2022/23 Report and Financial Statements

Report and Financial Statements

2022/2023

Fairhive Homes Limited

Community Benefit Society number: 8826

Regulator of Social Housing number: L4473

Board Members

Stephen Stringer Chair

Stephen Stringer joined Fairhive as Chair of the Parent Board in 2016. During his career as a Government advisor he worked in the housing and regeneration sectors as well as being responsible for the governance and oversight of a range of Government Associations. His board experience includes roles as Chair of Islington and Shoreditch Housing Association and member of the Metropolitan Support Trust.

Angela Macpherson Council Board Member

Angela and her family moved to Aylesbury in 1995 and in 2013 Angela became a local Member of the Buckinghamshire County Council. In 2020, Angela was elected onto the new unitary council as Deputy Leader and Cabinet Member Adult Social Care.

Barbara Richardson

Barbara has worked in the housing and property sector since 1995 at Senior Director and Board level and has extensive experience in site identification, land acquisition, planning, project management and sales, property services, and strategic asset management. Barbara is Chair of both subsidiary Association boards.

Board Members

David Keeling

David is an Independent Housing Consultant, specialising in affordable housing development and asset management. From 2000, David held the roles of Executive Director of Development, and latterly Chief Operating Officer, at Bedfordshire Pilgrims Housing Association, and more recently Executive Director of Development and Sales at Cross Keys Homes. David has served on several Housing Association Boards in London and the Homes Counties. He chairs Development & Assets Committee.

Stephen Bright

(until September 2022)

Stephen trained as a Chartered Accountant and is a member of the Association of Corporate Treasurers and the Chartered Institute of Taxation. He has previous experience on the Board of Charities and a social housing provider and was previously Chair of the Audit Committee for an NHS acute trust. Stephen retired to Buckinghamshire after 35 years at board level in Retail Banks and Insurance companies in the UK and Europe. Stephen was chair of Audit & Risk Committee.

Kelly Webster

Kelly joined the Board as a resident member in 2017. She has worked in accountancy firms since 1994 and is an Association Director and an Associate Member of the Chartered Institute of Credit Management. Kelly has lived in the Vale for 20 years. Kelly chairs Remuneration and Selection Committee.

Board Members

Jules BlundellThompson

(until September 2022)

Jules was a resident Board Member who was appointed to the Board in 2013. Jules was born in Aylesbury and having lived in the Vale for many years, he is regularly involved with the Buckingham Community Pantomime and is a keen local sportsman.

Olivia Clymer

Olivia was appointed to the Fairhive Board in 2017. Her early career was spent with the Environment Agency which subsequently led to roles in related areas in both the public and private sector. She has served as a housing association Board member for ten years.

Susan Ralphs

Susan was appointed to the Board in 2019 and serves as Vice Chair. She is a Chartered Accountant and has been in senior management for 25 years. Sue currently lives in Oxford working as a Consultant, a Coach and is also on the Board of a charitable foundation. Susan became Chair of Audit & Risk Committee in September 2022.

Board Members

Sue Fogden

Sue was appointed to the Board in 2022. She is a Chartered Surveyor with a wealth of experience in both private and public sectors. As well as being a surveyor, Sue is a Law graduate and a RICS Evaluative Mediator.

Nicola Gilham

(until April 2022)

Nicola joined the Board in 2019 and is a qualified chartered accountant. Nicola is non-Executive Director for a number of social enterprises, plus the Buckinghamshire Healthcare NHS Trust.

Ade Osibogun

(from January 2023)

Council Board Member

Dr. Adekunle Osibogun is a Council Board Member, appointed to the Fairhive Board January 2023. He is a dual qualified lawyer and an arbitrator, with experience in dispute avoidance and complex disputes. He brings a wealth of knowledge as a corporate lawyer and dispute resolution expert with over fifteen years’ experience, and expertise in commercial disputes.

Board Members

Matt McGeehan

(from January 2023)

Matt was appointed to the Fairhive Board in January 2023, having previously served as a member of the Buckinghamshire Housing Association Board. Matt is a retired chartered accountant, who worked with international accounting firms in the UK and abroad.  Followed by a career as a finance professional in industry.

Executive Management Team

Matthew Applegate Chief Executive

Matthew Applegate has been Chief Executive of the Association since its formation in 2006. He has worked within the housing sector for around 30 years and previously held a variety of senior executive roles, non-executive Board member and Committee Chair roles at other Housing Associations. He is a member of the Chartered Institute of Housing and is also a qualified accountant.

Dean Gill Executive Director of Operations

Dean Gill joined the Association in 2010 and leads a number of teams in Operations directorate. Dean has over 30 years of experience working with Housing Associations, Local Authorities, ALMOs and a number of related private sector businesses. Dean began his career as an apprentice Carpenter and Joiner before progressing into surveying and then management roles.

Julie Porter Executive Director of Development

Julie Porter joined the Association in 2020 to lead our programme of developing new homes. She has worked in housing development in a number of roles over 20 years, starting as a graduate trainee with a private housebuilder and going on to work for a number of regional and national housing associations, leading a wide range of teams including new business, asset management, planned maintenance, leasehold, sales and marketing, as well as development delivery. She is a Fellow of the Royal Institution of Chartered Surveyors and has a degree in Land Management.

Executive Management Team

Izabela Falinska Executive Director of Finance & Resources

Izabela Falinska joined the Association in 2021 and her responsibilities include finance, treasury, IT and governance. Her focus is to ensure that the Association maintains strong governance and strong financial metrics, with ample potential for growth. Izabela has worked in the housing sector for over 25 years in senior finance roles. Izabela is a Fellow Member of Association of Chartered Certified Accountants.

Claire Taylor Company Secretary

Claire Taylor joined the Association in 2019 and took over as the Company Secretary in September 2020. Claire is also responsible for teams covering the governance, IT and health & safety compliance. Claire is a member of both the Chartered Governance Institute and Chartered Quality Institute.

Office, Advisors and Bankers

fairhive.co.uk

@hellofairhive

Facebook.com/hellofairhive @hellofairhive

fairhivehomes

Registered office Fairfax House, 69 Buckingham Street, Aylesbury, Buckinghamshire

HP20 2NJ

Registered numbers

Community Benefit Society Number 8826.

Regulator of Social Housing number L4473.

Fairhive Homes Limited converted to a Community Benefit Society on 1 April 2022 registered under the Co-operative and Community Benefit Societies Act 2014, and changed its name from Vale of Aylesbury Housing Trust.

Auditors

BDO LLP

2 City Place

Beehive Ring Road

Gatwick

West Sussex RH6 0PA

Solicitors

Trowers & Hamlins LLP

3 Bunhill Row London

EC1Y 8YZ

Bankers

Barclays Bank Plc

Social Housing Team

27th Floor

1 Churchill Place London, E14 5HP

Devonshires Solicitors LLP

First floor No 1 Whitehall Riverside Whitehall Road Leeds

LS1 4BN

Report of The Board of Management and Strategic Report

The Board of Fairhive Homes Limited is pleased to present its report together with the audited consolidated financial statements.

Fairhive (‘the Group’) comprises Fairhive Homes Limited (“the Association”) and its subsidiaries Fairfax Housing Limited and Fairfax Design & Build Limited. Fairfax Design & Build Limited started its operations during the financial year ended 31 March 2022 and Fairfax Housing Limited has remained dormant since incorporation.

Activities

The Association was formed to receive the transfer of Aylesbury Vale District Council’s housing stock. This transfer took place in July 2006 and at 31 March 2023 the Association managed 8,578 homes (2022: 7,922).

The Association’s principal activities are the management, improvement and development of affordable housing and the provision of housing related services.

The Association operates two key business streams:

• the provision of general needs housing for rent and shared ownership and

• the provision of supported housing for people who need additional support to maintain their independence (Independent Living).

The Association invests in the housing stock to meet a quality standard which exceeds the Decent Homes Standard through an ongoing programme of planned and cyclical works. The Association is also committed to supporting its communities so they can be sustainable in the longer term.

Conversion to Community Benefit Society (CBS)

On 1 April 2022, the Association converted from a private Company limited by guarantee and registered charity with the Charities Commission to a CBS registered under the Cooperative and Community Benefit Societies Act 2014.

We received the registration certificate from the Financial Conduct Authority confirming our registration number: 8826 on the Mutual Societies portal. New Rules have been accepted by the Financial Conduct Authority and the NHF Code of Governance 2020 has been adopted. Compliance assessments against the NHF Code of Governance 2020 together with Regulatory Standards have been conducted with full compliance assured.

The Association has two subsidiaries, both Companies Limited by Shares: Fairfax Housing Limited (Company registration number: 11770715) and Fairfax Design & Build Limited (Company registration number: 11770796).

Transfer of Engagement from Buckinghamshire Housing Association Limited (BHA)

The transfer of engagement from BHA was approved by the Board during the year. Following positive outcome of the due diligence process, BHA joined the Association on 9 January 2023. BHA is a neighbouring Registered Provider and Community Benefit Society with strategic objectives, culture and ethos much in alignment with the Association.

It resulted in the transfer of over 500 well maintained homes wholly located in our area of operation. It will also bring an enhanced level of services to BHA’s former residents and will provide the opportunity to extend the Association’s influence whilst also creating economies of scale and efficiency gains.

Most of BHA’s former employees TUPE transferred to the Association and the alignment of systems and processes is well underway.

Business review

This was the third year of the five year corporate strategy ‘Bigger, Better, Bolder and Beyond’, launched in July 2020. Details of the Association’s performance for the year are set out in the Operating and Financial Review and Strategic Report that follows this Report of the Directors.

The Bigger, Better, Bolder and Beyond strategy is based around the themes of providing more homes for people in housing need, making sure services match the needs of current and future customers, investing in homes and communities, reducing environmental impact, improving sustainability and embracing new opportunities and innovative ideas.

We continued to support our residents and deliver against our strategy, despite a number of external challenges and risks facing the housing sector. These include continued impact of the COVID-19 pandemic and the ongoing financial uncertainties related to cost of living and increased supplier costs resulting from lagging Brexit impacts, the conflict in Ukraine and the energy cost crisis.

We responded to these unprecedented times by adapting our services and ways of working, reviewing our plans and assessing how we can support our residents and communities. We invested in technology, mobile working and ensured that we put our colleagues and customers’ health and wellbeing first.

Our financial position remained strong and robust.

The Board has continued its focus on Health & Safety to ensure that our residents can feel safe and secure in their homes.

We continue to engage with residents to more clearly hear their voice in our decision-making.

Following in-depth assessment by the Regulator of Social Housing we are very pleased to have retained the top rating for Governance and Viability of G1 and V1.

Resident and community engagement

During the year we continued to provide opportunities for residents to be involved and have their voice heard to increase our accountability, effectiveness and transparency to our residents.

We provided a variety of ways for residents to volunteer, including the Resident Forum, which meets regularly to discuss service delivery and review performance. We continued to hold scrutiny projects via a number of Task and Finish sub groups, with residents presenting their recommendations to our Board and the Resident Forum being updated on resulting actions and tracking progress. We also organised several focus groups to review policies with the residents and seek their input on other matters such as the review of our website.

Following the easing of COVID-19 restrictions, we were able to focus on our community growth projects with community events to support and raise the awareness of the Bearbrook Orchard project and Hampden Gardens Community Garden with planting days and activities alongside. During the summer we delivered our Summer Fun programme which included the very well attended Reconnect Event and we joined forces with Bucks Council to support their ‘play around the parishes’

events contributing to youth activity during the summer holidays. We also extended our Summer Fun programme to include October half term providing wider opportunities for engagement.

We continued to provide access to Outplacement First for residents to gain employment support (an online platform) and worked in partnership with Adviza and Bucks Adult Learning to deliver the Boost Your Potential course to increase employment opportunities for our residents. We provided “Scam Awareness” training sessions which was well received by the tenants, as well as Everyday First Aid sessions and an Accredited Paediatric First Aid course as an entry to employment in the Early Years sector. A training day was offered to our Fairhive volunteers to support their volunteering activity in a safe manner.

We completed Nurture Your Neighbourhood projects - a couple which were ongoing since before COVID-19 and supported other environmental improvement projects as well as carrying out consultations to find out residents’ views.

Following the completion of the transfer of engagement from BHA on 9th January 2023, we held welcome events to promote engagement with our new residents.

Employee engagement

Our well-established Employee Consultative Committee (ECC) meets four times a year and at other times as required. The group review key employment related policies and changes to the business, their views are taken into account before any changes are taken forward. This is a key mechanism to maintaining strong employee relations by actively listening and responding to the views of our employees. Twice a year we carry out an employee engagement survey to understand employee satisfaction as a measure of ‘being a great place to work’. The survey also gathers insight into employee wellbeing. It is encouraging that our turnover results are in the upper quartile for our sector. We continue to recognise the importance of listening to the views of our employees; to support, the process also includes an opportunity for employees to make suggestions on what further improvements could be made.

We maintain our strong commitment to Equality, Diversity and Inclusion. We have partnered with Talkback to create an internship in IT for an employee with autism for the whole of the last academic year. In May 2023, we are starting a series of short placements for autistic individuals with our Caretakers, also through Talkback. This will create opportunities to gain work experience.

We are also totally committed to being Disability Confident. Disability Confident is a Government led scheme that is designed to help employers recruit and retain disabled people. The Disability Confident scheme supports employers to make the most of the talents disabled people can bring to the workplace; this is important as there is a UK disability employment gap of 28.8%. The scheme helps employers think differently about disability, and improve how we attract, recruit and retain disabled workers.

This year, we achieved the highest accreditation level which is “Disability Confident Level 3” – “Disability Confident Leader”. There are over 17,000 UK businesses that have registered with the Disability Confident scheme and only 2.79% of these businesses have achieved this top ranking level. The “Disability Confident Leader” level is challenging to attain as businesses need to be independently assessed by disability experts to achieve this accreditation. We are very pleased to have achieved level 3 this year.

Employee engagement

We are very proud of this achievement. Our role as a Disability Confident Leader now involves encouraging other employers to make the journey also to become Disability Confident. We are already an active member of the Disability Confident Forum in Bucks and we look forward to working in partnership with our external stakeholders such as the Department of Work and Pensions to achieve this.

Our employee inclusion network met a few times during the year and covered variety of topics such as menopause, transgender issues and deaf awareness.

Furthermore, since the gender pay gap reporting started, reducing our gap has been a key area of focus. Our mean pay gap was 13% in 2018 and it is encouraging that over a 5 year period, our mean gender pay gap has

Supplier and other business relationships

The Association has a collaborative approach to working with its supply chain, which include placements for our younger residents to learn about the supplier’s industry, what it’s like in a working environment, teamwork and networking. Partnership working is in place with many Associations such as Local Authorities and the Citizen Advice Bureau to ensure residents are provided with support and welfare advice which includes aspects such as sustaining their tenancy.

A number of long term supply contracts are in place, which enable all partners to focus on mutually agreed performance indicators, designed to deliver value for money for our residents. Where possible, we include social value opportunities which benefit our residents such as work experience and CV workshops.

Our External Partnership Manager (EPM) role will ensure we maintain stakeholder communication, building relations with multiple groups including our local MPs and councillors. The aim of this work is to enhance our brand and reputation alongside building strategic relationships with both suppliers and partners. One example of this would be our partnership working with Youth Concern, over the last year we have ‘volunteered’ with Youth Concern in areas such as HR and strategic development.

We are also extending this work to include our residents; by working with our Resident Forum and Community Engagement Team we can ensure our residents are our biggest brand advocates. We will be meeting with them in the coming year to discuss the proposal to be implemented in the next financial year.

Board Directors and Executive Directors

The Board Directors are set out on pages 3 - 7. Board Members are drawn from a wide background bringing together professional, commercial and local ‘lived’ experience. At year-end, the Parent Board comprised: two

persons nominated by Buckinghamshire Council and eight independent members. During the year one resident Board Member moved home outside our portfolio and remains on the Board as an independent member.

The Executive Directors are the Chief Executive and three other members of Executive Management Team, as set out on page 8.

The Association has liability insurance policies for its Board Directors, Company Secretary and Executive Directors when acting for the Association.

Service contracts

The Chief Executive and Executive Directors are employed on essentially the same terms as other employees.

Pensions

The Executive Directors are members of defined benefit scheme with the Social Housing Pension Scheme or Local Government Pension Scheme with Buckinghamshire County Council Pension Fund. They participate in the schemes on the same terms as other eligible staff of that scheme. The Association contributes to these schemes on behalf of its employees.

Other benefits

The Executive Directors are entitled to other benefits such as a car allowance and health care insurance. Details of the Executive Directors’ remuneration are included in note 11 to the financial statements.

Regulatory compliance

A review of compliance with the regulatory standards of the Regulator of Social Housing has been undertaken and the Association complies with the Governance and Financial Viability Standard. During the year, the regulator refreshed its assessment of the Association’s compliance with the Governance and Viability Standard, including a Stability Check, and in December 2022 confirmed that the Association has retained the regulator’s top ratings for governance and viability; G1 and V1 respectively.

National Housing Federation (NHF) Code of Governance

As a member of the NHF, the Association has adopted the NHF’s 2020 “Code of Governance, Promoting board excellence for housing associations” since 1 April 2022. A Compliance Assessment has been conducted against the 2020 Code since 1 April 2022. The Association complies with the Code.

The 4 main principles of the Code are:

• Mission and values: The Board sets and actively drives the Association’s social purpose, mission, values and ambitions, and through these embeds within the Association resident focus, inclusion, integrity, openness and accountability.

• Strategy and delivery: The Board sets the Association’s plans and strategies and exercises demonstrable and effective oversight of their delivery.

• Board effectiveness: The Association is led by a skilled and diverse Board which regularly reviews and capably manages its own performance and effectiveness, and ensures that it complies with this code.

• Control and assurance: The Board actively manages the risks faced by the Association, and obtains robust assurance that controls are effective, and that plans and compliance obligations are being delivered.

Donations

During the year a total of £12,625 of donations were made (2022: £13,975). Donations were made to beneficiaries including: Samaritans, Food Banks and Youth Concern.

There were no political donations (2022: nil).

Thriving Communities Fund

As part of the strategy ‘Bigger, Better, Bolder and Beyond’, the grant fund was created to improve the lives of communities in areas in which the Association operates. The grants are given from three primary streams:

• Springboard grants of up to £300 to support residents with opportunities for wellbeing, education, training or employment,

• Community Micro-grants of up to £3,000 for small projects within the community and

• Community Project Grants of up to £10,000 to provide funding for large scale initiatives within the local community.

During the year £231,277 (2022: £136,000) was awarded as follows:

• £27,971 of Springboard grants.

• £20,763 of Micro-grants.

• £182,543 of Project grants.

In 2022, the Association also made additional donations of £89,000 to six food banks and Bucks Mind. The grants have been recognised in the Statement of comprehensive income.

This year, all employees were given half a day to volunteer during the year and many employees engaged in local volunteering activities.

Going concern

The Association has long term debt facilities in place including £80 million of undrawn facilities at 31 March 2023 (2022: £100 million) which provides adequate resource to finance the Association’s committed development programme, reinvestment and the Association’s day to day operations.

The Board has reviewed cash flow forecasts and has also carried out stress testing of its business plan. The outcome of the stress testing demonstrated that there is sufficient headroom on gearing and interest covenants and peak debts are within available funds. The Board has a reasonable expectation that the Association has adequate resources to continue in operational existence for the foreseeable future, being a period of at least twelve months after the date on which the report and financial statements are signed. For this reason, it continues to adopt the going concern basis in the financial statements.

Internal Controls Assurance

The Board acknowledges its overall responsibility for establishing and maintaining the whole system of internal control and for reviewing its effectiveness.

The system of internal control is designed to manage, rather than eliminate, the risk of failure to achieve business objectives, and to provide reasonable, and not absolute, assurance against material misstatement or loss.

The process for identifying, evaluating and managing the significant risks faced by the Association is ongoing and has been in place throughout the period from 1 April 2022 to the date of approval of this report and financial statements.

Key elements of the control framework include:

• regular reporting to the Board on key business objectives, risks, outcomes and performance targets within the Board approved Business Planning, Risk and Control Framework;

• Board approved Governance Framework including terms of reference for Boards and delegated authorities for the Committees: Audit & Risk, Committee (ARC) Development & Assets Committee (DAC) and Remuneration & Selection Committee (REMCOM), and Board’s approved Task and Finish Groups;

• Health & Safety Working Group that meets regularly and provides assurance to the Board and senior management on Health & Safety risks, their control and mitigation;

• clearly defined management responsibilities for the identification, evaluation and control of significant risks;

• strategic and business planning processes, with detailed financial budgets;

• recruitment, training and development policies for all staff;

• preparation of reports to the Board for approval of significant new initiatives and commitments, highlighting the risks and financial implications;

• a risk based approach to treasury management which is subject to review on an annual basis;

• Board approved confidential reporting (whistle blowing) policy;

• Board approved anti-fraud and corruption policy and code of conduct, covering prevention, detection and reporting of fraud; and

• Clearly defined policies and procedures on safeguarding and modern day slavery.

A fraud register is maintained and is available for review by ARC at each of its meetings. Fraud is a standing item on ARC’s agenda.

The Board accepts ultimate responsibility for the system of internal control and it has delegated authority to ARC to regularly review the effectiveness of the system of internal control. The Board receives minutes of all ARC meetings and an annual report from ARC.

The means by which ARC reviews the effectiveness of the system of internal control include considering internal audit reports, risk management reports, management assurances and the external auditors’ audit findings report.

ARC has received the Chief Executive’s annual review of the effectiveness of the internal controls for the Association, and the annual report of the internal auditor, and has reported its findings to the Board.

Objectives and strategy

The Association’s five year corporate strategy “Bigger, Better, Bolder and Beyond” covering the period from 2020 to 2025 is designed to help build on prior successes by meeting the needs of our customers now and into the future. The strategy is based around the following themes:

• deliver more homes;

• be a great landlord;

• support our residents and local communities; and

• do more to protect the environment.

We recognise that being adaptable is necessary in today’s world to ensure we are able to meet future challenges; the environment in which we work can change rapidly and the Association seeks to be flexible and introduce new ways for its services to be accessed, engage effectively with its residents and provide more homes across all affordable housing tenures.

Five key objectives support this strategy:

Increase housing supply for people in need

We are determined to continue to develop more homes for those in housing need at rents which are affordable and shared ownership for those who want to start owning their own home. We aim to expand the area we operate in to help widen our offer and affordability. We will work with partners to facilitate the Group to build houses for sale. In addition, we will reduce our carbon footprint by using sustainable materials and minimising our construction waste. And by making the best use of technology, we’ll leave a legacy of wellbuilt homes with great design and style.

Provide services that meet customer needs

Rising customer expectations, together with the digitalisation of services, means our residents want more choice and opportunity to have their say in the way services are run. By listening to, and acting on, resident feedback, we can improve services.

Run an efficient and effective business

As technology and innovation moves quickly, we continue to update IT systems to provide the flexibility and efficiency that our residents and employees need. The working environment and the expectations of employees and customers are changing. We will meet these challenges by continually reviewing our processes and considering how services are delivered. Strong leadership and management are important to us. We’ll make sure we have people with the right skills and resources in the right place at the right time.

Reduce environmental impact and improve sustainability

We will make sure that new and existing homes are adapted, where possible, to prevent unnecessary impact on our environment. Working towards reducing our environmental impact and improving our sustainability, we will give preference to partners who are working towards zero carbon, whilst using the most economical construction methods.

Invest in homes and communities

We will promote social inclusion and tenancy sustainment and improve estate environments, thereby providing strong, sustainable communities. Working with partners we will provide support to vulnerable residents, helping to reduce social isolation and assisting with independent living. Effective asset management will ensure that we consider low performing properties for sale. The proceeds from these properties will be used to deliver against the Association’s strategic priorities.

A number of projects were set up to deliver the strategic objectives. These included enhancing residents engagement, improving data quality, environmental improvements projects and enhancing residents access to on line services. The projects are supported by a suite of quantitative and qualitative measures which are monitored quarterly by the Executive Management Team (EMT), with updates reported to the Board twice a year.

Performance in the year

We are committed to providing services that represent value for money (VfM) for residents whilst delivering continuous improvement in the quality and range of homes and services.   Our values, strategic goals, the economic environment and increasing demand for our services place an ongoing emphasis on value for money. Our capacity to achieve future growth is partly affected by our ability to achieve increased operational efficiencies, without compromising the service provided to our residents and other stakeholders.

Our overall customer satisfaction rating of 83.7% remained in the upper quartile range. It has reduced from 90.6% reported last year.

The surplus for the year of £9.9 million is £2.7 million higher than the previous year and includes £3.0 million gain on BHA transfer. The surplus is used to support our development programme, to invest in the existing homes and to enhance our services to residents.

During the year, we invested £42.9 million (2022: £31.2million) on developing new affordable housing. We completed 197 homes (2022: 178) with a further 158 properties under construction at year end (2022: 217). It is planned that 197 homes will be completed in the next year. We also received 482 affordable units at £41 million fair value following the transfer of engagement from BHA.

Our strategic goals are underpinned by the effective management of key resources and driving continual improvement in services, and VfM improvement is a key focus.

This review highlights our performance through a range of VfM metrics and includes plans for improvement.

Monitoring and assurance

We regularly monitor progress towards our strategic goals, and performance against our regulatory and self-imposed performance measures. This enables us to implement corrective action to keep us on course and address any blockers to success that may arise. VfM is built into our strategic objectives and monitored closely by our Board and Executive Management Team.

We have a number of processes in place for monitoring our KPI and VfM performance and to understand the costs of delivering specific services in order to provide assurance for the Board on VfM delivery which include:

• The setting of targets annually for Key Performance Indicators (KPIs) and VfM metrics that are supported by a monthly update to senior management on performance against the agreed KPIs, with a quarterly update to the Board.

• A quarterly KPIs review to ensure that the performance information reported remains focused on continuous business improvement.

• Benchmarking our performance against a peer group of approximately 28 similar sized registered providers, making use of Housemark data.

• Detailed monthly management reporting that highlights financial performance compared to budget.

• Regular reporting to senior management on the in-house value for money savings made across efficiency, economy, effectiveness and social value.

• Regular reporting to senior management and annually to the Board of the VfM performance against plan.

• Regular reporting to senior management and the Board of our progress against the delivery of agreed strategies.

Our decision making process requires new initiatives to be properly evaluated and fully considered at appropriate levels. Any new initiatives need to be aligned with the corporate objectives and need to meet customers’ expectations before they are approved.

Value for Money Performance

The Association defines VfM as “the relationship between effectiveness, efficiency and economy”. VfM is high when there is a good balance between all three – relatively low costs, high productivity and successful outcomes. We also include social impact within value for money and consider what the initiative, or procurement can do to benefit our residents and community.

Our VfM performance and achievements for the year are summarised below through a suite of metrics and trend analysis. These areas tie into our strategic goals, and are compared to our peer group to understand how our performance rates against others. Areas for improvement are noted together with some of our future plans to deliver these.

We strive to embed VfM in all our activities and have a culture of continued improvement to enhance processes and systems which in turn makes our staff more efficient and provides a better service to our residents.

The value for money metrics are included in the quarterly reporting to the Board to provide regular and timely evidence of VfM progress against targets.

Value for Money Metrics

As a registered provider of affordable housing, we are regulated by the Regulator of Social Housing (RSH). The RSH requires Associations to report on certain metrics as standard, and these are then compared across peer groups, and the sector.

The Value for Money Metrics as defined by the regulator are set out in the following table and compared with the 2022/23 target for the year under review, the previous years’ results and the median performance of the benchmark group against which we measure our performance. The targets for next financial year are also shown.

Benchmarks throughout the report are shown for a peer group of 28 housing associations based in the East, South East, South West and London regions with 5,000 to 10,000 stock units.

We reinvest our surplus to improve services for our residents and to invest in our homes.

Value for Money Performance

Reinvestment was slightly below target with 197 units completed during the year A further 197 homes are planned for 2023/24 in line with the business plan.

EBITDA was below target due to significant expenditure to clear the backlog of void repairs, catch up works and large inflationary increase in property contractors’ costs. The next year’s target has been set at 130% in line with the current year’s trend.

The Social Housing Cost per unit (SHCP) was impacted by inflationary increase in the operating costs and catch up on void repairs and other property works deferred from last financial year. Increased spending is expected to continue in the following year. The Board is focused on reducing the SHCP in the long term.

The Operating margins are below target due to inflationary increases in the operating costs and catch up property works including backlog of void repairs. The next year’s targets assume increased margin as the backlog works have now been substantially completed.

Key Performance Indicators (KPIs) Metrics

In addition to the VfM metrics provided by our regulator, we also use other metrics that are common across the housing sector and benchmark against our peer group. The additional VfM measures shown in the table below are compared with targets, with last year and with the upper quartile performance of the benchmark group.

Value for Money Performance

The VfM KPI performance reflects the continued operational difficulties such as increased costs due to supply chains, inflationary pressures, labour shortages in the property sector, clearing backlog repairs and adverse impact of cost of living increases on our residents. The next year’s targets have been set to reflect expectations of improved performance in 2023/24.

Despite these challenges, we are proud that our customer satisfaction results remain in upper quartile performance. We are improving our understanding of how our residents feel about the services. We will use the feedback from residents’ surveys in conjunction with reviewing complaints and insurance claims to ensure joined up approach. New Tenant Satisfaction Measures will be used to understand new areas for improvement.

Calendar days to re-let improved significantly this year, as the backlog of void works has been reduced.

In addition, the lean review for the voids and lettings processes has highlighted further areas for improvement and efficiency gains.

Social value activities

We continued to invest heavily in our local community. Over the past year, we organised employee fundraising activities for a local charity, used our Thriving Communities Fund to support our residents and continued our SPARK initiatives.

In order to continue supporting our residents, we enhanced our digital engagement channels and have been promoting IMPACT, which is our resident engagement portal. This will help us reach and support a wider selection of our residents, breaking down barriers to engagement and improving our engagement offer. It is encouraging that during the year, we increased the number of residents who use IMPACT from 380 to 489 residents.

We have also seen a significant increase in our resident volunteering hours, they increased from 952 hours last year to over 3,000 hours in the current year. Furthermore, we had more residents volunteering with us, up to 942, during the current financial year.

Our “Spark” initiative continued during the year. “Spark” is about helping to build brighter futures and is focussed on building skills and providing experiences, bringing together our most popular initiatives under one umbrella, these include:

• apprenticeships, traineeships and work experience;

• “Tuition Plus”, support for residents’ children taking the 11 plus exam. Tuition Plus continued throughout the COVID-19 pandemic with lessons moving to online. Face to face lessons have now resumed. In the 2022/23 financial year, as a result of these Tuition Plus lessons, our residents had six ‘passes’ into Aylesbury Grammar schools, which was a fantastic achievement.

• “Learn Grow Develop”, our resident training programme; and

• “Job Club”, supporting people back into work through our Community Hub.

• We also attended a variety of careers events to promote careers in Housing including the Bucks Skills Show which had 5,200 attendees comprising 4,700 students from 30 schools across Buckinghamshire and 500 parents / family members attended in the evening. We also attended the Bucks Skills Show for students with special educational needs and disabilities (SEND) – it was the first time this event was run in 2022/23 – we will be attending this event again in 2023/24.

Environmental, Social and Governance (ESG) requirements

In accordance with best practice we developed an environmental strategy for the betterment of the properties we manage and develop, and in our work in enhancing our green spaces with planting of saplings and encouraging biodiversity including our bug boxes made from recycled materials. With the evolution of ESG requirements, we are looking to develop this further. We successfully run employment workshops, training and have an apprenticeship programme that helps transform lives.

Whilst we work in multitude of ways across the business, we are also developing our measurement of our greenhouse gases through our supply chain, our delivery processes and through the thermal efficiency of our homes. We have adopted the Social Reporting Standard recording tool and are also developing our internal reporting.

Future value for money plans

Offering real value for money, whilst continually improving the services provided is the driving force behind the being “Better” agenda within our Bigger, Better, Bolder and Beyond corporate strategy.

We have used our corporate strategy to identify key value for money plans to focus on in the coming years.

• Delivery of an ambitious development plan, reviewed in light of continuing pandemic restrictions, and seeking to deliver 612 new homes in the three year period to 2025.

• Continue to explore the use of commercial subsidiaries to build stock and sell open to market units will provide additional funding for development of social rented and affordable units.

• Increased use of digital channels to support our residents, and increase the opportunities they have to engage with us. Digital upskilling opportunities will continue so we can support our residents with this move.

• Continuation of agile working practices, ensuring flexibility as far as possible in how our staff work.

• Continue to invest in apprenticeships to help develop skills in our communities.

• Continuing Thriving Communities Fund with an annual budget of £250,000.

• Continue to work to understand our environmental footprint in both our stock and offices and identifying improvements that can be made to support our environmental strategy and ESG requirements.

• Continue to embed Housing Association Charitable Trust social value calculator within the Association which records and measures the social value of projects and business areas. The project is now in its third year and will help to cement the work that we do that makes us ‘more than a landlord’.

Risks and uncertainties

The main risks are regularly considered and reviewed by the Executive Management Team, Audit & Risk Committee and Board.

A Risk Management Framework is maintained which sets out our approach to risks, and how it is controlled and monitored.  The risk appetite is reviewed annually by Board in November.

The Audit & Risk Committee has a range of responsibilities surrounding risk management and it reviews the Strategic Risk Map at each of its meetings as well as receiving assurance on the adequacy and effectiveness of controls. The Audit & Risk Committee also receive two detailed risk reviews on key risks per meeting.

The Board receive reports on risk management with focus on the highest rated risks. The reporting mechanism from Committees to the Board include a key issues summary together with the minutes. The Board key risks are comprised of those outside of appetite or, if within appetite, which are highest graded on the risk map.

A summary of those risks is below:

Risk Examples of key controls in place

Failure to deliver the planned development programme that meets our planned contribution to housing need, achieving compliance with relevant standards within agreed resources.

• Development & Assets Committee monitor programme and specific risk map.

• Approved development plan aligned with Business Plan which is regularly monitored.

Actions to strengthen mitigation in year

• Development team managed construction programmes and liaised regularly with developers and contractors to monitor delivery.

• Assessment of the current economic climate saw the risk status increased to red in November 2022 with our increased focus on regular monitoring this risk.

Failure to provide a quality of accommodation that meets relevant standards, including the Decent Homes Standard and Fire Safety regulation and produces the financial and social returns, within agreed resources.

• Stock condition data maintained and regularly updated – targeted 100% surveyed every 5 years.

• Asset Management framework in place.

• 30 year funded investment programme aligned with business plan.

• Full compliance with Decent Homes was achieved in 2022/23.

• Building Safety Act 2022 requirements will be monitored and any changes in requirements relevant to us will be acted upon.

Risks and uncertainties

Risk Examples of key controls in place

Failure to ensure financial viability and to maintain loan covenants.

• Business Planning & Control Framework.

• Business Plan including stress testing approved by Board

• Risk management framework.

• Investment appraisal process

Actions to strengthen mitigation in year

• Quarterly treasury reporting to Executive Management team and Board.

• Treasury training sessions.

Failure to effectively monitor, anticipate and respond to the financial impact of changes in the external environment and change in government.

Failure to comply with health and safety obligations as a landlord, employer, developer and provider of care / support services.

• Stress testing within business planning is in place.

• Membership of professional bodies.

• Treasury strategy –updated annually.

• Health & Safety Framework and Policy.

• Health & Safety Working Group.

• Safe Contractor award.

• Stress testing scenarios received and reviewed from independent risk and treasury consultants

• Board training on stress testing undertaken.

• Completion of recommendations from external H&S Governance review.

• Full gap analysis against statutory and regulatory requirements for monitoring and reporting is underway.

• Review of fire safety responsibilities under section 156 of the Building Safety Act 2022

Cost of employer’s pension contributions significantly greater than planned.

• Pension strategy has been implemented to minimise exposure for future deficits.

• Periodic actuarial valuations

• Regular monitoring

• Successfully implemented pension changes from 1st April 2023.

Risks and uncertainties

Risk Examples of key controls in place Actions to strengthen mitigation in year

Failure to raise additional finance at planned costs to provide working capital and meet new business plan commitments.

• Regular monitoring of loan covenants compliance.

• Regular forecasting of cash flows and future funding requirements.

• Regular updating of business plan.

• Plan to commence the raising of new funding in 2023/24

Subsidiary Companies expose social housing assets to commercial risk and / or significantly impacts on core services.

• Financial exposure capped at level agreed by the Board.

• Business Planning.

• Governance structure approved by the Board.

• Subsidiary schemes approved by Fairhive Board

• Board of Fairfax Design & Build Limited receives regular update on the results and activities.

• Minutes and matters arising from Fairfax Design & Build Limited’s Board are submitted to the Board of Fairhive Homes Limited.

• Fairfax Development Limited remains dormant

Transfer of engagements from BHA

• Nominated senior managers to lead on project deliverables.

• Use of external consultants to advice on legal, governance and operational aspects of the transfer.

• Project management framework in place and regular reports to the Joint Steering Group.

• Board members regularly briefed on progress.

• Successful completion of the Transfer of Engagement from Buckinghamshire Housing Association to Fairhive Homes Limited was effective from 9th January 2023.

Financial position

The Group and Association prepared financial statements for the year to 31 March 2023 under the financial reporting standard (FRS 102).

The Statement of Comprehensive Income on page 40 shows a surplus of £9.9 million for the year (2022: £7.2 million) and total comprehensive income for the year of £21.6 million (2022: £11.6 million). The financial results are within the business plan parameters and the lenders’ covenants have been fully met. The turnover for the year was £61.6 million (2022: £58.5 million).

The Statement of Financial Position is shown on page 43. The Group and the Association have loan facilities in place which cover all the committed development in the business plan, reinvestment and day to day operations. Further finance is expected to be required within the next year to support the development activity over the next five years.

Accounting policies

The principal accounting policies are set out on pages 45 to 51 of the financial statements and have been reviewed by Audit & Risk Committee. The policies that are most critical to the financial results relate to accounting for housing properties and include housing property depreciation. As required by the financial reporting standard the accounting policies provide information in relation to critical judgements and estimates.

Housing properties

At 31 March 2023 the Association managed 8,578 (2022: 7,922) housing properties. Housing properties are shown in the statement of financial position at 31 March 2023 at net book value of £449.1 million (2022: £363.4 million).

Reserves

After transfer of the surplus for the year of £9.9 million (2022: £7.2 million), the actuarial gain on the pension schemes of £11.7 million (2022: 4.3 million) and reserves from transfer of engagement from BHA of £12.5 million, the reserves amount to £222.5 million (2022: £188.5 million).

Pension costs

The Association participates in six pension schemes: three of the schemes are closed to new members and three remain open. The schemes open to new entrants are with the Social Housing Pension Scheme (SHPS) and comprise a Career Average Revalued Earnings (CARE) structure and a defined contribution scheme which is used for pension autoenrolment. The two closed to new entrants are a final salary pension scheme with SHPS and a Local Authority Pension Scheme with Buckinghamshire County Council Pension Fund. The Association has contributed to the defined benefit schemes in accordance with levels set by the actuaries, of between 13% and 23.1%. The actuaries continue to review these levels. The Association contributes 6% to the defined contribution scheme.

During the year, we consulted with employees on changes to the pension arrangements effective 1 April 2023. Details are included in the pension note 13.

Financial position

Capital structure and treasury policy

At 31 March 2023 the Association has loan facilities arranged and available amounting to £285.0 million. (2022: £293.0 million). In April 2022, £8.0 million of the Barclays loan was repaid, reducing the overall loan facilities to £285.0 million.

The total facility comprises £60.0 million of fixed loan debt with Barclays, £100.0 million of revolving credit facilities and £125.0 million of capital market debt. The capital market funds include a 35 year, £70.0 million facility and a 30 year facility for £55.0 million. The revolving credit facilities are provided by two lenders, Handelsbanken and Nationwide Building Society and these are repayable between 2025 and 2030. The Barclays facility is repayable from 2026 to 2031.

Of the loan facilities, at 31 March 2023 the Association had drawn £205.0 million (2022: £193.0 million) and had £80.0 million of undrawn revolving credit facilities available (2022: £100.0 million). £15.0 million was drawn from revolving credit facilities to repay the BHA loans in January 2023 on transfer of engagement.

The Association is risk averse with respect to its treasury policy and endeavours to have a mix of fixed and variable interest rates for its drawn funds. The policy is to review the proposed mix annually. At 31 March 2023, £185.0 million of the facility were at fixed rates of interest ranging from 2.4% to 6.1%.

The Association borrows and invests only in sterling.

Cash flow

Cash inflows and outflows during the year are shown in the Consolidated Statement of Cash Flow on page 44. The net cash generated from operating activities for the year to 31 March 2023 was £21.0 million (2022: £19.2 million). Net cash outflow from investment activities was £45.4 million (2022: £31.6 million) mainly due to £49.0 million spend on construction and acquisition of housing properties and capitalised works to existing properties less £3.4 million proceeds from sale of fixed assets. Net cash inflow from financing activities was £8.0 million (2022: £41.0 million).

As a result, there was a net decrease in cash of £32.4 million (2022: net increase of £28.6 million).

Future developments

Our ambitious development aspiration is to provide approximately 612 new homes by 2024/25. Projections show a steady increase in the number of new affordable homes over the next two years. A proportion of the new homes will be shared ownership; this, along with grant funding from Homes England and Buckinghamshire Council, increases our capacity to deliver more social rented and affordable rented homes.

We have successfully secured £2.8 million grant from the Social Housing Decarbonisation Fund Wave 2.1. awarded by the Department for Energy Security and Net Zero. This will be match spend by us in the next two years for environmental improvements in our existing homes such as external wall insulation, air source heat pump, solar panels.

We commenced our digital technology transformation project, which is a 3 year project to simplify our systems structure, invest in IT infrastructure and further enhance our digital offer to our residents and our employees.

Statement of the responsibilities of the Board for the Strategic report and financial statements

The Board is responsible for preparing the Report of the board of management and the Strategic report and financial statements in accordance with applicable law and regulations.

Association law in the United Kingdom requires the Board to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements under the historical cost convention in accordance with applicable law and UK Generally Accepted Accounting Practice (UK GAAP). For the Group and the Association, this includes the Co-operative and Community Benefit Societies Act 2014 (and related group accounts regulations), the Housing and

Regeneration Act 2008, FRS 102 “the Financial Reporting Standard applicable in the United Kingdom and the Republic of Ireland”, the Statement of Recommended Practice (SORP) for Registered Social Housing Providers 2018, “Accounting by registered social housing providers”, the Accounting Direction for Private Registered Providers of Social Housing 2022 and with the Financial Conduct Authority (FCA).

The Board members must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Association and of the surplus or deficit of the Group and the Association for the year.

In preparing these financial statements the Board is required to:

• select suitable accounting policies and apply them consistently;

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

• state whether applicable UK Accounting Standards and the Housing SORP 2018: Statement of Recommended Practice Accounting by Registered Housing Providers, have been followed, subject to any material departures disclosed and explained in the financial statements and

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

Statement of the responsibilities of the Board for the Strategic report and financial statements

The Board is responsible for keeping adequate accounting records that are sufficient to show and explain the Group and the Association’s transactions and which disclose with reasonable accuracy at any time the financial position of the Group and the Association and enable it to ensure that the financial statements comply with the Housing and Regeneration Act 2008 and the Housing Direction for Registered Providers of Social Housing Act 2019. They are also responsible for safeguarding the assets of the Group and the Association and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

In so far as each of the Directors is aware:

• there is no relevant audit information of which the auditor is unaware; and

• the Directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditor is aware of that information.

The Board is responsible for the maintenance and integrity of the corporate and financial information on the Association’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

BDO LLP were appointed as the Association’s external auditors for 2022/23 on 22 September 2022

Statement of compliance

In preparing the Report of the board of management and Strategic Report, the Board has followed the principles set out in the Statement of Recommended Practice: Accounting by Registered Social Housing Providers.

The Report of the board of management and Strategic Report were approved by the Board on 8 August 2023 and signed on its behalf by:

Stephen Stringer Chair of the

Board

8 August 2023

Independent Auditor’s Report to The Members of Fairhive Homes Limited

Opinion on the financial statements

In our opinion, the financial statements:

• give a true and fair view of the state of the Group’s and of the Association’s affairs as at 31 March 2023 and of the Group’s and the Association’s surplus for the year then ended;

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

• have been properly prepared in accordance with the Co-operative and Community Benefit Societies Act 2014, the Co-operative and Community Benefit Societies (Group Accounts) Regulations 1969, the Housing and Regeneration Act 2008 and the Accounting Direction for Private Registered Providers of Social Housing 2022.

We have audited the financial statements of Fairhive Homes Limited (“the Association”) and its subsidiaries (“the Group”) for the year ended 31 March 2023 which comprise the consolidated and Association statement of comprehensive income, the consolidated and Association statement of financial position, the consolidated and Association statement of changes in reserves, the consolidated of cash flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

We remain independent of the Group and Association in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the Board members’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group’s and of the Association’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the Board with respect to going concern are described in the relevant sections of this report.

Other information

The Board is responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information including the Report of The Board of Management and Strategic Report and, in doing so, consider whether the other information is materially inconsistent with the financial statements, or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information we are required to report that fact.

We have nothing to report in this regard.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where we are required by the Co-operative or Community Benefit Societies Act 2014 or the Housing and Regeneration Act 2008 to report to you if, in our opinion:

• the information given in the Report of the Board for the financial year for which the financial statements are prepared is not consistent with the financial statements;

• adequate accounting records have not been kept by the parent Association; or

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

• the parent Association financial statements are not in agreement with the accounting records and returns; or

• we have not received all the information and explanations we require for our audit.

Responsibilities of the Board

As explained more fully in the statement of the responsibilities of the Board set out on pages 34 and 35, the Board is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the board members determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Board is responsible for 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 the Board either intend to liquidate the Group or the Association or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements

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 an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a 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 the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Extent to which the audit was capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below:

Based on our understanding of the Association and the industry in which it operates, we identified that the principal laws and regulations that directly affect the financial statements to be the Co-operative and Community Benefit Societies Act 2014, the Co-operative and Community Benefit Societies (Group Accounts) Regulations 1969, the Housing and Regeneration Act 2008, the Bribery Act 2010 and relevant Tax Legislation. We assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.

In addition, the Association is subject to many other laws and regulations where the consequences of non-compliance could have a material effect on amounts or disclosures in the financial statements, for instance through the imposition of fines or litigation. We identified the following areas as those most likely to

have such an effect: Employment Law, Data Protection and Health and Safety Legislation. Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of the Board and other management and inspection of regulatory and legal correspondence if any.

Audit procedures capable of detecting irregularities including fraud performed by the engagement team included:

• Performing analytical procedures to identify unusual or unexpected relationships that may indicate risks of material misstatement due to fraud. Areas of identified risk are then tested substantively;

• Discussions with management, including consideration of known or suspected instances of non-compliance with laws and regulations and fraud;

• Reading minutes of meetings of those charged with governance, reviewing internal audit reports and reviewing correspondence with HMRC and relevant regulators to identify any actual or potential frauds or any potential weaknesses in internal control which could result in fraud susceptibility;

• Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;

• Reviewing items included in the fraud register;

• Challenging assumptions made by management in their significant accounting estimates, in particular in relation to the recoverable amount of assets and the assumptions used in determining the defined benefit obligation;

• Carrying out detailed testing, on a sample basis, of revenue transactions and balances agreeing to appropriate documentary evidence to verify the completeness, existence and accuracy of the reported financial statements; and

• In addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments.

Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

Use of our report

This report is made solely to the members of the Association, as a body, in accordance with the Housing and Regeneration Act 2008 and the Co-operative and Community Benefit Societies Act 2014. Our audit work has been undertaken so that we might state to the Association’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Association and the members as a body, for our audit work, for this report, or for the opinions we have formed.

BDO LLP

Laurence Elliott (Senior Statutory Auditor) For and on behalf of BDO LLP statutory auditor London

Date: ….....................................

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

Consolidated Financial Statements

Consolidated and Association Statement of Comprehensive Income

The notes on pages 45 to 80 form part of these financial statements. The financial statements were approved and authorised for issue by the Board on 8 August 2023 and signed on its behalf by:

Stephen Stringer

Susan Ralphs

Claire Taylor Chair of the Board Board Member Company Secretary

Consolidated and Association Statement of Changes in Reserves

The notes on pages 45 to 80 form part of these financial statements.

Consolidated and Association Statement of Changes in Reserves

The notes on pages 45 to 80 form part of these financial statements.

Consolidated and Association Statement of Financial Position

The notes on pages 45 to 80 form part of these financial statements.

The financial statements were approved and authorised for issue by the Board on 8 August 2023 and signed on its behalf by:

Stephen Stringer Susan Ralphs Claire Taylor Chair of the Board Board Member Company Secretary

Consolidated and Association Statement of Cash Flow

The notes on pages 45 to 80 form part of these financial statements.

Notes to the Financial Statements

1. Legal status

The Association is incorporated in England. The financial statements are prepared under historic cost convention modified for revaluation of investment properties and the transfer of assets and liabilities from BHA at fair value. The housing properties from BHA are shown at existing use value for social housing (EUV-SH)

The functional and presentational currency used is pound sterling.

On 1 April 2022, the Association converted from a private company limited by guarantee and registered charity to a Community Benefit Society registered under the Co-operative and Community Benefit Societies Act 2014.

The Association has two subsidiaries; Fairfax Housing Limited and Fairfax Design & Build Limited. Both companies are registered under the Companies Act. Fairfax Design & Build Limited started its operations during 2021/22 and Fairfax Housing Limited remained dormant since incorporation.

2. Accounting policies Transfer of engagements

On 9 January 2023, under the transfer of engagement, the assets and liabilities of BHA were transferred to Fairhive Homes Limited at the fair value. A review of accounting policies and estimates was undertaken to ensure uniformity and the classification of the transaction across the group. Any adjustments made as a result of the change in accounting policies or application of fair value are detailed in note 31 to the financial statements.

The transfer was accounted for as the “transfer of engagement” (gift), as defined in chapters 19 and 34 of FRS102.

Basis of accounting

The financial statements of the Association are prepared in accordance with UK Generally Accepted Accounting Principles (UK GAAP) including Financial Reporting Standard 102 (FRS 102) and the Housing SORP 2018: Statement of Recommended Practice for Registered Social Housing Providers and comply with the Accounting Direction for Private Registered Providers of Social Housing 2019.

Basis of consolidation

The consolidated financial statements present the results of Fairhive Homes Limited and its subsidiaries (“The Group”) as if they formed a single entity.

Uniform accounting policies have been adopted across the Group, and intercompany transactions and balances between have therefore been eliminated in full.

BHA’s results from the date of the transfer have been included in the consolidated statement of comprehensive income.

Business combinations

Where there is a business combination that is in substance a gift, any excess of the fair value of the assets received over the fair value of the liabilities assumed is recognised as a gain in the statement of comprehensive income. This gain represents the gift of the value of one entity to another and shall be recognised as income. Where the fair value of the liabilities exceeds the fair value of assets, the loss represents net obligations assumed and shall be recognised as an expense.

Going concern

The Association’s business activities, its current financial position and factors likely to affect its future development are set out within the Report of the Directors. The Association has in place long and medium term debt facilities which provide adequate resources to finance the committed development programme, reinvestment and the Association’s day-to-day operations.

The Board has reviewed cash flow forecasts and considered downside scenarios which allow for the potential impact of high inflation and falling house prices and delays in the timing of sales as well as increased arrears, voids and bad debts.

Having considered the forecast cash flow and scenario analysis the Board concluded that the Association has sufficient headroom on liquidity and will operate well within its loan covenants requirements including the risk trigger level set by the Board.

As a result, the Board is satisfied that there is a reasonable expectation that the Association has adequate resources to continue in operational existence for the foreseeable future, being a period of at least twelve months after the date on which the report and financial statements are signed. For this reason, it continues to adopt the going concern basis in the financial statements.

Value Added Tax

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

Turnover and revenue recognition

Turnover comprises rental and service charge income, income from shared ownership first tranche sales, other services included at the invoiced value (excluding VAT where recoverable) of goods and services and grants receivable from local authorities and Homes England.

Rental and service charge income is recognised from the point when properties under development reach practical completion or otherwise become available for letting, net of any voids. Income from first tranche sales is recognised at the point of legal completion of the sale. Revenue grants are recognised when the conditions for receipt of agreed grant funding have been met.

Charges for support services funded under Supporting People are recognised as they fall due under the contractual arrangements with Administering Authorities.

Interest payable

Interest is capitalised on borrowings to finance developments to the extent that it accrues in respect of the period of development if it represents either:

a) interest on borrowings specifically financing the development programme after deduction of social housing grant received in advance; or

b) a fair amount of interest on borrowings of the Association as a whole after deduction of social housing grant received in advance to the extent that they can be deemed to be financing the development programme.

Other interest payable is charged to the statement of comprehensive income in the year.

Financial instruments

Financial instruments which meet the criteria of basic financial instruments as defined in Section 11 of FRS 102 are accounted for under an amortised historic cost model.

Basic financial instruments are recognised at amortised historic cost.

Debtors

Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.

Creditors

Short-term trade creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.

Employee benefits

Short-term employee benefits and contributions to defined contribution plans are recognised as an expense in the period in which they are incurred.

Pension costs

The Association participates in four pension schemes; the Social Housing Pension Scheme (SHPS) and the Buckinghamshire County Council Pension Fund (BCCPF). Within the Social Housing Pension Scheme, the Association operates four benefit structures: two defined benefit and two defined contribution. The BCCPF and the SHPS final salary structure are closed to new entrants. The benefit structures open to new entrants are SHPS Career Average Revalued Earnings and SHPS defined contribution schemes.

Social Housing Pension Scheme

The scheme assets are measured at fair value. Scheme liabilities are measured on an actuarial basis using the projected unit credit method and are discounted at appropriate high-quality corporate bond rates.

The current service cost and costs from settlements and curtailments are charged against operating surplus. Past service costs are recognised in the current reporting period within the income and expenditure account. Interest is calculated on the net defined benefit liability. Re-measurements are reported in other comprehensive income. Please see note 13 for more details.

Buckinghamshire County Council Pension Fund

For the Buckinghamshire County Council Pension Fund (BCCPF), the operating costs of providing retirement benefits to participating employees are recognised in the accounting periods in which the benefits are earned. The related finance costs, expected return on assets and any other changes in fair value of the assets and liabilities, are recognised in the accounting period in which they arise.

The current service cost and costs from settlements and curtailments are charged against operating surplus. Past service costs are recognised in the current reporting period within the income and expenditure account. Interest is calculated on the net defined benefit liability. Re-measurements are reported in other comprehensive income. Please see note 13 for more details.

Housing properties

Housing properties are properties available for rent, and properties subject to shared ownership leases.

The Association applied a transitional relief available under FRS 102 to revalue housing properties transferred from the council in 2006 at the date of transition (1 April 2014) and to hold this value as ‘deemed cost’. Completed housing properties are stated at deemed cost less depreciation. All properties developed or purchased subsequent to transfer, are held at cost less depreciation. The cost is the cost of acquired properties, land, development costs, interest and improvements. Works to existing properties which replace a component that has been treated separately for depreciation purposes are capitalised as improvements.

Shared ownership properties are split proportionally between current and fixed assets based on the element relating to expected first tranche sales. The first tranche proportion is classed as a current asset and related sales proceeds included in turnover, and the remaining element is classed as fixed asset and included in housing properties at cost, less any provisions needed for depreciation.

On transfer of engagement from BHA, their completed housing properties along with the retained equity in shared ownership units are shown at fair value as EUV-SH.

Government grants

Government grants include grants receivable from Homes England, local authorities, and other government Associations. Government grants received for housing properties are recognised in income over the useful life of the housing property structure and, where applicable, its individual components (excluding land) under the accruals model.

Grants relating to revenue are recognised in the statement of comprehensive income over the same period as the expenditure to which they relate once reasonable assurance has been gained that the entity will comply with the conditions and that the funds will be received.

Grants due from government Associations or received in advance are included as current assets or liabilities.

Government grants received for housing properties are subordinated to the repayment of loans by agreement with Homes England. Government grants released on sale of a property may be repayable but are normally available to be recycled and are credited to a Recycled Capital Grant Fund and included in the statement of financial position in creditors.

If there is no requirement to recycle or repay the grant on disposal of the asset, any unamortised grant remaining within creditors is released and recognised through the statement of comprehensive income.

Where individual components are disposed of and this does not create a relevant event for recycling purposes, any grant which has been allocated to the component is released to the statement of comprehensive income. Upon disposal of the associated property, the Association is required to recycle these proceeds and recognise them as a liability.

On transfer of engagement from BHA, the capital grant was transferred to liabilities and will be reflected under long term liability. When the property the grant relates to has been disposed of or ceases to be used for social housing purposes, the liability is transferred to the Recycled Capital Grant Fund as a liability and a cost of disposal in the Statement of Comprehensive Income.

Other grants

Grants received from non-government sources are recognised using the performance model. A grant which does not impose specified future performance conditions is recognised as revenue when the grant proceeds are received or receivable. A grant that imposes specified future performance-related conditions on the Association is recognised only when these conditions are met. A grant received before the revenue recognition criteria is satisfied is recognised as a liability.)

Depreciation of housing properties

The Association separately identifies the major components which comprise its housing properties, and charges depreciation, so as to write-down the cost of each component to its estimated residual value, on a straight-line basis, over its estimated useful economic life. Freehold land is not depreciated.

The Association depreciates the major components of its housing properties over their expected useful lives on the following basis:

Impairment

Housing properties are assessed annually for impairment indicators at an individual property level, which is deemed to be a cash generating unit (CGU). Where indicators are identified an assessment for impairment is undertaken by comparing the asset’s carrying amount to its recoverable amount. Where the carrying amount of an asset is deemed to exceed its recoverable amount, the asset is written down to its recoverable amount, this is likely to be the value in use of the asset based on its service potential. The resulting impairment loss is recognised as an expenditure in the statement of comprehensive income. Where an asset is currently deemed not to be providing service potential to the Association, its recoverable amount is its fair value less costs to sell.

Other tangible fixed assets

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

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are depreciated over the periods shown below:

years Lifts 30 years

Leasehold properties are amortised over the life of the lease or their estimated useful economic lives in the business, if shorter.

Computer equipment 4 years

years

Computer software 2 to 4 years

Motor vehicles 4 years

Computer software, previously accounted for as Intangible assets has been reclassified and included in other tangible fixed assets.

Leased assets

Rentals payable under operating leases are charged to the statement of comprehensive account on a straight line basis over the terms of the leases.

Loan finance issue costs

Issue costs of long and medium term finance are deducted from the amount of loan drawn down. This cost is charged to the statement of comprehensive income evenly over the period of the loan.

Properties for sale

Shared ownership first tranche sales, completed properties for outright sale and property under construction are valued at the lower of cost and net realisable value. Cost comprises materials, direct labour and direct development overheads. Net realisable value is based on estimated sales price after allowing for all further costs of completion and disposal.

Provisions for liabilities

Provisions are recognised when the Association has a present obligation (legal or constructive) as a result of a past event, it is probable that the Association will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.

Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value using a discount rate. The unwinding of the discount is recognised as a finance cost in the statement of comprehensive income in the period it arises.

The Association recognises a provision for annual leave accrued by employees as a result of services rendered in the current

period, and which employees are entitled to carry forward and use within the next 12 months. The provision is measured at the salary cost payable for the period of absence.

Right to Buy

Under the terms of the transfer agreement, some of the proceeds from Right to Buy sales are shared with the Buckinghamshire Council (formally Aylesbury Vale District Council). On completion of a Right to Buy sale contract, the share of the proceeds receivable by the Association are credited to the statement of comprehensive income.

Reserves

The Association establishes restricted reserves for specific purposes where their use is subject to external restrictions.

Revaluation reserve

The difference on transition to FRS 102 accounting between the fair value of social housing properties transferred from Aylesbury Vale District Council and the historical cost carrying value is credited to the revaluation reserve.

Key accounting judgements in applying accounting policies and key sources of estimation

Preparation of the financial statements requires management to make significant judgements and estimates. The items in the financial statements where these judgements and estimates have been made are set out below.

Key accounting judgements

The following are the significant management judgements made in applying the accounting policies that have the most significant effect on the financial statements.

Capitalisation of property development costs

Distinguishing the point at which a project is more likely than not to continue, allowing capitalisation of associated development costs requires judgement.

After capitalisation management monitors the asset and considers whether changes indicate that impairment is required.

Categorisation of housing properties

The categorisation of housing properties as investment properties or property, plant and equipment based on the use of the asset requires judgement.

Financial Instruments

The Association has reviewed its funding agreements and have concluded that they meet the conditions of a basic financial instrument under section 11.9 of FRS102 inasmuch that they are contractual payments to the holder (lender), assessed in sterling in which the debt instrument is denoted and are either a positive fixed rate or a positive variable rate.

Key sources of estimation uncertainty

Information about estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses is provided below. Actual results may be substantially different.

Useful lives of depreciable assets

Management reviews its estimate of the useful lives of depreciable assets at each reporting date based on the expected utility of the assets. Uncertainties in these estimates relate to technological obsolescence that may change the utility of certain software and IT equipment and changes to decent homes standards which may require more frequent replacement of key components.

Fair value of BHA’s assets and liabilities

At the date of transfer, all BHA’s completed housing properties, along with the retained equity in shared ownership units acquired, were fair valued to their existing use value for social housing. Jones Lang LaSalle (JLL), carried out valuation using a discounted cash flow model on the entire housing portfolio. The key inputs into the valuations were the passing rent and the relevant cost bases associated, the discount rate, rent and

expenditure growth rates. The BHA’s loans were settled in full on 9 January 2023 (the date of transfer).

Defined benefit obligation (DBO)

Management’s estimate of the DBO is based on a number of critical underlying assumptions such as standard rates of inflation, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses, as analysed in Note 13 Pension schemes.

The sensitivity analysis disclosed in note 13 Pension schemes sets out the impact of a small change in the discount rates and mortality assumptions on the defined benefit obligation and projected service costs.

Allocation of value to land, structure and components

Value is split between components, land and structure: the land value is allocated first, then the component value and the remainder is allocated to structure. Value has been attributed to land and components based on cost.

Net realisable value of stock

Net realisable value is based on the estimated selling price less selling costs. Estimated selling prices were provided by external valuers and by reference to actual selling prices for completed developments. For schemes under construction, the estimated costs to completion are based on approved budget and forecast.

Rental and other trade receivables

The estimate for receivables relates to the recoverability of the balances outstanding at year end. A review is performed on outstanding debts to consider whether each debt is recoverable.

Investment in subsidiaries

Investments in subsidiaries are accounted for at cost less impairment in the individual financial statements.

3a. Turnover, cost of sales, operating costs and operating surplus

3a. Turnover, cost of sales, operating costs and operating surplus (continued)

3b. Turnover, cost of sales, operating costs and operating surplus/ (deficit)

3b. Turnover, cost of sales, operating costs and operating surplus (continued)

4. Particulars of income and expenditure from social housing lettings

– Group and Association

5. Units of housing stock– Group and Association

6. Operating surplus

This is arrived at after charging/ (crediting):

The remuneration paid to the auditors in respect of other services comprises: £1,800 for Right to buy audit confirmation and £9,200 for service charge audit.

7. Surplus on disposal of fixed assets

Group and Association

8. Interest receivable and other income

9. Interest payable and financing costs

10. Employees – Group and Association

Headcount (FTE):

The average number of employees expressed as full-time equivalents (FTE) calculated based on 37 hours, during the year was:

Salaries payable (including bonuses and pensions) to employees including Executive Management Team earning £60,000 or more were:

11. Board Members and Executive Directors - Group

The emoluments of the highest paid director, the Chief Executive, excluding pension contributions, were £203,616 (2022: £197,554).

The Chief Executive is a member of the Social Housing Pension Scheme. He is an ordinary member of the pension scheme and no enhanced or special terms apply.

11. Board Members and Executive Directors (continued)

Emoluments payable to Board Members (gross salary excluding expenses)

Non-executive Board members are not members of the pension scheme. Their emoluments for the year are set out below:

The Board members received £735.00 (2022: £212.00) for expenses during the year.

12. Tax on surplus on ordinary activities

The Association is registered with charitable rules under Co-operative and Community Benefits Societies Act and as such received charitable relief from Corporation Tax.

Any surplus made by a non-charitable Group member (Fairfax Design & Build Limited) has been donated to the Association under the deed of covenant.

13. Pensions

The Association participates in three pension schemes:

a) Social Housing Pension Scheme (SHPS) - defined benefit scheme

The scheme is a multi-employer scheme which provides benefits to some 500 nonassociated employers. The Scheme is a defined benefit scheme in the UK.

The last triennial valuation of the scheme for funding purposes was carried out as at 30 September 2020. A recovery plan has been put in place with additional annual deficit contributions of £209,253 paid during the financial year (2022: £111,882)

The scheme is classified as a ‘last-man standing arrangement’. Therefore the Association 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.

On transfer of engagement from BHA, the Association took over the responsibility for BHA’s SHPS defined benefit pension scheme. The details of that scheme are disclosed separately in the tables below.

We have been notified by the Trustees of the SHPS Scheme that it has performed a review of the changes made to the Scheme’s benefits over the years and the result is that there is uncertainty surrounding some of those changes. The Trustee has been advised to seek clarification from the Court on these items. This process is ongoing and the matter is unlikely to be resolved before the end of 2024 at the earliest. It is recognised that this is could potentially impact the value of Scheme Liabilities, but until Court directions are received it is not possible to calculate the impact of

this issue, particularly on an individual employer basis, with any accuracy at this time. No adjustment has been made in these financial statements in respect of this potential issue.

b) Buckinghamshire County Council Pension Fund (BCCPF)

The BCCPF is a multi-employer scheme, administered by Buckinghamshire County Council under the regulations governing the Local Government Pension Scheme, a defined benefit scheme.

The scheme is closed to new entrants. The employer’s contribution rate was 23.1% of pensionable salaries (2022: 23.1%).

The most recent actuarial valuation of the scheme was carried out as at 31 March 2023 by a qualified independent actuary. It showed £571k surplus with no additional contributions required for the period to 31 March 2026, when the next actuarial valuation is due.

Following consultation with members, the scheme was closed to future accruals from 1 April 2023. The Association has become a deferred employer in the scheme under the Deferred Debt Agreement.

c) Social Housing Pension Scheme (SHPS) - defined contribution scheme

It is funded and contracted out of the state pension scheme. The amount charged to the consolidated statement of comprehensive income represents the employer’s contribution payable to the scheme.

On transfer of engagement from BHA, the Association took over the responsibility for BHA’s SHPS defined contribution pension scheme.

Summary of accounting disclosures in relation to defined benefit schemes are set out on the next page.

13. Pensions

Consolidated Statement of Comprehensive Income:

gain/(loss) on defined benefit pension scheme:

Consolidated statement of financial position:

Defined benefit schemes

Principal actuarial assumptions used by the actuary at the statement of financial position date:

13. Pensions

13. Pensions

13. Pensions

14a. Tangible fixed assets housing properties – Group

14b. Tangible fixed assets housing properties – Association

14c. Tangible fixed assets housing properties –Group and Association

The net book value of housing properties comprises: Note

The Group assessed its portfolio for indicators of impairment at the statement of financial position date. This is an annual process and includes looking at the changes in government policy, materially higher than anticipated development costs, reduction in house market prices for shared ownerships properties held for sale, changes for market demand for properties and the properties with the most voids throughout the year.

A review of existing portfolio for indicators of impairment resulted in nil charge to the Statement of comprehensive income (2022: nil).

15. Other tangible fixed assets - Group and Association

16. Investment Properties – Group and Association

The Association’s investment properties are valued annually on 31 March at fair value, determined by JLL, an independent, professionally qualified valuer. The valuations were undertaken in accordance with the Royal Institute of Chartered Surveyors’ Appraisal and Valuation Manual.

The valuation is derived from current market rents and investment property yields for comparable properties, taking into account the nature, location or condition of the specific asset. Fair value has been determined through a desktop valuation.

Investment properties are valued using the investment method of valuation. There are two categories of investment property: commercial properties and garages. For the commercial properties the nature of the properties, the lease terms and the varying strength of the tenant covenant was considered before rental income was capitalised by applying all-risks yields of between 8% and 12%. Garage rental income has been valued applying a yield of 10% to estimated net rental income.

There is a loss on revaluation of investment property of £27,000 (2022: £220,000), which has been recognised in the Consolidated statement of comprehensive income.

17. Properties held for sale – Group and Association

18. Trade and other debtors

19. Creditors: amounts falling due within one year

20. Creditors: amounts falling due after more than one year

21. Recycled capital grant fund – Group and Association

The grants have been recycled into this fund, following property sales under the preserved Right to Acquire.

22. Deferred capital grant – Group and Association

23. Loans and borrowings

Security

The bank loans and private placements are secured by a fixed charge over the Association’s properties. In addition there is a floating charge over the assets of the Association in favour of the security trustee.

Terms of repayment and interest rates

The interest on long term loans and note purchase agreements are paid in quarterly instalments over the life of the loans. £68m of the loans are bullet payments and with our two note purchase agreements, one agreement is for 30 years which is repaid on a bullet payment basis, whereas the second agreement is for 35 years and is repaid on a phased basis. The loans are fully repaid between 2022 and 2035. The average cost of funding at 31 March 2023 is 3.6% (2022: 3.6%).

At 31 March 2023 the Association had undrawn loan facilities arranged and available of £80 million (2022: £100 million).

24. Capital commitments – Group and Association

The above commitments will be financed through borrowings which are available for draw down under existing arrangements.

25. Financial Instruments - Group

The Group’s financial instruments may be analysed as follows:

Borrowing facilities

The Group has undrawn committed borrowing facilities. The facilities available at 31 March 2023 in respect of which all conditions precedent have been met were £80 million (2022: £100 million).

26. Provisions for liabilities – Group and Association

The leave pay provision represents holiday balances accrued as a result of services rendered in the current period and which employees are entitled to carry forward. The provision is measured as the salary cost payable for the period of absence.

27. Contingent liabilities – Group and Association

Amortised SHG represents a contingent liability of £4.2 million including £2.4m from BHA transfer (2022: £1.6m). This contingent liability will be realised if the assets to which the amortised grant relates to are disposed.

28. Share capital - Association

29. Investment in subsidiaries

The Association has two wholly owned subsidiaries: Fairfax Housing Limited and Fairfax Design & Build Limited. Fairfax Design & Build Limited started its operations during the financial year ended 31 March 2022. Fairfax Housing Limited remained dormant since incorporation. The Association holds £1.00 share in each subsidiary and has the right to appoint members to the Board and thereby exercises control over them.

Both subsidiaries are non-regulated registered companies under the Companies Act 2006. The registered office is the same for all of the group entities. The Association is the ultimate parent undertaking.

30. Related party disclosure – Association

Intergroup transactions and balances with Fairfax Design & Build Limited (FDBL)

The Association transacts with FDBL, a non-regulated entity, whose principal activity is to provide design and build services. As FDBL does not employ any staff, it buys staff services to manage various design and build projects, and buys management services from the Association.

The Association pays for the design and build services provided by FDBL and the recharge includes an administration fee, calculated as 2% of the contract costs.

Board members:

During the year there was one tenant member on the Board: Julian Blundell-Thompson, who resigned in September 2022. His tenancy was on normal commercial terms and as such his position does not afford him any additional benefits compared with other tenants.

During the year Councillors of Buckinghamshire Council; Ade Osibogun (from 9th January 2023) and Angela Macpherson served on the Board. All transactions made with the Local Authority were made at arm’s length on normal commercial terms; members cannot use their position to their advantage.

31. Business Combination – Group and Association

On 9 January 2023 the Association accepted transfer of engagement from Buckinghamshire Housing Limited (BHA). The transfer was accounted for as the “transfer of engagement” (gift), as defined in the chapters 19 and 34 of FRS102.

The assets and liabilities were transferred to the Association at fair value. The key areas impacted by the fair valuation were housing properties and other fixed assets. BHA’s loans were repaid on the transfer and the SHPS pension liability transferred to the Association. The business of BHA was transferred to the Association as a gift to the value of £3.0 million, being the fair value less any associated costs of the business combination. This is shown as a Gain arising from Gift of Net Assets in the Consolidated statement of comprehensive income.

31. Business Combination - Group and Association

As a result of the business combination, the consolidated statement of comprehensive income includes activities of BHA from 9 January 2023 to 31 March 2023.

Due to a similar nature of the Association and BHA legal status and business activities, the accounting policies and estimation methodologies are closely aligned. Therefore, there was not a significant amount of further harmonisation required and there were negligible changes to the accounting policies.

The Association incurred one off costs of around £160k in relation to the business combination. These costs included the cost of undertaking the due diligence exercise, project management costs and legal and professional advice on governance matters, loans repayment and pension transfer.