3.
Minimum levels of reserves.
3.1 YHN’s reserves are formed from the cumulative profits and losses it has made throughout its existence. YHN uses reserves when expenditure exceeds income in the financial year. It is prudent to hold a level of reserves that can act as a buffer against unforeseen financial shocks, or allow the Group to carry out additional expenditure to create future efficiencies. At the Board Away Day on 20 June, a minimum level of reserves of £3.1m was discussed. This amount would provide financial contingency against possible financial risks including the following risks: • •
Further decline of NFS rental income including the additional 1718 pressure of £0.5m Further decline of Ostara income Further NCC efficiency requirements
The reserves for YHN Group (prior to pension deficit) stand at £7.33m. This is well ahead of target, and means that our Transformation fund of £2.8m remains affordable. Closing Reserves Less: Transformation plans
£7.33m (£2.80m)
Total
£4.53m
Target reserves
£3.10m
Even after the Transformation fund is omitted, reserves are at 146% of target. Board is asked to approve the new target for minimum level of reserves (excluding pension liabilities) at £3.1m.
4.
The Options / Appraisal
4.1 Feedback from Group Audit Committee scrutiny Group Audit Committee received a detailed report on the Annual Accounts for all Group companies, and feedback from EY on the course and findings of the audit. EY have given the statements a ‘clean’ audit report, that is, the statements give a “true and fair view of the company’s affairs” and no material errors have been found. Having had the opportunity to review the financial statements and audit results report from EY, Group Audit Committee has recommended that Board approve the Annual Accounts and supporting documents.