove

Covenant compliance

Going concern The original 2020/21 Financial Plan, prepared in February

Trent & Dove have assessed the potential impact of the

2020, demonstrated that Trent & Dove had a reasonable

government’s post COVID-19 recovery plans and the

expectation that they had adequate resources to

subsequent economic risks and a series of rigorous stress

continue their current operational existence for the

tests have been carried out to ensure the impact of said

foreseeable future. Primarily this was based on sufficient

risks are evaluated and required mitigations, including the

available liquidity to support the organisation’s financial

cessation of future development when appropriate, are

requirements without further external funding being

identified .

required. Additionally, it was felt there would be no barrier to sourcing future funding to support the association’s

Based on the above, Trent & Dove has a reasonable

strategic targets of continuing to develop new social

expectation that they have adequate resources to

housing units.

continue in operational existence for the foreseeable future. For this reason, the association continues to adopt

As this Financial Plan was being presented to the Trent

the going concern basis in the financial statements.

& Dove Board in March 2020 the potential financial implication of the COVID-19 pandemic was just being identified and it was agreed that the plan should be reviewed considering these potential consequences. This review has now been concluded and despite the impact on development schemes, increased arrears and general costs, the assessment of the adequacy of both current resources and the potential of future funding remains unchanged.

Annual report and financial statements 2020 53 Annual report and financial statements 2020 53

The year at a glance Key Performance Indicators Using a balanced score card approach the organisation reports quarterly to board and monthly to the Executive on its key objectives and a range of key performance indicators to ensure we deliver our mission to Transform Homes Lives and Neighbourhoods. We are pleased to report strong progress as show below.

New homes - 139 (Target 172)

Efficiency savings - £920k

Rent collected 97.84%

Further £31.5m committed for

(of which £836k reinvested)

(Target 97.5%)

development

Number of people who achieved sustained employment - 15

Volunteering hours - over 9,000 (Target 7,000) with an increasing number contributing to our community programme

54

Families who received assisted support such as mental health or parental care - 1,618 (Target 1,000)

1.51% of revenue invested in

94% of customers surveyed who

93% of customers who

communities, over £400k

believe their rent provides value

say their home provides a

for money

great place to live

99% of repairs carried out within

95% of colleagues who agree or

100% compliance for fire,

the customer agreed date

moderately agree that Trent &

electrical, gas asbestos and

Dove is a great place to work

legionella

Trent & Dove

What Value for Money means to Trent & Dove Value for Money (VfM) continues to be a primary strategic focus for Trent & Dove and is reviewed regularly by Board. In addition, during 2019/20, an internal audit review was undertaken that considered our approach to VfM plus the design and operation of our controls surrounding VfM; the result of this independent review was a positive substantial assurance.

2019/20 was the fourth and final year of -1% rent reductions. To meet this loss of income Trent & Dove planned to achieve total efficiencies of £4.4m over the four-year period 2016/17 to 2019/20. A total of £6.2m savings have been achieved over the four years to 31st March 2020 as shown in the table below. The most significant elements are efficiencies in routine and planned maintenance achieved by bringing the repairs service in-house, a reduction in management costs, procurement savings and the closure of the Local Government Pension Scheme.

VALUE FOR MONEY EFFICIENCY TARGETS 2016-2020 Area of Spend

VfM Target Efficiencies 16/17-19/20

Reported Savings 16/17

Reported Savings 17/18

Reported Savings 18/19

Reported Savings 18/19

Total Forecast Savings 16/17-19/20

(£000’s)

(£000’s)

(£000’s)

(£000’s)

(£000’s)

(£000’s)

Asset Management

1,436

435

307

1,552

884

3,178

Estates and Service Contract

703

306

551

175

390

1,422

In-house Repairs Service

350

761

-

-

-

761

Pay Rise Limited to 1%

224

50

50

62

62

224

Closure of LGPS

532

-

202

174

156

532

15

135

-

-

-

135

607

-

248

(194)

(123)

(69)

Digital Improvements

42

44

-

-

-

44

Financial Plan Savings

500

-

-

-

-

-

£4,409

£1,731

£1,358

£1,769

£1,369

£6,227

Grounds Maintenance Overheads

Total VfM Target/ Savings

Annual report and financial statements 2020

55

During 2017/18, the Regulator of Social Housing (RSH) unveiled an overhauled value for money (VfM) regime for the sector. This includes a set of metrics against which the association is assessed and benchmarked. The results of those metrics for Trent & Dove for 2019/20 (showing 2018/19 equivalents) are shown below. A comparator group of 11 other associations for benchmarking purposes, has been identified who are felt to best match Trent & Dove in terms of unit size, geography, maturity and type of property supplied.

Metric No.

56

Definition

2019/20 Actual

2019/20 Target

2018/19 Actual

2018/19 Consolidated Sector Median

2018/19 Comparator Group Median

12.59%

15.01%

12.29%

6.24%

9.55%

2.13%

2.74%

3.12%

1.49%

1.76%

58.64%

62.50%

59.37%

43.39%

61.54%

222%

189%

242%

184.19%

184.41%

1

Reinvestment: measures investment in Properties (both Existing and New Build Supply)

2

New Build Supply (Social Housing): No of Social Housing Units delivered as percentage of existing stock

3

Gearing – measures % of assets made up of debt and reliance on debt funding

4

EBITDA MRI Interest Cover measures surplus generated compared to interest payable

5

Headline Social Housing Cost per Unit

£2,949

£3,002

£2,754

£3,695

£3,041

6

Operating Margin (Social Housing Lettings)

31.81%

29.41%

35.95%

29.21%

31.03%

7

Operating Margin (Overall)

29.02%

32.97%

33.81%

25.84%

31.40%

8

Return on Capital Employed (ROCE)

5.85%

5.36%

6.90%

3.76%

4.94%

Trent & Dove

Trent & Dove have compared themselves to the sector median for 2018/19 due to 2019/20 results not yet being available. Additionally to provide a more focused and relevant result they have also compared the results against those of a selected group comprising Midlands Based LSVT organisations who have been operational for more than 12 years (and therefore should have similar development potential) and whose stock size is between 2,000 and 15,000 units. This resulted in a comparator group including 11 other associations.

Metric No.

Compared to Target

Year on Year Performance

Compared to Sector Median?

Compared to Comparator Group Median

1 2 3 4 5 6 7 8

Annual report and financial statements 2020

57

Reinvestment and newbuild supply (Social housing) One of Trent & Dove’s strategic objectives is to generate robust surpluses and attract efficient funding to maximise our capacity to build quality new homes whilst protecting investment in our existing stock. In 2019/20 we spent £19.5m (2018/19 £17.1m) supplying 139 new homes (2018/19 201) and £3.7m (2018/19 £3.3m) was invested in improvements to existing stock.

The 2019/20 Financial Plan set a target of 172 units to be delivered but although the actual supply of 139 homes fell below its internal target this still results in the association delivering VfM by achieving a top quartile result against our comparator group.

The development expenditure originally forecast for 2019/20 contained significant values relating to larger schemes which were planned to commence in year. Due to delays outside the association’s control, particularly poor weather, planning issues and the closure of sites due to COVID-19 in March, this expenditure has been delayed to 2020/21+. This resulted in the reduction from targeted development spend of £31.5m to the actual of £19.5m.

It is important to recognise that this expenditure has only been delayed not removed from the association’s future financial plan and the revised 2020/21 plan contains the following targets:

RE-INVESTMENT AND NEW BUILD SUPPLY (SOCIAL HOUSING)

58

2020/21 £k

2021/22 £k

2022/23 £k

Re-Investment

12.61%

25.22%

29.54%

New Build Supply

2.05%

2.27%

4.04%

Trent & Dove

Gearing The comparator group chosen represents LSVT organisations with a maturity of greater than 12 years and could therefore be expected to be at a similar level of loan values. The fact that Trent & Dove sits below the median level for the group supports the realisation of the objective of generated surpluses (and therefore cash) being used to support the supply of new properties.

The projected gearing ratios for future years derived from the 2020/21 Financial Plan, demonstrate the association’s continued dependence on sourcing VfM with respect to future funding requirements and we continue to work closely with our funding advisors in the delivery of this requirement.

GEARING

Gearing

2019/20 £k

2020/21 £k

2021/22 £k

2022/23 £k

58.64%

61.89%

60.55%

66.64%

Operating Margins and EBITDA (MRI) Trent & Dove’s actual operating margin for 2019/20 showed a decrease against both budget and previous year’s results primarily due to reduced shared ownership surpluses and increased spend on revenue repairs including the introduction of an improved voids standard.

When this reduced margin is combined with lower financing costs, due to the delayed development expenditure, this has resulted in an EBITDA (MRI) which although slightly lower than the previous year (due to the increase in improvement works) was significantly higher than target.

A comparison with the 2018/19 comparator group result for operating margin and EBITDA (MRI) suggests the association comparing favourably with the group. However, in this instance, due to the impact of external influences and pressures on all association’s surpluses the exact position will not be fully recognised until actual 2019/20 benchmarking can be concluded.

Annual report and financial statements 2020

59

Headline Social Cost per Unit The reduced operating surplus for 2019/20 is reflected in the overall headline social housing CPU increasing compared to 2018/19 performance, whilst exceeding the target for the year. Again, although the result is below median for the comparator group a full analysis of this and a comparison of performance against the sector median will be undertaken when the 2019/20 results are available.

Cost per Unit

2019/20 Actual

2019/20 Target

2018/19 Actual

£

£

£

2,949

3,002

2,754

3,695

3,041

Management

858

1,215

778

1,004

904

Service Charge

236

175

239

395

218

Maintenance

907

912

836

1,013

874

Major Repairs

753

568

676

837

689

Other Social Housing

196

132

226

224

172

Headline Social Housing

60

Trent & Dove

2018/19 Consolodated Group Sector Median £

2018/19 Comparator Group Median

£

Target

Year on Year

Compared to Sector Median

Compared to Comparator Group Median

Return on Capital Employed The outturn for ROCE is favourable when compared to target, sector and comparator group median.

However, the reduced operating surplus for 2019/20 compared to 2018/19 is reflected in year on year comparison.

Trent & Dove Specific Metrics In addition to those standard sector metrics which have been reported above, Trent & Dove have also identified additional metrics which measure performance against some of their unique strategic community and employee-based objectives and values.

Metric No.

Definition

2019/20 Actual

2019/20 Target

2018/19 Actual

1

Social Return on Investment volunteering £ return v £ spent

£3.76

£4.00

£3.45

2

Number of volunteering hours

9,000

7,000

9,172

3

Investment in Neighbourhoods and Communities as a % of revenue

1.51%

1.75%

1.41%

4

% of Customers who when surveyed rated our service as good or outstanding

93%

80%

94%

5

Colleague turnover %

10%

10%

14%

Compared to target

Year on Year Performance

Annual report and financial statements 2020

61

Metric 1 - Social Return on Investment During 2019/20, we measured our volunteering and employability support services using HACT methodology. Volunteering generating £3.76 for every £1 invested and employability support generating £19 for every £1 invested. We strongly believe that the services differentiate Trent & Dove and are significant in supporting customers to sustain their tenancies.

Metric 2 - Number of Volunteering Hours 9,000 volunteering hours were contributed in 2019/20 from 16 active volunteers.

Volunteering continues to support projects such as grounds maintenance, community projects and our furniture project. If volunteering did not exist this work would either be a direct cost to Trent & Dove or in terms of community support, not get done at all.

Metric 3 - Investment in Neighbourhoods as a % of revenue In 2017 the Board committed to investing 1.75% of revenues per annum into supporting our Neighbourhoods. This year we invested 1.51%, over £390k, in areas such as family support, mental health, youth support and a social exclusion officer. We believe that this investment not only supports our mission and community focus but represents value for money in that the support provided helps sustain tenancies and rental income.

Metric 4 - % of customers who when surveryed rated our service as good or outstanding In 2019/20 the percentage of customers rating our service as good or better achieved 93% against a target of 80%, this compares to 94% in 2018/19.

Our customer panel and Operations Committee, made up of our customers and chaired by a customer, continue to provide advice and guidance on how and where our resources are used to “Transform Homes Lives and Neighbourhoods”.

Metric 5 - Colleague turnover % In April 2019, the Board set a target of 10% for colleague turnover and incorporated this target into colleague Performance Related Bonus criteria. Colleague attrition had been increasing and can if left unchecked impact on culture on performance. During 2019/20 the business focused on increasing training and development through the One Trent & Dove programme, communicating more often through multiple channels as well as improving recruitment practices to ensure the right people were recruited into role. The impact is shown in the performance for 2019/20 year end.

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Trent & Dove

Future priorities and prospects In the 2018/19 financial statements it was recognised that the external environment continued to provide uncertainty with one of the major risks identified at that time being general economic uncertainty, particularly as a result of the impending conclusion to Brexit.

12 months later, the COVID-19 pandemic has overtaken this risk for the short term and the association’s immediate priorities have switched to retaining operational priorities whilst ensuring the safety of all our customers and staff. Additionally, the resulting financial and economic risks from the pandemic, and any government public debt recovery plan, have to be assessed, stress tested alongside the 30-year financial plan and continually reviewed against actual performance.

However, Trent & Dove maintain an ambitious growth agenda and will continue to invest in the provision of

We understand the “net zero carbon” drive over the

much needed new homes to meet the identified

coming years and the need to make our existing

housing needs in our operational area. Despite

homes as energy efficient as we can. It is our aim to

the forecasted impact of the pandemic the

meet these objectives whilst balancing resources

development programme over the next five years

against our growth plans for new developments

will aim to deliver a further 1,200 homes

that in themselves will produce high quality, energy

This aspirational development programme which

efficient homes.

contains gross expenditure of £180m and grant

The Board have agreed that the existing mission of

receipts of £44m will require additional future

“Transforming Homes, Lives and Neighbourhoods”

funding. Whilst the financial plan is constructed to

remains appropriate and will continue to closely

ensure Trent & Dove remains in a robust position to

monitor the association’s targets and performance

manage future risks and ensure there is sufficient

understanding that there are some key issues to be

covenant headroom at all times, the funder’s

addressed as a result of the pandemic.

perception of the sector in the post COVID-19 world and the resulting availability of funds will prove pivotal to the delivery of this programme.

Annual report and financial statements 2020

63

Independent auditor’s report to Trent & Dove Housing Ltd

Opinion We have audited the financial statements of Trent & Dove Housing (“the Association”) for the year ended 31 March 2020 which comprise the Consolidated Statement of Comprehensive Income, Association Statement of Comprehensive Income, Consolidated Statement of Financial Position, Association Statement of Financial Position, Consolidated Statement of Changes in Reserves, Consolidated Statement of Cash Flows and related notes, including the accounting policies in note 1.

In our opinion the financial statements: • give a true and fair view, in accordance with UK accounting standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland, of the state of affairs of the group and the association as at 31 March 2020 and of its income and expenditure for the year then ended; • comply with the requirements of the Co-operative and Community Benefit Societies Act 2014; and team, including planning for the succession of key Board and Executive roles; • have been properly prepared in accordance with the Housing and Regeneration Act 2008 and the Accounting Direction for Private Registered Providers of Social Housing 2019.

64

Trent & Dove

Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities are described below. We have fulfilled our ethical responsibilities under, and are independent of the group and the association in accordance with, UK ethical requirements including the FRC Ethical Standard. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion.

We are required to report to you if we have concluded that the use of the going concern basis of accounting is inappropriate or there is an undisclosed material uncertainty that may cast significant doubt over the use of that basis for a period of at least a year from the date of approval of the financial statements. In our evaluation of the Board’s conclusions, we considered the inherent risks to the group’s business model and analysed how those risks might affect the group and association’s financial resources or ability to continue operations over the going concern period. We have nothing to report in these

Going concern The association’s Board has prepared the financial statements on the going concern basis as they do not intend to liquidate the group or the association or to cease its operations, and as they have concluded that the group and the association’s financial position means that this is realistic. They have also concluded that there are no material uncertainties that could have cast

respects.

However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements that were reasonable at the time they were made, the absence of reference to a material uncertainty in this auditor’s report is not a guarantee that the group or the association will continue in operation.

significant doubt over its ability to continue as a going concern for at least a year from the date of approval of the financial statements (“the going concern period”).

Annual report and financial statements 2020

65

Other information The association’s Board is responsible for the other information, which comprises the Board’s Annual Report.

Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements audit work, the information therein is materially misstated or inconsistent with the financial statements or our audit knowledge. Based solely on that work, we have not identified material misstatements in the other information.

Matters on which we are required to report by exception

Under the Co-operative and Community Benefit Societies Act 2014 we are required to report to you if, in our opinion: • the association has not kept proper books of account; or • the association has not maintained a satisfactory system of control over transactions; or • the financial statements are not in agreement with the association’s books of account; or • we have not received all the information and explanations we need for our audit.

We have nothing to report in these respects

66

Trent & Dove

Board’s responsibilities As more fully explained in their statement set out on page 12, the association’s Board is responsible for the preparation of financial statements which give a true and fair view; such internal control as it determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error; assessing the group and the association’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and using the going concern basis of accounting unless it either intends to liquidate the group or the association or to cease operations, or has no realistic alternative but to do so.

Auditor’s responsibilities Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue our opinion in an auditor’s report. Reasonable assurance is a high level of assurance, but does not guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/auditorsresponsibilities

The purpose of our audit work and to whom we owe our responsibilities This report is made solely to the association in accordance with section 87 of the Co-operative and Community Benefit Societies Act 2014 and section 128 of the Housing and Regeneration Act 2008. Our audit work has been undertaken so that we might state to the association those matters we are required to state to it 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 as a body, for our audit work, for this report, or for the opinions we have formed.

Sarah Brown for and on behalf of KPMG LLP, Statutory Auditor Chartered Accountants One Snowhill Snow Hill Queensway Birmingham B4 6GH

Annual report and financial statements 2020

67

Financial statements CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the year ended 31st March 2020 Note

2020 £’000

2019 £’000

Turnover

3

30,467

30,908

Operating expenditure

3

(21,626)

(20,458)

Gain on disposal of property ,plant and equipment

4

2,014

1,686

Surplus on revaluation of investment properties

13

(107)

44

Operating surplus

3

10,748

12,180

Interest and financing costs

5

(4,508)

(4,876)

Finance income

6

20

90

Surplus before tax

7

6,260

7,394

Taxation

10

1

(7)

6,261

7,387

Surplus for the year Actuarial gain/ (loss) in respect of pension schemes

23

781

(2,105)

Re-measurement of SHPS obligation

23

-

(7)

7,042

5,275

Total comprehensive income for the year

ASSOCIATION STATEMENT OF COMPREHENSIVE INCOME for the year ended 31st March 2020 Note

2020 £’000

2019 £’000

Turnover

3

30,358

30,794

Operating expenditure

3

(21,534)

(20,422)

Gain on disposal of property ,plant and equipment

4

2,014

1,686

Operating surplus

3

10,838

12,058

Interest and financing costs

5

(4,508)

(4,876)

Finance income

6

28

98

70

53

6,428

7,333

Gift Aid receivable Surplus for the year Actuarial gain / (loss) in respect of pension schemes

23

781

(2,105)

Re-measurement of SHPS obligation

23

-

(7)

7,209

5,221

Total comprehensive income for the year

68

Trent & Dove

CONSOLIDATED STATEMENT OF FINANCIAL POSITION at 31st March 2020 Note

2020 £’000

2019 £’000

Intangible assets

11

1,443

253

Housing properties

12

184,523

167,061

Investment Properties

13

1,139

1,246

Other property, plant and equipment

13

2,036

1,766

189,141

170,326

Fixed Assets

Current Assets Stock

14

930

676

Debtors

15

1,723

1,020

Short Term Investments

16

4,502

4,487

4,128

10,580

11,283

16,763

(15,012)

(11,210)

Net current (liabilities) / assets

(3,729)

5,553

Total assets less current liabilities

185,412

175,879

Cash and Cash Equivalents

Creditors: amounts falling due within one year

17

Creditors: amounts falling due after more than one year

18

(134,457)

(131,023)

Defined benefit pension liability

23

(3,903)

(4,845)

Provision for deferred taxation

24

(162)

(163)

46,890

39,848

Revenue reserve

46,890

39,848

Total reserves

46,890

39,848

Net assets Capital and reserves

The financial statements were approved by the Board on 28th July 2020 and signed on its behalf by:

Mark Lewis Afzal Ismail Catherine Slater Chairman Vice-Chair Secretary Annual report and financial statements 2020

69

ASSOCIATION STATEMENT OF FINANCIAL POSITION at 31st March 2020 Note

2020 £’000

2019 £’000

Intangible assets

11

1,443

253

Housing properties

12

184,525

167,061

Other property, plant and equipment

13

2,036

1,766

188,004

169,080

Fixed Assets

Current Assets Stock

14

930

676

Debtors

15

1,964

1,317

Short Term Investments

16

4,502

4,487

4,071

10,407

11,467

16,887

(14,999)

(11,196)

Net current (liabilities) / assets

(3,532)

5,691

Total assets less current liabilities

184,472

174,771

Cash and Cash Equivalents

Creditors: amounts falling due within one year

17

Creditors: amounts falling due after more than one year

18

(134,457)

(131,023)

Defined benefit pension liability

23

(3,903)

(4,845)

46,112

38,903

Revenue reserve

46,112

38,903

Total reserves

46,112

38,903

Net assets Capital and reserves

The financial statements were approved by the Board on 28th July 2020 and signed on its behalf by:

Mark Lewis Afzal Ismail Catherine Slater Chairman Vice-Chair Secretary

70

Trent & Dove

CONSOLIDATED STATEMENT OF CHANGES IN RESERVES at 31st March 2020 Income and expenditure reserve

At 1st April Surplus for the year Actuarial gain / (loss) in respect of pension schemes Re-measurement of SHPS obligation Balance at 31st March

2020 £’000

2019 £’000

39,848

34,573

6,261

7,387

781

(2,105)

-

(7)

46,890

39,848

ASSOCIATION STATEMENT OF CHANGES IN RESERVES at 31st March 2020 Income and expenditure reserve

At 1st April Surplus for the year Actuarial gain / (loss) in respect of pension schemes Re-measurement of SHPS obligation Balance at 31st March

2020 £’000

2019 £’000

38,903

33,682

6,428

7,333

781

(2,105)

-

(7)

46,112

38,903

Annual report and financial statements 2020

71

CONSOLIDATED STATEMENT OF CASH FLOWS for the year ended 31st March 2020 2020 £’000

2019 £’000

16,303

15,954

(23,566)

(20,547)

Purchase of intangible assets

(1,322)

(216)

Proceeds from sale of property, plant & equipment

2,638

2,101

Grants received

1,376

1,149

Interest received

7

102

(20,867)

(17,411)

(4,646)

(4,781)

New Loans

5,000

-

Repayment of Borrowings

(2,242)

(15,181)

Deposits to Short Term Investments

-

(2,058)

Withdrawal from Short Term Investments

-

30,020

Net cash flows from financing activities

(1,888)

8,000

Net (decrease) / increase in cash and cash equivalents

(6,452)

6,543

Cash and cash equivalents at beginning of year

10,580

4,037

4,128

10,580

Net cash generated from operating activities (see note 26) Cash flows from investing activities Purchase of property, plant and equipment

Net cash flows from investing activities Cash flows from financing activities Interest paid

Cash and cash equivalents at end of year

72

Trent & Dove

Notes to Financial Statements 1. ACCOUNTING POLICIES

The Group prepares a 30-year business plan which is updated and approved on an annual basis. The most recent business plan was approved in July 2020

The principal accounting policies are summarised

by the Board. As well as considering the impact

below. They have all been applied consistently

of a number of scenarios on the business plan the

throughout the year and to the preceding year.

Board also adopted a stress testing framework

General information and basis of accounting These financial statements are prepared in accordance with Financial Reporting Standard 102 – the applicable financial reporting standard in the UK and Republic of Ireland (FRS 102) and the Statement of Recommended Practice: Accounting 2019 and comply with the Accounting Direction for Private Registered Providers of Social Housing 2019.

Trent & Dove Housing Association is a public benefit entity, as defined in FRS 102 and applies the relevant paragraphs prefixed ‘PBE’ in FRS 102.

The presentation currency of these financial statements is sterling. All amounts in the financial statements have been rounded to the nearest £1,000.

The accounting policies set out below have, unless otherwise stated, been applied consistently to all

against the base plan. The stress testing impacts were measured against loan covenants and peak borrowing levels compared to agreed facilities, with potential mitigating actions identified to reduce expenditure. Following the outbreak of Covid-19 the Group has undertaken a series of further scenario testing including severe but plausible downsides in the worst-case assessment.

The board, after reviewing the group and company budgets for 2020/21 and the group’s medium term financial position as detailed in the 30-year business plan including changes arising from the Covid-19 pandemic, is of the opinion that, taking account of severe but plausible downsides, the group and company have adequate resources to continue in business for the foreseeable future. In order to reach this conclusion, the Board have considered: • The property market – budget and business plan

periods presented in these financial statements.

scenarios have taken account of delays in handovers,

Judgements made by the directors, in the

values and potential conversion of shared ownership

application of these accounting policies that have

sales to social homes;

significant effect on the financial statements and estimates with a significant risk of material

lower numbers of property sales, reductions in sales

• Maintenance costs – budget and business plan

adjustment in the next year are discussed in note 2.

scenarios have been modelled to take account

Measurement convention

expenditure, with major works being phased into

The financial statements are prepared on the historical cost basis except that the following assets and liabilities are stated at their fair value: derivative

of cost increases and delays in maintenance future years; • Rent and service charge receivable – arrears

financial instruments and investment property.

and bad debts have been increased to allow for

The group financial statements consolidate the

of potential future reductions in rents;

customer difficulties in making payments and Basis of consolidation budget and business plan scenarios to take account financial statements of the Association and its subsidiary undertakings drawn up to 31 March each year.

• Liquidity – current available cash and unutilised loan facilities of £26.2m which gives significant

headroom for committed spend and other forecast Going Concern cash flows that arise; The financial statements have been prepared on a going concern basis which the directors consider to be appropriate for the following reasons.

For this reason, the going concern basis has been adopted in preparing the financial statements.

Annual report and financial statements 2020

73

Notes to the Financial Statements

1. ACCOUNTING POLICIES (continued)

Leaseholders Where the rights and obligations for improving a housing property reside with the leaseholder or tenant, any works to improve such properties

Property, plant and equipment – housing properties Housing properties are stated at cost less accumulated depreciation and accumulated impairment losses. Cost includes the cost

incurred by the Association is recharged to the leaseholder and recognised in surplus or deficit in the Statement of Comprehensive Income along with the corresponding income from the leaseholder or tenant.

of acquiring land and buildings and directly

Non-housing property, plant and equipment

attributable development costs. Capitalisation

Non-housing property, plant and equipment

ceases when substantially all the activities that

is stated at historic cost less accumulated

are necessary to get the asset ready for use are

depreciation and any provision for impairment.

complete.

Depreciation is provided on all non-housing

Depreciation is charged so as to write down the net book value of housing properties to their estimated residual value, on a straight-line basis, over their useful economic lives. Freehold land is not depreciated.

property, plant and equipment, other than investment properties and freehold land, at rates calculated to write off the cost or valuation, less estimated residual value, or each asset on a straight-line basis over its expected useful life, as follows.

Major components Major components of housing properties, which have significantly different patterns of consumption of economic benefits, are treated as separate assets and depreciated over their expected useful economic lives as follows: Boilers

10 years

Central Heating Systems

25 years

Freehold office building

50 years

Furniture, fixtures and fittings

5 years

Motor vehicles

5 years

Computer equipment

3 years

Plant and equipment

10 years

Investment Properties The classification of properties as investment

property or property, plant and equipment is Roofs 40 years based upon the intended use of the property.

Windows 25 years Properties held to earn commercial rentals or Doors 20 years for capital appreciation or both are classified as Kitchens 15 years investment properties. Properties that are used Bathrooms 25 years for administrative purposes or that are held for Electrics 30 years the provision of social housing are treated as Structure 80 years property, plant and equipment. Mixed use property

is separated between investment property and Properties held on long leases are depreciated over their useful economic lives or the lease duration if shorter.

Land is accounted for based on its intended use Where land is acquired speculatively with the

Improvements

intention of generating a capital gain and/or a

Where there are improvements to housing

commercial rental return it is accounted for as an

properties that are expected to provide incremental

investment property. Where land is acquired for

future benefits, these are capitalised and added

use in the provision of social housing or for a social

to the carrying amount of the property. Any works

benefit it is accounted for as property, plant and

to housing properties which do not replace a

equipment.

component or result in an incremental future benefit are charged as expenditure in surplus or deficit in the Statement of Comprehensive Income.

74

property, plant and equipment.

Trent & Dove

Investment properties are measured at fair value annually with any change recognised in surplus or deficit in the Statement of Comprehensive Income.

Notes to the Financial Statements

1. ACCOUNTING POLICIES (continued)

accrual model and are classified either as a grant relating to revenue or a grant relating to assets.

Grants relating to revenue are recognised in income on a systematic basis over the period in which related costs for which the grant is intended

Intangible assets

to compensate are recognised. Where a grant

Intangible assets are stated at historic cost less

is receivable as compensation for expenses or

accumulated amortisation and any provision

losses already incurred or for the purpose of giving

for impairment. Amortisation is provided on all

immediate financial support with no future related

intangible assets at rates calculated to write off the

costs, it is recognised as revenue in the period in

cost of each asset on a straight-line basis over its

which it becomes receivable.

expected useful life, as follows: Computer software

3 years

Impairment of social housing properties

Grants relating to assets are recognised in income on a systematic basis over the expected useful life of the asset.

Properties held for their social benefit are not held

Grants received for housing properties are

solely for the cash inflows they generate; they are

recognised in income over the expected useful life

also held for their service potential.

of the housing property structure. Where a grant is

An assessment of impairment is made at each reporting date as to whether an indicator exists. If such an indicator exists, an impairment assessment

received specifically for components of a housing property, the grant is recognised in income over the expected useful life of the component.

is carried out and an estimate of the recoverable

Grants received from non-government sources

amount of the asset is made. Where the carrying

are recognised as revenue using the performance

amount of the asset exceeds its recoverable amount,

model

an impairment loss is recognised in surplus or deficit in the Statement of Comprehensive Income.

The recoverable amount of an asset is the higher of its value in use and fair value less costs to sell.

Where assets are held for their service potential, value in use is determined by the present value of the asset’s remaining service potential plus the net

Where a donation of land and/or other assets is received or land and/or other assets are acquired at below market value from a government source, this is accounted for as a non-monetary government grant and included in the Statement of Financial Position as a liability.

amount expected to be received from its disposal.

Where a donation of land and/or other assets

Depreciated replacement cost is taken as a suitable

is received or acquisitions of land and/or other

measurement model.

assets at below their market value from a third

An impairment loss is reversed if the reasons for the impairment loss have ceased to apply and included in surplus or deficit in the Statement of Comprehensive Income.

party that does not meet the definition of a government source the transaction is recognised as an asset in the Statement of Financial Position at fair value, taking account of any restrictions on the use of the asset and income equivalent to the

Social Housing Grant and other Government

difference between any amounts paid or payable

grants

for the asset and the fair value of the asset is

Where grants are received from government

recognised in surplus or deficit in the Statement of

agencies such as the Homes and Communities

Comprehensive Income as a future donation when

Agency, local authorities, devolved government

future performance-related conditions are met.

agencies, health authorities and the European Commission which meet the definition of government grants they are recognised when there is reasonable assurance that the conditions attached to them will be complied with and that the grant will be received.

Government grants are recognised using the

Recycling of grants Where there is a requirement to either repay or recycle a grant received for an asset that has been disposed of, a provision is included in the Statement of Financial Position to recognise this obligation as a liability. When approval is received from the funding body to use the grant for a specific development, Annual report and financial statements 2020

75

Notes to the Financial Statements

1. ACCOUNTING POLICIES (continued)

Operating leased assets Leases that do not transfer all the risks and rewards of ownership are classified as operating leases.

Payments under operating leases are charged

the amount previously recognised as a provision for

to surplus or deficit in the Statement of

the recycling of the grant is reclassified as a creditor

Comprehensive Income on a straight-line basis over

in the Statement of Financial Position.

the period of the lease.

For shared ownership staircasing sales, when full

Interest payable

staircasing has not taken place, the recycling of the

Borrowing costs are interest and other costs

grant may be deferred if the net sales proceeds are

incurred in connection with the borrowing of funds.

insufficient to meet the grant obligation relating to

Borrowing costs are calculated using the effective

the disposal and not be recognised as a provision.

interest rate, which is the rate that exactly discounts

On subsequent staircasing sales, the requirement to

estimated future cash payments or receipts through

recycle the grant becomes an obligation if sufficient

the expected life of a financial instrument and is

sales proceeds are generated to meet the obligation

determined on the basis of the carrying amount

and a provision is recognised at this point.

of the financial liability at initial recognition. Under

On disposal of an asset for which government grant was received, if there is no obligation to repay the grant, any unamortised grant remaining within liabilities in the Statement of Financial Position related to this asset is derecognised as a liability and recognised as revenue in surplus or deficit in the Statement of Comprehensive Income.

the effective interest method, the amortised cost of a financial liability is the present value of future cash payments discounted at the effective interest rate, and the interest expense in a period equals the carrying amount of the financial liability at the beginning of a period multiplied by the effective interest rate for the period.

Interest is capitalised on borrowings related to the Leased assets development of qualifying assets, to the extent that At inception, the Group assesses agreements that it accrues in respect of the period of development if transfer the right to use assets. The assessment it represents considers whether the arrangement is, or contains, a lease based on the substance of the arrangement.

Finance Leased Assets Leases of assets that transfer substantially all the

a. An interest on borrowings specifically financing the development programme after deduction of related grants received in advance; or

risks and rewards incidental to ownership are

b. A fair amount of interest on borrowings of the

classified as finance leases.

association as a whole after deduction of social

Finance leases are capitalised at commencement of the lease as assets at the fair value of the leased asset or, if lower, the present value of the minimum

housing grant received in advance to the extent that they can be deemed to be financing the development programme.

lease payments calculated using the interest rate

Taxation

implicit in the lease.

Current tax is provided at amounts expected to be

Assets are depreciated over the shorter of the lease term and the estimated useful life of the asset. Assets are assessed for impairment at

paid (or recovered) using the tax rates and laws that have been enacted or substantively enacted by the Statement of Financial Position date.

each reporting date. The capital element of lease

Deferred tax is recognised in respect of all timing

obligations is recorded as a liability on inception of

differences that have originated but not reversed

the arrangement. Lease payments are apportioned

at the Statement of Financial Position date where

between capital repayment and finance charge,

transactions or events that result in an obligation

using the effective interest rate method, to produce

to pay more tax in the future or a right to pay less

a constant rate of charge on the balance of the

tax in the future have occurred at the Statement

capital payments outstanding.

of Financial Position date. Timing differences are differences between the Group’s taxable surpluses

76

Trent & Dove

Notes to the Financial Statements

1. ACCOUNTING POLICIES (continued)

As at 31 March 2020 the net defined benefit pension deficit liability was £58k, which was included within the provisions for pensions liability in the financial statements. In the year ended 31 March

and its results as stated in the financial statements that arise from the inclusion of gains and losses in tax assessments in periods different from those

2020, interest is calculated on the net defined liability and remeasurements are reported in other comprehensive income.

in which they are recognised in the financial

Local Government Pension Scheme

statements.

The Group participated in a local government

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that, on the basis of all available evidence, it can be regarded as more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted.

pension scheme until 31st March 2017. This is a multiemployer scheme where it is possible for individual employers as admitted bodies to identify their share of the assets and liabilities of the pension scheme.

For this scheme, the amounts charged to operating surplus are the costs arising from employee services rendered during the period and the cost of plan

Deferred tax is measured using the tax rates and

introductions, benefit changes, settlements and

laws that have been enacted or substantively

curtailments. They are included as part of staff costs.

enacted by the Statement of Financial Position

The net interest cost on the net defined benefit

date that are expected to apply to the reversal

pension liability is charged to revenue and included

of the timing difference. Deferred tax relating to

within finance costs. Remeasurement comprising

property, plant and equipment measured using

actuarial gains and losses and the return on

the revaluation model and investment property is

scheme assets (excluding amounts included in net

measured using the tax rates and allowances that

interest on the net defined liability) are recognised

apply to the sale of the asset.

immediately in other comprehensive income.

Pensions

Defined benefit schemes are funded, with the

Social Housing Pension Scheme

assets of the scheme held separately from those

For the year ended 31 March 2018, the SHPS pension obligation had been accounted for as a defined contribution scheme, as there had not been sufficient information available to identify each employers’ share of pension assets and pension liabilities. Since the year ended 31 March 2019 sufficient information is available identify

of the Group, in separate trustee administered funds. Pension scheme costs are measured at fair value and liabilities are measured on an actuarial basis using the projected unit credit method. The actuarial valuations are obtained at least triennially and are updated at each Statement of Financial Position date.

each employers scheme assets and liabilities

Defined contribution

and so defined benefit accounting has been

The Group participates in a defined contribution

applied. For accounting purposes, the relevant

scheme where the amount charged to surplus

date for accounting for this change from defined

or deficit in the Statement of Comprehensive

contribution to defined benefit accounting is 1

Income in respect of pension costs and other post-

April 2018. The scheme assets are measured at fair

retirement benefits is the contributions payable

value and the scheme liabilities are measured on

in the year. Differences between contributions

an actuarial basis using the projected unit credit

payable in the year and contributions actually paid

method and are discounted at appropriate high-

are shown as either accruals or prepayments in the

quality corporate bond rates. The deficit funding

Statement of Financial Position.

agreement liability that was previously recognised within creditors of £132k was derecognised on 1 April 2018, and an initial net defined benefit pension liability of £139k was recognised at this date. The resulting net difference of £7k was recognised in other comprehensive income.

Turnover Turnover represents rent and service charges receivable (net of rent and service charge losses from voids) and disposal proceeds of current assets such as shared ownership first tranche sales at completion together with revenue grants from Annual report and financial statements 2020

77

Notes to the Financial Statements

1. ACCOUNTING POLICIES (continued) local authorities and Homes England. Service charge income is recognised when expenditure is incurred as this is considered to be the point at which the service has been performed and the revenue recognition criteria met.

Shared ownership property sales Shared ownership properties, including those under construction, are split between noncurrent assets and current assets. The split is determined by the percentage of the property to be sold under the first tranche disposal which is shown on initial recognition as a current asset, with the remainder classified as a non-current asset within property, plant and equipment. Where this would result in a surplus on the disposal of the current asset that would exceed the anticipated overall surplus, the surplus on disposal of the first tranche is limited to the overall surplus by adjusting the costs allocated to current or non-current assets.

Proceeds from first tranche disposals are accounted for as turnover in the Statement of Comprehensive Income of the period in which the disposals occur and the cost of sale is transferred from current assets to operating costs. Proceeds from subsequent tranche sales are treated as disposals of fixed assets.

Service charge sinking funds and service costs Unutilised contributions to service charge sinking funds and over-recovery of service costs which are repayable to tenants or leaseholders or are intended to be reflected in reductions to future service charge contributions are recognised as a liability in the Statement of Financial Position. The amount included in liabilities in respect of service charge sinking funds includes interest credited to the fund.

Where there has been an under-recovery of leaseholders’ or tenants’ variable service charges and recovery of the outstanding balance is virtually certain, the balance is recognised in the Statement of Financial Position as a trade receivable. Debit and credit balances on individual schemes are not aggregated as there is no right of set-off.

Financial instruments Financial assets and financial liabilities are 78

Trent & Dove

recognised when the Group becomes a party to the contractual provisions of the instrument.

Financial assets carried at amortised cost Financial assets carried at amortised cost comprise rent arrears, trade and other receivables and cash and cash equivalents. Financial assets are initially recognised at fair value plus directly attributable transaction costs. After initial recognition, they are measured at amortised cost using the effective interest rate method. Discounting is omitted where the effect of discounting is immaterial.

If there is objective evidence that there is an impairment loss, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate.

The carrying amount of the asset is reduced accordingly.

A financial asset is derecognised when the contractual rights to the cash flows expire, or when the financial asset and all subsequent risks and rewards are transferred.

If an arrangement constitutes a financing transaction, the financial asset is measured at the present value of the future payments discounted at a market rate of interest for a similar debt instrument.

Financial liabilities carried at amortised cost These financial liabilities include trade and other payables and other interest-bearing loans and borrowings.

Non-current debt instruments which meet the necessary conditions in FRS 102 are initially recognised at fair value adjusted for any directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method, with interest related charges recognised as an expense in finance costs in the Statement of Comprehensive Income. Discounting is omitted where the effect of discounting is immaterial.

A financial liability is derecognised only when the contractual obligation is extinguished, that is, when the obligation is discharged, cancelled or expires.

Cash and cash equivalents Cash and cash equivalents comprise cash in hand and demand deposits, together with other short

Notes to the Financial Statements

1. ACCOUNTING POLICIES (continued)

Estimation Uncertainty

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the

term highly liquid investments that are readily converted into known amounts of cash and are subject to an insignificant risk of changes in value.

related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of

assets and liabilities within the next financial year Gift aid payments are addressed below.

Gift aid payments are charged as distributions of reserves in accordance with the guidance included in the Institute of Chartered Accountants technical release ‘Guidance on donations by a company to its parent charity’.

2. SIGNIFICANT MANAGEMENT JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

Fair value measurement Management uses valuation techniques to determine the fair value of assets. This involves developing estimates and assumptions consistent with how market participants would price the instrument. Management base the assumptions on observable data as far as possible but this is not always available. In that case, management uses the best information available. Estimated fair values may vary from the actual process that would be achievable in an arm’s length transaction at the reporting date.

Defined benefit pension scheme The Group has obligations to pay pension benefits to certain employees. The cost of these benefits and the present value of the obligation depend on a number of factors, including; life expectancy, salary increases, asset valuations and the discount rate on corporate bonds. Management estimates these factors in determining the net pension obligation in the balance sheet. The assumptions reflect the historical experience and current trends

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.

Significant management judgements The following are management judgements in applying the accounting policies of the Group that have the most significant effect on the amounts recognised in the financial statements.

Impairment of social housing properties.

The Group have to make an assessment as to whether an indicator of impairment exists. In making the judgement, management considered the detailled criteria set out in the SORP. Annual report and financial statements 2020

79

Notes to the Financial Statements

3 .TURNOVER, OPERATING COSTS AND OPERATING SURPLUS Continuing activities GROUP 2020

£’000

Surplus on investment properties £’000

Operating Surplus/ (Deficit) £’000

19,009

-

-

8,869

1,342

1,020

-

-

322

254

496

-

-

(242)

Development costs not capitalised

-

376

-

-

(376)

Surplus on disposal of property, plant and equipment

-

-

2,014

-

2,014

367

112

-

-

255

29,841

21,013

2,014

-

10,842

99

90

-

-

9

-

-

-

(107)

(107)

527

523

-

-

4

30,467

21,626

2,014

(107)

10,748

Turnover £’000

Operating expenditure £’000

Surplus on disposals £’000

Surplus on investment properties £’000

Operating Surplus/ (Deficit) £’000

27,158

17,394

-

-

9,764

2,521

1,384

-

-

1,137

291

521

-

-

(230)

Development costs not capitalised

-

694

-

-

(694)

Surplus on disposal of property, plant and equipment

-

-

1,686

-

1,686

342

-

-

-

342

30,312

19,993

1,686

-

12,005

105

36

-

-

69

-

-

-

44

44

491

429

-

-

62

30,908

20,458

1,686

44

12,180

Social housing lettings

Turnover

Operating expenditure

Surplus on disposals

£’000

£’000

27,878

Other social housing activities 1st tranche property sales Charges for support services

Other

Activities other than social housing activities Lettings Deficit on revaluation of investment properties Other

GROUP 2019

Social housing lettings Other social housing activities 1st tranche property sales Charges for support services

Other

Activities other than social housing activities Lettings Surplus on revaluation of investment properties Other

80

Trent & Dove

Notes to the Financial Statements

3 .TURNOVER, OPERATING COSTS AND OPERATING SURPLUS Continuing activities (continued) ASSOCIATION 2020

Turnover £’000

Operating expenditure £’000

Surplus on disposals £’000

Operating Surplus/ (Deficit) £’000

27,878

19,009

-

8,869

1,342

1,020

-

322

254

496

-

(242)

Development costs not capitalised

-

374

-

(374)

Surplus on disposal of property, plant and equipment

-

-

2,014

2,014

367

112

-

255

29,841

21,011

2,014

10,844

517

523

-

(6)

30,358

21,534

2,014

10,838

Social housing lettings Other social housing activities 1st tranche property sales Charges for support services

Other

Activities other than social housing activities Other

ASSOCIATION 2019

Turnover £’000

Operating expenditure £’000

Surplus on disposals £’000

Operating Surplus/ (Deficit) £’000

27,158

17,394

-

9,764

2,521

1,384

-

1,137

291

521

-

(230)

Development costs not capitalised

-

694

-

(694)

Surplus on disposal of property, plant and equipment

-

-

1,686

1,686

342

-

-

342

30,312

19,993

1,686

12,005

482

429

-

53

30,794

20,422

1,686

12,058

Social housing lettings Other social housing activities 1st tranche property sales Charges for support services

Other

Activities other than social housing activities Other

Annual report and financial statements 2020

81

Notes to the Financial Statements

3 .TURNOVER, OPERATING COSTS AND OPERATING SURPLUS Continuing activities (continued) PARTICULARS OF INCOME AND EXPENDITURE FROM SOCIAL HOUSING LETTINGS GROUP AND ASSOCIATION General needs housing

Supported housing & housing for older people

Other

2020

2019

£’000

£’000

£’000

£’000

£’000

25,216

703

616

26,535

25,618

Service charge income

547

318

140

1,005

1,215

Amortised government grant

247

79

12

338

318

-

-

-

-

7

26,010

1,100

768

27,878

27,158

5,086

142

124

5,352

4,788

Service charge costs

799

465

205

1,469

1,468

Routine maintenance

2,471

106

7

2,584

2,156

Planned maintenance

2,984

86

-

3,070

2,989

Major repairs expenditure

923

64

23

1,010

816

Bad debts

170

5

7

182

133

4,691

304

111

5,106

4,871

67

2

2

71

71

-

33

-

33

-

126

3

3

132

102

Operating Expenditure

17,317

1,210

482

19,009

17,394

Operating surplus on social housing lettings

8,693

(110)

286

8,869

9,764

241

24

13

278

277

Income Rents receivable

Other grants Turnover from social housing lettings Expenditure Management

Depreciation of housing properties Depreciation of other tangible fixed assets Impairment Loss Amortisation of intangible assets

Void losses

82

Trent & Dove

Notes to the Financial Statements

4. SURPLUS ON DISPOSAL OF PROPERTY, PLANT AND EQUIPMENT

2020 £’000

2019 £’000

Sales of subsequent tranche shared ownership properties

379

36

Costs of sale

(213)

(23)

Surplus on disposal

166

13

Sales of properties under the right to buy

1,190

848

Costs of sale

(225)

(116)

Surplus on disposal

965

732

Sales of properties under the right to acquire

1,069

1,217

Costs of sale

(184)

(276)

Surplus on disposal

885

941

-

-

Costs of sale

(2)

-

Surplus on disposal

(2)

-

2,014

1,686

2020 £’000

2019 £’000

4,395

4,801

Net interest on LGPS defined benefit liability (see note 23)

109

72

Net interest on SHPS defined benefit liability (see note 23)

4

3

4,508

4,876

Sales of motor vehicles

Total Surplus on Disposal of Property, Plant & Equipment

5. INTEREST AND FINANCING COSTS

Bank loans and overdrafts

Annual report and financial statements 2020

83

Notes to the Financial Statements

6. OTHER FINANCE INCOME GROUP Bank interest receivable

ASSOCIATION

2020 £’000

2019 £’000

20

90

Interest receivable from:

20

90

bank and other sources

2020 £’000

2019 £’000

20

90

8

8

28

98

on loan to group undertaking

7. SURPLUS BEFORE TAXATION – GROUP GROUP

2020 £’000

2019 £’000

5,177

4,942

182

133

(338)

(318)

42

29

-

2

for audit services

51

20

for non-audit services

1

3

133

122

2020 £’000

2019 £’000

Wages and salaries

6,177

5,764

Social security costs

542

510

Other pension costs (see note 23)

386

238

7,105

6,512

Surplus before taxation is arrived at after charging / (crediting): Depreciation of property, plant & equipment Provision for bad debts Government grants External auditors' remuneration (including VAT) for audit services for non-audit services Internal auditors’ remuneration (including VAT)

Operating lease rentals: motor vehicles

8. STAFF COSTS EMPLOYEE COSTS

84

Trent & Dove

Notes to the Financial Statements

8. STAFF COSTS (continued) The full time equivalent number of employees who received emoluments, including pension contributions, in excess of £60,000 are shown below.

Salary Band £'000

2020 No.

2019 No.

60,000 - 69,999

8

6

90,000 - 99,999

-

2

100,000 - 109,999

3

1

110,000 - 119,999

2

1

150,000 - 159,999

-

1

160,000 - 169,999

1

-

The average full time equivalent number of employees was:

2020 No.

2019 No.

Administration

39

37

Development

8

9

150

142

197

188

Housing

9. DIRECTORS’ REMUNERATION AND TRANSACTIONS Key management personnel remuneration 2020 £’000

2019 £’000

Wages and salaries

658

487

Social security costs

76

57

Other pension costs

56

40

Wages and salaries

58

59

Social security costs

1

-

849

643

Directors who are executive staff members

Non-executive directors

Total

Directors are defined as members of the Board, the Chief Executive and any other person who is a member of the Executive Management team.

The Chief Executive is an ordinary member of the pension scheme. No enhanced or special terms apply.

2020 £’000

2019 £’000

153

140

Remuneration of the highest paid director, excluding pension contributions: Emoluments

Annual report and financial statements 2020

85

Notes to the Financial Statements

9. DIRECTORS’ REMUNERATION AND TRANSACTIONS Key management personnel remuneration (continued) Remuneration of Non-Executive Directors

Basic Salary £

Expenses £

Total 2020 £

Total 2019 £

Mark Lewis (Chair)

11,305

1,462

12,767

12,949

Afzal Ismail (Vice Chair)

10,112

182

10,294

7,840

Mark Ashby

5,272

167

5,439

5,587

Sophie Churchill (resigned Sept 19)

3,458

238

3,696

7,546

Sally Gibson (retired Sept 19)

3,346

4

3,350

7,178

Gary Middleton

7,250

426

7,676

7,555

Geoff Prior

6,282

229

6,511

5,649

Kathryn Robb

6,884

202

7,086

5,906

Anita Wanowicz (appointed Sept 19)

4,355

1,333

5,688

-

-

-

-

3,725

58,264

4,243

62,507

63,935

2020 £’000

2019 £’000

UK Corporation Tax at 19%

-

-

Total current tax

-

-

(20)

7

Effect of increase in tax rate on opening liability

19

-

Total deferred tax (see note 23)

(1)

7

Total tax surplus on ordinary activities

(1)

7

Ian Cox Total

10. TAX ON SURPLUS ON ORDINARY ACTIVITIES GROUP THE TAX CHARGE COMPRISES: Current tax on surplus on ordinary activities

Deferred tax Origination and reversal of timing differences

86

Trent & Dove

Notes to the Financial Statements

10. TAX ON SURPLUS ON ORDINARY ACTIVITIES (continued) The differences between the total tax charge shown above and the amount calculated by applying the standard rate of UK corporation tax to the surplus before tax is as follows:

GROUP

2020 £’000

2019 £’000

Surplus on ordinary activities before taxation

6,260

7,394

1,190

1,405

Losses Eliminated

7

6

Charitable activities not subject to tax

-

(1,437)

67

-

Expenses not deductible for tax purposes

4,892

-

Income not taxable in determining taxable surplus

(6,120)

(8)

(2)

-

(20)

8

-

2

Adjust opening deferred tax to average rate of 19%

(2)

1

Deferred tax not recognised

(13)

30

Group total tax charge for the period

(1)

7

Surplus on ordinary activities multiplied by rate of corporation tax of 19% (2019: 19%) Effects of:

Fixed asset differences

Other permanent differences Chargeable gains / (losses) Adjust closing deferred tax to average rate of 19%

On 1 April 2009, Trent & Dove Housing Limited converted from being a company limited by guarantee to a charitable organisation, a Registered Society under the Co-operative and Community Benefits Society Act. This change had the effect of mitigating tax liabilities.

The tax charge comprises:

ASSOCIATION

2020 £’000

2019 £’000

-

-

Origination and reversal of timing differences

-

-

Effect of increase in tax rate on opening liability

-

-

Total deferred tax (see note 23)

-

-

Total tax surplus on ordinary activities

-

-

Current tax on surplus on ordinary activities UK Corporation Tax at 19% (2019: 19%) Deferred tax

Annual report and financial statements 2020

87

Notes to the Financial Statements

10. TAX ON SURPLUS ON ORDINARY ACTIVITIES (continued) The differences between the total tax charge shown above and the amount calculated by applying the standard rate of UK corporation tax to the surplus before tax is as follows:

ASSOCIATION

2020 £’000

2019 £’000

6,428

7,333

1,221

1,393

Losses Eliminated

7

6

Charitable activities not subject to tax

-

(1,433)

67

-

Expenses not deductible for tax purposes

4,872

-

Income not taxable in determining taxable surplus

(6,133)

-

-

21

Adjust opening deferred tax to average rate of 19%

(21)

(17)

Deferred tax not recognised

(13)

30

-

-

Surplus on ordinary activities before taxation Surplus on ordinary activities multiplied by rate of corporation tax of 19% (2019: 19%) Effects of:

Fixed asset differences

Adjust closing deferred tax to average rate of 19%

Association total tax charge for the period

11. INTANGIBLE FIXED ASSETS COMPUTER SOFTWARE £’000 Cost At 1 April 2019

844

Additions

1,322

At 31 March 2020

2,166

Amortisation At 1 April 2019

591

Charged in year

132

At 31 March 2020

723

Net book value

88

At 31 March 2020

1,443

At 31 March 2019

253

Trent & Dove

Notes to the Financial Statements

12. TANGIBLE FIXED ASSETS – HOUSING PROPERTIES GROUP

Social housing properties held for letting £’000

Social housing properties under construction

Shared ownership properties held for letting

Shared ownership properties under construction

Total

£’000

£’000

£’000

£’000

189,961

7,702

11,341

1,801

210,805

-

16,314

-

3,221

19,535

Schemes completed

12,757

(12,757)

2,813

(2,813)

-

Works to existing properties

3,688

-

-

-

3,688

Disposals

(1,699)

-

(233)

-

(1,932)

204,707

11,259

13,921

2,209

232,096

At 1 April 2019

43,130

-

614

-

43,744

Charged in year

4,995

-

111

-

5,106

33

-

-

-

33

Released on disposals

(1,290)

-

(20)

-

(1,310)

At 31 March 2020

46,868

-

705

-

47,573

At 31 March 2020

157,839

11,259

13,216

2,209

184,523

At 31 March 2019

146,831

7,702

10,727

1,801

167,061

Cost At 1 April 2019 Additions

At 31 March 2020 Depreciation

Impairment in year

Depreciated cost

GROUP

2020 £’000

2019 £’000

Amounts capitalised: Replacement of components

1,080

1,044

Improvements

2,608

2,299

Sub-Total

3,688

3,343

Amounts charged to Statement of Comprehensive Income

1,010

816

4,698

4,159

Total

Freehold land and buildings with a carrying amount of £61,169,000 (2019: £61,376,000) have been pledged to secure borrowings of the Association. The Association is not allowed to pledge these assets as security for other borrowings or to sell them to another entity.

Annual report and financial statements 2020

89

Notes to the Financial Statements

12. TANGIBLE FIXED ASSETS – HOUSING PROPERTIES (continued) ASSOCIATION

Social housing properties held for letting

Social housing properties under construction

Shared ownership properties held for letting

Shared ownership properties under construction

Total

£’000

£’000

£’000

£’000

£’000

189,961

7,702

11,341

1,801

210,805

-

16,316

-

3,221

19,537

Schemes completed

12,757

(12,757)

2,813

(2,813)

-

Works to existing properties

3,688

-

-

-

3,688

Disposals

(1,699)

-

(233)

-

(1,932)

204,707

11,261

13,921

2,209

232,098

At 1 April 2019

43,130

-

614

-

43,744

Charged in year

4,995

-

111

-

5,106

33

-

-

-

33

Released on disposals

(1,290)

-

(20)

-

(1,310)

At 31 March 2020

46,868

-

705

-

47,573

At 31 March 2020

157,839

11,261

13,216

2,209

184,525

At 31 March 2019

146,831

7,702

10,727

1,801

167,061

Cost At 1 April 2019 Additions

At 31 March 2020 Depreciation

Impairment in year

Depreciated cost

90

Trent & Dove

Notes to the Financial Statements

13. OTHER PROPERTY, PLANT AND EQUIPMENT

GROUP

Investment properties

Freehold offices

Computers and office equipment

Plant and Equipment

Motor vehicles

Total

£’000

£’000

£’000

£’000

£’000

£’000

1,246

3,567

634

111

66

5,624

-

-

350

(7)

-

343

(107)

-

-

-

-

(107)

-

-

-

-

(8)

(8)

1,139

3,567

984

104

58

5,852

At 1 April 2019

-

1,911

610

29

62

2,612

Charged in year

-

38

23

8

2

71

Released on disposals

-

-

-

-

(6)

(6)

At 31 March 2020

-

1,949

633

37

58

2,677

At 31 March 2020

1,139

1,618

351

67

-

3,175

At 31 March 2019

1,246

1,656

34

82

4

3,012

Cost At 1 April 2019 Additions Revaluations Disposals At 31 March 2020 Depreciation

Net book value

The depreciation of freehold offices at 1st April 2019 includes the impairment losses of £1,347,000 which arose when the main Burton office was subject to revaluation reviews in May 2010, February 2014 and January 2018.

Freehold offices with a carrying amount of £1,606,000 are held as security against the company’s share of the deficit on the Staffordshire County Council Pension Fund.

The investment properties have been valued on an annual basis since March 2014. The latest valuation was as at 31st March 2020 and was completed by Rushton Hickman Ltd.

Annual report and financial statements 2020

91

Notes to the Financial Statements

13. OTHER PROPERTY, PLANT AND EQUIPMENT (continued) ASSOCIATION

Freehold offices

Plant and Equipment

Motor vehicles

Total

£’000

Computers and office equipment £’000

£’000

£’000

£’000

3,567

634

111

66

4,378

Additions

-

350

(7)

-

343

Disposals

-

-

-

(8)

(8)

3,567

984

104

58

4,713

1,911

610

29

62

2,612

38

23

8

2

71

-

-

-

(6)

(6)

1,949

633

37

58

2,677

At 31 March 2020

1,618

351

67

-

2,036

At 31 March 2019

1,656

24

82

4

1,766

Cost At 1 April 2019

At 31 March 2020 Depreciation At 1 April 2019 Charged in year Released on disposals At 31 March 2020 Net book value

14. STOCK GROUP AND ASSOCIATION

92

2020 £’000

2019 £’000

Completed properties for sale

121

-

Work in progress

737

600

Raw materials and consumables

72

76

930

676

Trent & Dove

Notes to the Financial Statements

15. DEBTORS GROUP

2020 £’000

2019 £’000

908

811

(646)

(653)

262

158

1,106

563

Less: Provision for bad and doubtful debts: other debtors

(7)

(3)

Prepayments and accrued income

362

302

1,723

1,020

Amounts falling due within one year: Rent and service charges arrears Less: Provision for bad and doubtful debts : rent and service charges arrears

Other debtors

ASSOCIATION

2020 £’000

2019 £’000

908

811

(646)

(653)

262

158

Amounts owed by group undertakings

242

301

Other debtors

1,105

561

Less: Provision for bad and doubtful debts: other debtors

(7)

(3)

Prepayments and accrued income

362

300

1,964

1,317

Amounts falling due within one year: Rent and service charges arrears Less: Provision for bad and doubtful debts : rent and service charges arrears

16. SHORT TERM INVESTMENTS As a condition of the loan with The Housing Finance Corporation (THFC) a total of £1.266m (2019: £1.253m) is held in an Interest Service Reserve Fund and is invested at the instruction of Trent & Dove.

In addition, short term investments totalling £3.236m (2019: £3.234m) are held as security against the company’s share of the deficit on the Staffordshire County Council Pension Fund.

Annual report and financial statements 2020

93

Notes to the Financial Statements

17. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR GROUP

2019 £’000

Bank loans and overdrafts (see note 22)

2,368

2,241

729

Rents received in advance

892

729

527

781

Trade creditors

466

772

128

139

Amounts owed to group undertakings

52

-

6,328

2,115

Other taxation and social security

137

139

375

333

Other creditors

6,328

2,115

4,394

4,872

Government grants

375

333

15,012

11,210

Accruals and deferred income

4,381

4,867

14,999

11,196

2019 £’000

Bank loans and overdrafts (see note 22)

2,368

2,241

Rents received in advance

892

Trade creditors Other taxation and social security Other creditors Government grants Accruals and deferred income

ASSOCIATION

2020 £’000

2020 £’000

18. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR - GROUP AND ASSOCIATION

Bank loans (see note 25) Financing costs Government grants (see note 19) Disposal proceeds fund (see note 20) Recycled Capital Grant Fund (see note 21)

2020 £’000

2019 £’000

110,390

107,759

(434)

(239)

24,374

22,269

-

1,148

127

86

134,457

131,023

The loans are secured on freehold housing properties. The fixed rate loans have a weighted average interest rate of 4.16% (2019: 4.16%) and the weighted average year until which they are fixed is 2033. In addition to the above debt, at 31 March 2020 the Association had undrawn loan facilities of £26.187m (2019: £31.5m).

The total accumulated amount of capital grant received or receivable at the balance sheet date is £27.1m (2019: £24.6m).

94

Trent & Dove

Notes to the Financial Statements

19. DEFERRED INCOME - GOVERNMENT GRANTS 2020 £’000

2019 £’000

22,602

21,262

Grants receivable

2,525

1,744

Amortisation to Statement of Comprehensive Income

(338)

(318)

Reclassified on Disposal

(40)

(86)

Balance at 31 March

24,749

22,602

Due within one year

375

333

24,374

22,269

At 1 April

Due after one year

The total value of government grants receivable up to 31st March 2020 was £27,084,000

20. DISPOSAL PROCEEDS FUND GROUP AND ASSOCIATION 2020 £’000

2019 £’000

1,148

1,731

Inputs to DPF

-

-

Interest accrued

2

12

(1,150)

(595)

-

1,148

At 1 April

Recycling of grant Balance at 31 March

21. RECYCLED CAPITAL GRANT FUND GROUP AND ASSOCIATION 2020 £’000

2019 £’000

At 1 April

86

-

Capital grant recycled

40

86

Balance at 31 March

126

86

Annual report and financial statements 2020

95

Notes to the Financial Statements

22. BANK LOANS – GROUP & ASSOCIATION 2020 £’000

2019 £’000

Between one and two years

2,503

2,368

Between two and five years

8,429

7,962

99,045

97,016

109,977

107,346

2,368

2,241

112,345

109,587

Bank loans are repayable as follows:

After five years

On demand or within one year

23. RETIREMENT BENEFIT SCHEMES Staffordshire County Council Pension Fund The Staffordshire County Council Pension Fund is a multi-employer scheme which is administered by Staffordshire County Council under the regulations governing the Local Government Pension Scheme (LGPS), a defined benefit scheme. The most recent actuarial valuations of scheme assets were carried out as at 31 March 2016. The present value of the defined benefit obligation, the related current service cost and the past service cost were measured using the projected unit credit method.

A decision was made to close the fund to future accrual and remove the salary link to CPI + 2% effective from 1 April 2017. This decision was made by the Board of T&D on 19th September 2016, following consultation with members. This was considered to trigger a demonstrable event requiring the change in salary assumptions, reflecting Trent & Dove’s realistic expectation for salary growth for the LGPS members, to be included in the pension deficit valuation as at March 2019 and March 2020.

Valuation at 2020

2019

Pension Increase Rate

1.9%

2.5%

Salary Increase Rate

2.3%

2.5%

Discount Rate

2.3%

2.4%

Key assumptions used:

96

Trent & Dove

Notes to the Financial Statements

23. RETIREMENT BENEFIT SCHEMES Mortality assumptions: Life expectancy is based on the Fund’s Vita Curves with improvements in line with the CMI 2018 model, an allowance for smoothing of recent mortality experience and long-term rates of 1.25% p.a. for males and females.

The assumed life expectations on retirement at age 65 are: Valuation at 2020 Years

2019 Years

Males

21.2

21.0

Females

23.6

22.6

Males

22.1

22.2

Females

25.0

24.0

2020 £’000

2019 £’000

109

72

(241)

(241)

(132)

(169)

Recognised in other comprehensive income

(702)

2,061

Total cost relating to defined benefit scheme

(834)

1,892

Retiring today:

Retiring in 20 years:

Net interest cost Plan introductions, changes, curtailments and settlements

The amount included in the Statement of Financial Position arising from the Group’s obligations in respect of its defined benefit retirement benefit scheme is as follows: Defined benefit retirement benefit scheme

2020 £’000

2019 £’000

Present value of defined benefit obligations

29,668

33,993

Fair value of scheme assets

(25,823)

(29,314)

Deficit

3,845

4,679

Net liability recognised in the Statement of Financial Position

3,845

4,679

Annual report and financial statements 2020

97

Notes to the Financial Statements

23. RETIREMENT BENEFIT SCHEMES (continued) Movements in the present value of defined benefit obligations were as follows: Defined benefit obligations

2020 £’000

2019 £’000

33,993

29,876

Interest cost

809

800

Benefits paid

(695)

(486)

Changes in demographic assumptions

(1,243)

-

Changes in financial assumptions

(2,807)

3,798

(389)

5

29,668

33,993

2020 £’000

2019 £’000

29,314

27,089

Interest income

700

728

Contributions from the employer

234

234

7

7

(695)

(486)

Return on assets excluding amounts included in net interest

(3,737)

1,742

At 31 March

25,823

29,314

At 1 April

Other experience At 31 March

Movements in the fair value of defined scheme assets were as follows:

Defined scheme assets At 1 April

Contributions in respect of unfunded benefits Benefits paid

The analysis of the scheme assets at the Statement of Financial Position date was as follows: Analysis of the scheme assets

98

Fair value of assets 2020

2019

Equity instruments

65%

68%

Bonds

23%

21%

Property

10%

8%

Cash

2%

3%

Trent & Dove

Notes to the Financial Statements

23. RETIREMENT BENEFIT SCHEMES (continued) The Pensions Trust – Social Housing Pension Scheme The company participates in the Social Housing Pension Scheme (the Scheme), a multi-employer scheme which provides benefits to some 500 non-associated employers. The Scheme is a defined benefit scheme in the UK. The Scheme is subject to funding legislation outlined in the Pensions Act 2004 which came into force on 30 December 2005. This, together with documents issued by the Pensions Regulator and Technical Actuarial Standards issued by the Financial Reporting Council, set out the framework for funding defined benefit occupational pension schemes in the UK. The last triennial valuation of the scheme for funding purposes was carried out as at 30 September 2017. This valuation revealed a deficit of £1,522m. A Recovery Plan has been put in place with the aim of removing this deficit by 30 September 2026.

The Scheme is classified as a ‘last-man standing arrangement’. Therefore, the company is potentially liable for other participating employers’ obligations if those employers are unable to meet their share of the scheme deficit following withdrawal from the Scheme. Participating employers are legally required to meet their share of the Scheme deficit on an annuity purchase basis on withdrawal from the Scheme.

For financial years ending on or before 28 February 2019, it was not possible for the company to obtain sufficient information to enable it to account for the Scheme as a defined benefit scheme, therefore the company has accounted for the Scheme as a defined contribution scheme.

For financial years ending on or after 31 March 2019, it is possible to obtain sufficient information to enable the company to account for the Scheme as a defined benefit scheme.

For accounting purposes, a valuation of the scheme was carried out with an effective date of 30 September 2018. The liability figures from this valuation were rolled forward for accounting year-ends from 31 March 2019 to 29 February inclusive. The liabilities are compared, at the relevant accounting date, with the company’s fair share of the Scheme’s total assets to calculate the company’s net deficit or surplus.

Similarly, an actuarial valuation of the Scheme was carried out as at 30 September 2019 to inform the liabilities for accounting year ends from 31 March 2020 to 28 February 2021 inclusive.

Present values of defined benefit obligation, fair value of assets and defined benefit liability

2020 £’000

2019 £’000

Fair value of plan assets

1,033

997

Present value of defined benefit obligation

1,091

1,163

Net defined benefit liability to be recognised

(58)

(166)

Annual report and financial statements 2020

99

Notes to the Financial Statements

23. RETIREMENT BENEFIT SCHEMES (continued) Reconciliation of opening and closing balances of the defined benefit obligation

2020 £’000

2019 £’000

1,163

1,108

2

2

Interest expense

28

29

Actuarial gains due to scheme experience

(1)

(42)

Actuarial losses due to changes in demographic assumptions

7

-

Actuarial (gains)/losses due to changes in financial assumptions

(73)

101

Benefits paid and expenses

(35)

(35)

Defined benefit obligation at end of period

1,091

1,163

2020 £’000

2019 £’000

997

969

Interest income

24

26

Experience on plan assets

12

15

Contributions by the employer

35

22

(35)

(35)

1,033

997

2020 £’000

2019 £’000

Expenses

2

2

Net interest expense

4

3

Total cost relating to defined benefit scheme

6

5

Defined benefit obligation at start of period Expenses

Reconciliation of opening and closing balances of the fair value of plan assets Fair value of plan assets at start of period

Benefits paid and expenses Fair value of plan assets at end of period

Defined Benefit costs recognised in Statement of Comprehensive Income

100

Trent & Dove

Notes to the Financial Statements

23. RETIREMENT BENEFIT SCHEMES (continued) Defined Benefit costs recognised in Other Comprehensive Income

2020 £’000

2019 £’000

12

15

1

42

Effects of changes in the demographic assumptions underlying the present value of the defined benefit obligation

(7)

-

Effects of changes in the financial assumptions underlying the present value of the defined benefit obligation

73

(101)

Total amount recognised in other comprehensive income

79

(44)

2020 £’000

2019 £’000

Global Equity

151

168

Absolute Return

54

86

Distressed Opportunities

20

18

Credit Relative Value

28

18

Alternative Risk Premia

72

58

Fund of Hedge Funds

1

4

Emerging Markets Debt

31

34

Risk Sharing

35

30

Insurance-Linked Securities

32

29

Property

23

22

Infrastructure

77

52

Private Debt

21

13

Opportunist Illiquid Credit

25

-

Corporate Bond Fund

59

47

Long Lease Property

18

15

Secured Income

39

36

343

365

4

2

1,033

997

Experience on plan assets Experience gains and losses arising on plan liabilities

Assets

Liability Driven Investment Net Current Assets Total amount recognised in other comprehensive income

None of the fair values of the assets shown above include any direct investments in the employer’s own financial instruments or any property occupied by, or other assets used by, the employer.

Annual report and financial statements 2020

101

Notes to the Financial Statements

23. RETIREMENT BENEFIT SCHEMES (continued) Key assumptions

Valuation at 2020

2019

Discount Rate

2.3%

2.4%

Inflation (RPI)

2.9%

3.5%

Inflation (CPI)

1.9%

2.5%

Salary Growth

2.3%

2.5%

75% of maximum allowance

75% of maximum allowance

Key assumptions used:

Allowance for commutation of pension for cash at retirement

The mortality assumptions imply the following life expectancies: Life expectancy at age 65 2020 Years

2019 Years

Males

21.2

21.0

Females

23.0

22.6

Males

22.6

22.3

Females

24.2

23.8

2020 £’000

2019 £’000

Provision at start of period

163

156

Recognised in Statement of Comprehensive Income

(1)

7

162

163

-

-

Retiring today:

Retiring in 20 years:

24. DEFERRED TAXATION Provision for deferred taxation on investment property revaluation

Provision at end of period Deferred tax (asset)/liability not recognised

102

Trent & Dove

Notes to the Financial Statements

25. FINANCIAL INSTRUMENTS The carrying values of the Group and Association’s financial assets and liabilities are summarised by category below:

FINANCIAL ASSETS GROUP

2020 £’000

2020 £’000

2019 £’000

1,360

716

242

301

Measured at undiscounted amount receivable:

Measured at undiscounted amount receivable: Rent arrears and other debtors (see note 15)

FINANCIAL ASSETS ASSOCIATION

2019 £’000

Rent arrears and other debtors (see note 15)

1,361

718

Short Term Investments

4,489

4,487

Amounts due from group undertakings

Cash

4,141

10,580

Short Term Investments

4,489

4,487

9,991

15,785

Cash

4,084

10,407

10,175

15,911

2020 £’000

2019 £’000

112,324

109,761

Trade and other creditors (see note 17)

7,823

3,755

Amounts owed to group undertakings

52

-

120,199

113,516

FINANCIAL LIABILITIES GROUP

2020 £’000

2019 £’000

Measured at amortised cost: Loans payable

Measured at amortised cost: 112,324

109,761

Measured at undiscounted amount payable: Trade and other creditors (see note 17)

FINANCIAL LIABILITIES ASSOCIATION

Loans payable Measured at undiscounted amount payable:

7,875

3,764

120,199

113,525

The group’s income, expense, gains and losses in respect of financial instruments are summarised below: 2020 £’000

2019 £’000

20

90

4,395

4,801

Interest income and expense Total interest income for financial assets at amortised cost Total interest expense for financial liabilities at amortised cost

Annual report and financial statements 2020 103

Notes to the Financial Statements

26. STATEMENT OF CASH FLOWS Cash flow from operating activities

2020 £’000

2019 £’000

6,260

7,394

5,177

4,942

132

102

(Increase) / Decrease in stock

(254)

287

Increase in debtors

(703)

(7)

Increase in creditors

3,689

759

Pension costs less contributions payable

(274)

(261)

624

415

Impairment loss on property, plant and equipment

33

-

(Decrease) / Increase in fair value of investment property

107

(44)

(2,638)

(2,101)

Government grants utilised in the year

(338)

(318)

Interest payable

4,508

4,876

Interest received

(20)

(90)

16,303

15,954

Surplus for the year Adjustment for non-cash items: Depreciation of property, plant and equipment Amortisation of intangible assets

Carrying amount of property, plant & equipment disposals

Adjustments for investing or financing activities: Proceeds from the sale of property, plant and equipment

Cash generated by operations

27. FINANCIAL COMMITMENTS GROUP AND ASSOCIATION Capital commitments are as follows: 2020 £’000

2019 £’000

Contracted for but not provided for

15,337

26,925

Approved by the directors but not contracted for

21,980

18,192

37,317

45,117

The above commitments will be financed primarily through borrowings available for draw-down under existing loan arrangements, which currently amount to £61.1m, through social housing grants and through cash and short term investments held, totalling £10.8m.

104

Trent & Dove

Notes to the Financial Statements

27. FINANCIAL COMMITMENTS GROUP AND ASSOCIATION (continued) The future minimum lease payments under non-cancellable operating leases are as follows: Operating leases

2020 £’000

2019 £’000

within one year

20

119

between one and five years

21

17

41

136

Payments due:

28. HOUSING STOCK GROUP AND ASSOCIATION Housing stock

2020 Units

2019 Units

General needs housing accommodation at social rent

4,626

4,576

General needs housing accommodation at affordable rent

1,178

1,145

Housing accommodation at intermediate rent

23

26

Supported housing accommodation at social rent

167

190

Shared ownership accommodation

242

217

6,236

6,154

Owned and managed

Annual report and financial statements 2020 105

Notes to the Financial Statements

29. RELATED PARTY TRANSACTIONS

is charged at variable rates, with £8k (2019: £8k) payable from First Housing Limited to Trent & Dove in the year.

Trent & Dove charged a management fee of £16k

Tenants Serving as Board Members

(2019: £16k) for the year to First Housing Limited for

During the year to 31 March 2020, two tenants

services carried out on its behalf.

served as members of the Board: Mark Ashby and Anita Wanowicz. Their tenancies are on normal commercial terms and they are not able to use their position to derive any benefit which is not available

Trinity Housing Developments Limited is incorporated in England and Wales. It is a design and build company set up to provide design and

to tenants in general.

build services to Trent & Dove Housing Limited.

The total value of rent and service charges

trading in February 2020 and had a net turnover for

receivable in the year from tenant board members

the year of £52k. All turnover relates to design and

was £8,037.

build services provided to Trent & Dove Housing

Investment in Subsidaries

Trinity Housing Developments Limited started

Limited.

Trent & Dove Housing Limited has investments in

Pension Schemes

its subsidiary companies First Housing Limited and

Trent & Dove Housing Limited participate in the

Trinity Housing Developments Limited. Trent & dove

Social Housing Pension Scheme, this provides

Housing Limited hold one ordinary share of £1 in

benefits to employees that choose to take part.

each of the subsidiaries. The share in First Housing Limited was acquired on 26 March 2009, whilst the share in Trinity Housing Developments Limited was

Trent & Dove also took part in the Staffordshire County Council Pension Fund. A decision was made

acquired on 29 March 2020. This represents the total

to close this fund to future accrual from 1 April 2017.

allotted share capital for both subsidiaries as at 31

Further details about these schemes can be found

March 2020..

First Housing Limited is incorporated in England and Wales and acquired the shops of Trent & Dove

in Note 23.

30. CONTROLLING PARTY

Housing Limited on 30 March 2009 for the sum of £158k. First Housing continues to let and maintain shops and had a net turnover for the year of £109k (2019: £115k).

Trent & Dove Housing Limited is the ultimate controlling party of the group.

A loan of £187k (2019: £237k) has been provided

by Trent & Dove to First Housing Limited. Interest

106

Trent & Dove

- END -

Annual report and financial statements 2020 107

Contact Us Phone: 01283 528528 Email: communications@trentanddove.org www.trentanddove.org Social: facebook.com/trentanddove | twitter.com/TaDHousing Trent & Dove Housing Trinity Square Horninglow St Burton upon Trent DE14 1BL

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