directors’ report, strategic report and consolidated ... · rory o’byrne (vice-chair &...

Directors’ Report, Strategic Report and Consolidated

Financial Statements for year end 31 March 2016

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SevernsideHousingDirectors’Report,StrategicReportandConsolidatedFinancialStatementsYearended31stMarch2016

Contents

CompanyInformation,Auditors,AdvisersandBankers Page3

BoardDirectors,ExecutiveDirectors Page4-7

ReportoftheBoard Page8

StatementofResponsibilitiesoftheBoard Page17

StrategicReport(incorporatingOperatingandFinancialReview) Page19

IndependentAuditorsreporttotheDirectorsofSevernsideHousing Page34

ConsolidatedStatementofComprehensiveIncome Page36

ConsolidatedStatementofFinancialPosition Page37

Consolidated&AssociationStatementofChangesinEquity Page38

ConsolidatedCashFlowStatement Page39

NotestotheFinancialStatements Page40

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CompanyInformation,Auditors,AdvisersandBankers

Registeredoffice Severnside Housing, Brassey Road, Old PottsWay,Shrewsbury,Shropshire,SY37FA

SevernsideHousing Registrationnumber: 04025816

HomesandCommunitiesAgency(HCA)

Registrationnumber:LH4325

AWaltersElectricalContractorsLimited Registrationnumber: 03141171

AWaltersElectricalLimited Registrationnumber: 08331962

ShrewsburyHomesForAll Registrationnumber:07492338

CharityRegistrationnumber:1141044

SevernsideCommunityAssociationLimited Registrationnumber:031977R

ShropshireCommunityHousingLimited Registrationnumber:06474307

ExternalAuditors KPMGLLP,OneSnowhill,SnowHillQueensway,Birmingham,B46GH

InternalAuditors Service Matters, Garden Court, Harry WestonRoad,Binley,Coventry,CV32SU

Solicitors Anthony Collins, 134 Edmund Street,Birmingham,B32ES

TrowersandHamlins,HeronHouse,AlbertSquare,ManchesterM25HD

Bankers National Westminster Bank Plc,8MardolHead,Shrewsbury,SY11HE

Funders NationwideBuildingSociety,KingsParkRoad,MoultonPark,Northampton,NN36NW

CanadaLifeInvestments,1-6LombardStreet,LondonEC3V9JU

ShropshireCouncil,TheShirehall,AbbeyForegate,ShrewsburySY26ND

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BoardDirectorsandExecutiveDirectors

SevernsideHousing

BoardMembersandExecutiveDirectors

BoardofDirectors Appointed Resigned

PaulSmith(Chair) January2013

SarahBoden(ChiefExecutive) November2010

GarethEvans January2014

ElaineGanderton(Chair,AuditandRiskCommittee) July2008

AlysonLanning November2010

AndrewParkes November2010

PeterPrice January2014

Rory O’Byrne (Vice-Chair & Chair, Nominations andRemunerationCommittee)

January2010

PaulWilliams January2013

MalcolmPrice(HousingPortfolioholder–ShropshireCouncilNominee)

September2010

MichaelRoughan(Co-optee) April2015

ExecutiveDirectors Appointed Resigned

SarahBoden

ChiefExecutive

January2006

PeterDonovan

ResourcesDirector

October2001

SueGroom

NeighbourhoodandCommunityServicesDirector

July2006

IanGardner

AssetManagementDirector

December2009 July2015

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CompanySecretary

IreneMolyneux January2012

AWaltersElectricalContractorsLimited



MikeRoughan(Chair) December2012

PaulBeaman December2012

SarahBoden(ChiefExecutive) December2012

PeterDonovan(ResourcesDirector) December2012

ElaineGanderton December2012

ManagingDirector

AndyWalters December2012

CompanySecretary

IreneMolyneux December2012

AWaltersElectricalLimited



RobinPritchard(Chair) December2012

SarahBoden December2013

PeterDonovan December2012

MikeRoughan May2014

PaulWilliams December2012

ManagingDirector

AndyWalters December2012

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CompanySecretary

IreneMolyneux December2012

ShrewsburyHomesforAll

CharityTrusteesat31March2016


ChristineAllen(Chair) April2011

HelenClaireCracknell(Treasurer) April2011

DeborahGriffiths March2013

SueGroom March2013

AmeliaHutchins April2011 October2015

AngusMarshall May2012

NeliaMaggs April2011

AnnWalters April2011

SevernsideCommunityAssociationLimitedBoardMembersat31March2016


PaulSmith March2014

SarahBoden March2013

AlysonLanning May2014

RoryO’Byrne March2013

CompanySecretary

IreneMolyneux March2013

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SevernsideCommunityHousingLimitedBoardMembersandExecutiveDirectorsat31March2016


RobinPritchard February2008

CompanySecretary

PeterDonovan February2008

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ReportoftheBoardTheBoardpresentsitsfinancialreportandtheGroupauditedfinancialstatementsfortheyearending31March2016.NatureofSevernside’sbusinessSevernsideHousing(SH)isaCompanyLimitedbyguaranteeformedthroughatransferofsocialhousingpropertiesfromShrewsburyandAtchamBoroughCouncil(SABC)inOctober2001.Itsprincipalactivitiesarethemanagementanddevelopmentofaffordablehousing.A.WaltersElectricalContractorsLimitedisawhollyownedtradingsubsidiaryofSHandprovideselectricalservicestoSH.AWaltersElectricalLimitedisawhollyownedtradingsubsidiaryofSHandprovideselectricalservicestoprivateandcommercialclientsotherthanSevernside.ShrewsburyHomesforAll(SHFA)isaRegisteredCharitywhichisawhollyownedtradingsubsidiaryofSHandprovideshomelesspreventionandhousingadviceservices.On1April2016theGroupenteredintoaDeedofTerminationtoresignasamemberofSHFA.SevernsideCommunityAssociationLimitedisanIndustrialandProvidentSocietyandexemptcharitywhichisawhollyownedtradingsubsidiaryofSHandmanagesgrants,SHCommunityChestfundinganddonations.SevernsideCommunityHousingLimitedisaprivatelimitedcompanywhichisawhollyownednon-tradingsubsidiaryofSH.CorporateObjectivesSH’sCorporateObjectiveswerereviewedin2014torespondtochangesintheeconomicandpoliticalenvironment,combinedwiththechangestoitsfinancialcapacityandthecreationofthesubsidiaries.TheJuly2015Budget,whichintroducedenforcedrentreductionsforthenextfouryears,hasrequiredSHtostreamlinesomeactivitiestoidentifyequivalentcostsavingstomaintainfinancialstability.Therefore,theBoardhasagainreviewedtheCorporatePlanresultinginsomeamendmentstoSH’sprincipalactivities,aimsandobjectives.SHcurrentCorporateObjectivesfor2015-18are:

• Customers–Providingexcellentcustomerservice• Communities–Contributingtothedevelopmentofsustainable,thrivingcommunities• Business–Financiallystrongwithknowledgeablecommercialandcaringstaff

SHVisionis:“ExcellentHomesinthrivingcommunities.”SHAmbitionis:“Toprovideandmaintainexcellenthomes,createopportunitiesandofferarangeofservicestobuildthrivinglocalcommunities.”

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SHValuesare:Integrity: Wewillbehonest,truthfulandtrustworthywithcustomers,partnersandstaff;Accountable:Wewillbeopen,transparentandresponsibleinandforallouractions;Fair: Wewillactinanethicalmanner,embracingandcelebratingdiversityand

ensuringprobityRespectful: Wewilltreatcustomers,partnersandstaffwithcareandrespect;Effective: WewilldelivercreativeandinnovativesolutionsPartnership:Wewillworkwithcustomersandpartnersinaprofessional,efficientand supportivewaytoachieveourobjectivesSevernside’sPrincipalActivitiesandAimsSHprincipalactivitiesarethemanagementanddevelopmentofaffordablehousing.SHprincipalaimsinclude:

• Todeliverthecoreservicescustomersneed;• Toprovidewellmaintainedhomes;• Toencouragecustomerinvolvementandsatisfaction;• Toprovidecosteffectivesupporttothemostvulnerableinourneighbourhoods;• Tohelpcustomerstomanagetheirfinancesandtounderstandandplanfortheimpactof

welfarereform;• Toensurenewcustomersare“tenancyready”;• Toencouragesupportanddevelopgreaterindividualandcommunityresponsibility;• TodeveloptrainingskillsandemploymentopportunitiesforSHCustomers;• ToensurethatweoperateinamannerthatrespectsourenvironmentandreflectsSH’s

values;• Tomaximiseincome;• Todevelopanddeliverhighquality,commercialbusinessstreams;• Todevelopandacquiremorehomes;• Toensureexcellentgovernance;• Tohaveskilledandmotivatedstaff;• Todemonstrateandcontinuouslyimprovevalueformoney;and• TogrowthebusinessoftheGroup.

Thereforethecurrent2015-18CorporatePlan–

• ExplainsSH’spurposeandethosthroughourvision,ambitionandvalues;• Setsoutwhatwewanttoachievethroughthestrategicobjectives;• EnablesSHtoidentifyandfurtherdevelopthepartnershipsandalliancesneededtodeliver

communityandbusinesspriorities;• Respondstochangesbeingintroducedthroughkeynationalpolicydecisions;• Buildsontheachievementsandlearningtodate;• Enablesustoplanourresourcestodelivercustomerandbusinesspriorities;• Captures the commitment of SH and its subsidiary companies to our customers, their

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homesandourcommunities;and• EnsuresthateverypartofSH,ourpartnersandstakeholdershaveasharedunderstanding

ofwhatwewanttoachieveandhowwewanttodoit.

BusinessReviewDetailsofperformancefortheyearandfutureplansaresetoutintheStrategicReviewfollowingthereportoftheBoard.StatementofRegulatoryComplianceSHisregisteredwithandregulatedbytheRegulationCommitteeoftheHomesandCommunitiesAgency(HCA).InlightofpublicisedchangestotheHCARegulatoryFrameworkwitheffectfrom1April 2015, SHhadmadeadjustments andenhancements to systems, policies andprocesses toensurethatSHcouldmeetthe2015RegulatoryFrameworkstandards.SH’s levelofcomplianceagainst the standards has been tested and the Board is pleased to confirm that SH is fullycompliantwiththerequirementsoftheHCA2015RegulatoryFramework.

TheHCAmonitorsandreportsoncompliancewiththeRegulatoryFrameworkeconomicstandardsnamely:

• GovernanceandFinancialViability• Rent• ValueforMoney

TheHCAregulatoryjudgementforSHinFebruary2016confirmedthatSHhadmaintaineditscompliancewiththeregulatorystandardsandgaveSHgradingsofG1andV1,thehighestgrades,forGovernanceandFinancialViability.InrespectoftheFinancialViabilityassessmentitwasstatedthat:–

• TheprovidermeetstherequirementssetoutinGovernanceandFinancialViabilitystandardoftheRegulatoryFrameworkinrelationtofinancialviability.

CustomersareactivelyinvolvedindecisionmakingthroughtheResidentSenateandCustomerPanelandpartoftheirroleisscrutinisingandassessingperformanceagainsttheHCARegulatoryFrameworkconsumerstandardsnamely:

• TenantInvolvementandEmpowerment• Home• Tenancy• NeighbourhoodandCommunity

DetailsoftheseassessmentsandperformanceareincludedintheAnnualReporttoCustomers.TheResidentSenatehasamaximummembershipofnine,includingtwoBoarddirectors.MembersworkcloselywithotheractivelyinvolvedresidentswhoparticipateinourCustomerPanelandasresidentinspectors.TheSenatehasresponsibilityfordecisionmaking,shaping

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servicedeliveryandrevisingpolicyandprocedures.Itmeetsformallyonaquarterlybasisandinformallymorefrequently.SHprovidesacustomerlearningprogrammedeliveredannuallytoincreasetheskillsofitscustomerstohelpwithemploymentopportunities.During2015-16,thelearningprogrammedeliveredover137coursesto480customersandstakeholders.Werobustlymonitorcomplaints.Duringtheyearwereceived58complaintsofwhichonewasescalatedtostage2andafurtheronetostage3.Atstage3,thecomplaintwaspartiallyupheldand,inaccordancewithSH’scustomarypractice,learningpointswereidentifiedwhichSHhasimplementedtoimproveourservicetocustomers.NHFCodeofGovernanceSHhasadoptedthe2015NationalHousingFederation(NHF)CodeofGovernanceandCodeofConduct.SHreviewscomplianceagainsttheseCodeseachyearandconfirmsthatitiscompliant.SHEmployeesSHiscommittedtoinvestinginemployeestoensureSHisanorganisationpeoplewanttoworkforandwheretheyfeelvalued.ThisisevidencedbyourInvestorsinPeopleGoldStandard.SH’sstrengthliesinthequalityandcommitmentofallitsemployeestomeetcompanyobjectivesandcustomerexpectations.InformationissharedandstaffareconsultedthroughmonthlybriefingswiththeChiefExecutiveandatregularteammeetings.Werecognisethatthesuccessofourbusinessdependsonthequalityofourmanagersandstaff.ItisthepolicyofSHthattraining,careerdevelopmentandpromotionopportunitiesbeavailabletoallemployees.In2015/16SHinvestedover£130,000instafftraining.Nearly200traininganddevelopmenteventsorconferenceswereattended.Thesuiteofe-learningpackageswasfurtherdevelopedandover400e-learningcourses/assessmentswerecompleted.AnumberofprofessionalqualificationswerealsofundedbySH.InJanuary2016SHlaunchedtheAspireProgramme,abespoke developmentprogrammeaimedatseniorteamleadersandmiddlemanagerstoequipmanagerswiththeskillsandconfidencetooperateallofSH’speoplepolicies.Theprogrammewillalsoenhanceinterpersonalskillssomanagerscanmanagetheirteamseffectively.Theprogrammewillbedeliveredwithablendofexternalprofessionaltrainersandin-housesubjectmatterexperts.Aspirewillrunfortheremainderofthe2016calendaryearandwillcoverfourdiscretemodules.SHhasanapprenticeprogrammeandin2015/16theGroupemployedeightapprentices,includingfivewithsubsidiaries.SHiscommittedtosupportingthethreerecognisedTradeUnionsthatarerepresentedwithinSHandregularlymeetandconsultwiththemviatheJointNegotiatingConsultativeCommittee(JNCC).Employeesarealsoencouragedtocontributetotherunningofthebusinessthroughstaffconferences,workinggroups,comprehensiveservicereviews,corporatebriefingsessions,oneto

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onemeetings,andteammeetingsandbydevelopingtheirpersonalcompetenciesthroughtraininganddevelopment.TheChiefExecutive,ResourcesDirectorandNeighbourhood&CommunityServicesDirectorareemployedonseparatetermstootherstaff,theirnoticeperiodsbeingsixmonths.Theyareentitledtootherbenefitssuchastheprovisionofacarallowanceandhealthcareinsurance.TheAssetManagementDirectorleftSHinJuly2015andtheroleiscurrentlybeingfilledbyanInterimDirectoremployedonafixedtermcontract.PensionAllSHstaffaregivenopportunitytoparticipateinaPensionScheme.ThemajorityofSHStaffaremembersoftheShropshireLocalGovernmentPensionScheme,adefinedbenefit(finalsalary)pensionschemewhichwasclosedtonewentrantsinMarch2010.EffectivefromApril2010,allSHstaffareentitledtojointheSevernsideDefinedContributionSchemewhichistheSHvehicleforpensionauto-enrolment.TheChiefExecutiveandpermanentmembersoftheExecutiveTeamareallmembersoftheShropshireLocalGovernmentPensionScheme.Theyparticipateintheschemeonthesametermsasallothereligiblestaff.CorporateGovernanceTheBoardDirectorsandExecutiveDirectorsofSHaresetoutonpages4-5.TheBoardDirectorsaredrawnfromawidebackgroundbringingtogetherprofessional,commercialandlocalknowledgeandexperiencewhichismatchedtothecurrentneedsofthebusinessTheBoardhas11DirectorsincludingtheSHChiefExecutive,oneco-opteeand,until1April2016,anomineefromShropshireCouncil.Witheffectfrom1April2016,SHhasbecomearegisteredcharityand,inamendingitsArticles,ShropshireCouncilnolongerhastherighttoappointanomineetotheBoard.However,givenhisskillsandexpertise,itwasdecidedthatthepreviousCouncilnomineeshouldbecomeanindependentmemberontheBoard.Duringtheyear,theBoardreceivedawiderangeofreportsrelatedtobusinessactivities,includingreportsfromsubsidiaryBoardslinkedtoprovidingeffectiveoversightoftheiractivities.InordertorespondtothefinancialrestrictionsimposedonRegisteredProviders(RPs)bytheJuly2015Budget,therehasbeenaparticularemphasisonbusinessplanning,stresstesting,riskmanagementandacorporateplanreviewtoensureSH’sfuturestability.Inaddition,during2015/16,theBoardconsideredtwomajorstrategicbusinessproposals.ThefirstoftheseinvolvedtheBoardhavingdetaileddiscussionswithregardtothemeritsofSHadoptingcharitablestatus.TheBoardagreedthatitwasinthebestinterestsofthebusinesstobecomeacharityandSHconsultedwidelywithregardtotheproposalthatSHbecomearegisteredcharityeffectivefrom1April2016.MembersingeneralmeetingagreedthenecessarychangestoSHArticlesand,therequiredconsentstothechangeofSHstatushavingbeenobtainedandtherequirementsoftheCharityCommissionhavingbeenmet,SHbecamearegisteredcharityon1April2016.

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ThesecondmajoritemconsideredbytheBoardwasapotentialmergeropportunity.TheSHChiefExecutivewasapproachedbyHousingPlus,anotherRegisteredProvider(RP)toascertainwhetherSHwouldbeinterestedinenteringintomergerdiscussions.TheBoarddiscussedthisopportunityandagreedthatwhilstSHdidnothavetomergegivenitsfinancialstandingandfullyfundedbusinessplan,thiswassomethingthatSHshouldactivelyexploregiventhechallengingexternalenvironmentbut,onlyontheunderstandingthatanymerger,wereittomaterialise,hadtobeinthebestinterestsofexistingandfuturecustomersandenableacombinedorganisationtodelivermoretogetherthanthetwoorganisationsinvolvedcoulddeliverseparately.Duringtheyear,mergerdiscussionshavegonewellandintensiveduediligenceworkwasundertakenwhichindicatedthattherewasapotentialfitbetweenthetwoorganisationsonmanylevels.InMarch2016,whentheoutlinebusinesscasewasconsidered,itwasagreedthatafullbusinesscaseshouldbeprepared.InMay2016,whenthefullbusinesscasewasconsidered,theBoardagreedthatnecessarystepsshouldbetakentoeffectamergerofthetwobusinessesduringthe2016/17financialyear.BoardDirectorsandExecutiveDirectorsattendregularin-housetrainingeventswhichaddressareasofspecificinterestrelatedtocurrentbusinessactivitiesidentifiedbyDirectors,togetherwiththoserelatedtodevelopmentsintheexternalenvironment.Inaddition,allDirectorsareencouragedtoattendoutsideeventsandseminarstoenhancetheirexperienceandknowledgeandtonetworkwithotherstoensureSHproactivelyadaptstothechangingenvironmentanddeliversgoodservicestoallcustomers.Onanannualbasis,BoardDirectorsparticipateinindividualandwholeBoardappraisalexercises.In2015/16,thecollectiveresultsoftheindividualappraisalsandthefindingsfromtheindependentwholeBoardreview,informedtheBoardactionplanwhichhassubsequentlybeenconsolidatedintoarevisedGovernanceImprovementPlan.ThedeliveryoftheGovernanceImprovementPlanisoverseenbytheNominationsandRemunerationCommittee.ServicecontractsAllBoardDirectors,includingthoseonsubsidiaryBoards,areissuedwithacontractforservicesandtheremunerationlevelisreviewednotlessthaneverythreeyearstoensurethatpaymentlevelsareproportionategivenSH’ssize,complexityandresourcesandareinlinewithindustrynorms.TheremunerationofDirectorswasreviewedinSeptember2015andtheBoardissatisfiedthatBoardremunerationremainsappropriate.ThefeespaidtoSHDirectorsaresetoutatpages58-59.CommitteesoftheBoardTheBoardisservedbytwospecialistcommitteesthatscrutiniseandoverseethefollowingareasofactivityforbothSHanditssubsidiarycompanies:

• Audit&Risk:TheCommitteehasfourmembersandmeetsnotlessthanfourtimesayear.

Itisresponsibleforoverseeingtheeffectivenessofthesystemofinternalcontrols,agreeingtheannualinternalauditplan,monitoringitsdeliveryandthatofinternalandexternalauditorsandprovidingrelevantreportstotheSHBoardandsubsidiarycompanyBoards,includingreportsonriskmanagementarrangements.TheCommitteealsoplaysa

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formativeroleinthedevelopmentanddeliveryofSH’svalueformoneyandassurancereportingarrangements.

• RemunerationandNominations:TheCommitteehasthreemembersandmeetsnotless

thantwiceayear.ItisresponsibleforoverseeingandprovidingguidanceonnominationstotheSevernsideBoard,itsCommitteesandtosubsidiarycompanyBoardsandrecommendingappropriateremunerationlevels.TheCommitteealsoagreestheremunerationofseniorstaff,makingrecommendationstotheBoardinrespectoftheremunerationoftheChiefExecutive.

ResidentSenateTheResidentSenatecurrentlyhas6members.Itsroleistoscrutiniseperformance,decisionmaking,shapingservicedeliveryandrevisingpolicyandprocedures.TheResidentSenatepresentstotheBoard‘GreenPapers’withrecommendationsforchangeandimprovement.TheExecutiveTeamprovides‘ManagementComment’withregardtotherecommendationsthataremadeandtodate,theBoardhasacceptedallSenaterecommendationsforimplementation.Togetherwithotherinterestedcustomers,theResidentSenateiscurrentlyundertakingareviewofSH’scustomerinvolvementstructurewithaviewtostrengtheningexistingarrangementsincludingmaximisingtheexperienceofexistinginvolvedcustomers.RecommendationswillbeputforwardtoensurethatSHhasinplaceasustainableandaccessiblemodelofcustomerinvolvement,engagementandconsultation.

CorporatePlanTheBoard’sthreeyearCorporatePlanisdeliveredbytheChiefExecutivewhoissupportedbytheResourcesDirector,NeighbourhoodandCommunityServicesDirectorandtheInterimAssetManagementDirector.IndemnityInsurancepoliciesindemnifyBoardDirectorsandofficersagainstliabilitywhenactingonbehalfofSH.SubsidiaryBoardsTheSHBoardisresponsibleforagreeingappointmentstosubsidiaryBoardsandhastherighttoremoveBoardDirectorsshouldtheneedarise.EachAWalterssubsidiaryBoardhasfiveDirectorscomprisingthreenon-executiveandtwoexecutiveDirectors,namelytheChiefExecutiveandSHResourcesDirector.

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SHFAhas7Trustees,SHhasnominatedtwopeopletoserveontheBoardofTrusteesofSHFA,theNeighbourhoodandCommunityServiceDirectorandtheHeadofFinanceandPerformance,whohavesincebothresignedfollowingthesigningoftheDeedofTerminationbetweenbothparties.SevernsideCommunityAssociationLimitedhasfourDirectors,includingtheSHChiefExecutive.SevernsideCommunityHousingLimitedhasoneDirector.EqualityandDiversitySHiscommittedtoequalopportunities.SHhasadetailedEqualityDiversityandInclusionStrategyandActionPlanwhichisreviewedeverythreeyears.EqualityManagementReviewsorimpactassessmentsarecompletedonallgroupStrategiesandPoliciestoensurethattheycomplywiththeEqualityAct2010anddonotdiscriminateagainstordisadvantageanyoftheprotectedgroups.SHconductsregulartrainingforBoard,StaffandCustomersandwasawardedbyStonewalltheWestMidlands“MostImprovedEmployer”in2014.Sincethisaward,SHhasfurtherimproveditspositionandmoveduptheIndexachievingapositionof13/30withinsector.Alsoduring2015,followinganassessmentprocess,wewereawardedthe“DiversityNetworkAccreditation”fromtheHousingDiversityNetwork.HealthandSafetySHiscommittedtomaintainingthehealthandsafetyofitsemployees,customersandthegeneralpublic.Ourinhouseworkforce(SevernsideHousingPropertyServices)andourelectricalcontractingsubsidiariesareaccreditedbytheContractorsHealthandSafetyAssessmentScheme(CHAS).TheSHSeniorManagementTeamleadsonimprovinghealthandsafety,monitorsprogressregularlyandensuresthatitsmanagersandcontractorsareawareoftheirhealthandsafetyresponsibilitieswhilstundertakingtheirduties.TheBoardandAuditandRiskCommitteereceivereportsinrespectofHealthandSafetyperformanceandcompliancewithstatutoryobligations.RiskManagementTheprocessforidentifying,evaluatingandmanagingthesignificantrisksfacedbySHison-goingandhasbeeninplacethroughouttheperiodcommencing1April2015uptothedateofapprovalofthereportandfinancialstatements.Asanintegratedpartoftheagreedriskmanagementframework,SHmaintainsakeyriskregister.TheChiefExecutivereportstotheBoardonthemanagementofkeyrisksnotlessthanonaquarterlybasisandtheAuditandRiskCommitteehasdelegatedresponsibilitiesinrespectoftheoversightofriskmanagementarrangementsandperformance.FurtherinformationonSH’sriskmanagementarrangementscanbefoundatpages30-32.

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In2015/16,inresponsetochangesintheexternalenvironmentincludingthoserelatingtoenforcedrentreductionsforfouryearsfrom1April2016introducedbytheJuly2015budget,theSHBoard,throughtheAuditandRiskCommittee,revieweditsriskmanagementandassurancearrangements.ThepurposeofthisreviewwastoensurethatthesearrangementsremaincompliantwithbestpracticebothinsideandoutsidethehousingsectorandprovideappropriateinformationtoenableSHtoidentifyandaddresspromptlyanyemergingriskstothebusiness,particularlythoselinkedtoanyadverseimpactfromtheimplementationofrentreductionsandtheimpactofwelfarereformchangesonourcustomers.InternalControlsAssuranceTheBoardacknowledgesitsoverallresponsibilityforestablishingandmaintainingthewholesystemofinternalcontrolandforreviewingitseffectiveness.Thesystemofinternalcontrolisdesignedtomanage,ratherthaneliminate,theriskoffailuretoachievebusinessobjectives,andtoprovidereasonableassuranceagainstmaterialmisstatementorloss.Keyelementsofthecontrolframeworkinclude:

• BoardapprovedtermsofreferenceanddelegatedauthoritiesforCommitteesandtotheChiefExecutive.

• Clearlydefinedmanagementresponsibilitiesfortheidentification,evaluationandcontrolofsignificantrisks.

• Robuststrategicandbusinessplanningprocesses,withdetailedfinancialbudgetsandforecasts.

• Formalrecruitment,retention,traininganddevelopmentpoliciesforallstaff.• Establishedauthorisationandappraisalproceduresforsignificantnewinitiativesand

commitments.• Asophisticatedapproachtotreasurymanagementwhichissubjecttoexternalrevieweach

year.• RegularreportingtotheappropriateCommitteeonkeybusinessobjectives,targetsand

outcomes.• Boardapprovedprobity,whistle-blowingandanti-theftandanti-briberyandcorruption

policies.• Boardapprovedfraudpolicies,coveringprevention,detectionandreporting,togetherwith

recoverabilityofassets.• Regularmonitoringofloancovenantsandrequirementsfornewloanfacilities.• Robustassuranceframeworktomonitorcorporateplanobjectives

AfraudregisterismaintainedandisreviewedbytheAuditandRiskCommitteeonaquarterlybasis.TheBoardcannotdelegateultimateresponsibilityforthesystemofinternalcontrolbuthasdelegatedauthoritytotheAuditandRiskCommitteetoregularlyreviewtheeffectivenessofthesystemofinternalcontrol.TheBoardreceivesAuditandRiskCommitteequarterlyreportsandmeetingminutes.TheAuditandRiskCommitteehasreceivedtheExecutiveteam’sannualreviewoftheeffectivenessofthesystemofinternalcontrolforSH,andtheannualreportoftheinternalauditor,andhasreporteditsfindingstotheBoard.

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BasedontheInternalAuditorsgivingadequateassurancethatSHoperatesaneffectiveinternalcontrolenvironmentbasedontheareastheyhaveauditedintheyearwithinthescopeofthosereviews,theBoardconfirmsthattheinternalcontrolswithintheorganisationmeettherequirements.Statementofdirectors’responsibilitiesinrespectoftheStrategicReport,theReportoftheBoardandthefinancialstatementsTheBoardisresponsibleforpreparingtheStrategicReport,theReportoftheBoardandthefinancialstatementsinaccordancewithapplicablelawandregulations.

Companylawrequiresthedirectorstopreparefinancialstatementsforeachfinancialyear.UnderthatlawtheyhaveelectedtopreparethefinancialstatementsinaccordancewithUKAccountingStandardsandapplicablelaw(UKGenerallyAcceptedAccountingPractice),includingFRS102TheFinancialReportingStandardapplicableintheUKandRepublicofIreland.

UndercompanylawtheBoardmustnotapprovethefinancialstatementsunlesstheyaresatisfiedthattheygiveatrueandfairviewofthestateofaffairsoftheGroupandtheAssociationandoftheGroup’sandtheAssociation’ssurplusordeficitforthatperiod.Inpreparingthesefinancialstatements,theBoardisrequiredto:

• selectsuitableaccountingpoliciesandthenapplythemconsistently;• makejudgementsandestimatesthatarereasonableandprudent;• statewhetherapplicableUKAccountingStandardsandtheStatementofRecommended

Practicehavebeenfollowed,subjecttoanymaterialdeparturesdisclosedandexplainedinthefinancialstatements;and

• PreparethefinancialstatementsonthegoingconcernbasisunlessitisinappropriatetopresumethattheAssociationwillcontinueinbusiness.

TheBoardisresponsibleforkeepingadequateaccountingrecordsthataresufficienttoshowandexplaintheAssociation’stransactionsanddisclosewithreasonableaccuracyatanytimethefinancialpositionoftheAssociationandenablethemtoensurethatthefinancialstatementscomplywiththeCompaniesAct2006,theHousingandRegenerationAct2008andtheAccountingDirectionforPrivateRegisteredProvidersofSocialHousing2015.TheyhavegeneralresponsibilityfortakingsuchstepsasarereasonablyopentothemtosafeguardtheassetsoftheAssociationandtopreventanddetectfraudandotherirregularities.

TheBoardisresponsibleforthemaintenanceandintegrityofthecorporateandfinancialinformationincludedontheAssociation’swebsite.LegislationintheUKgoverningthepreparationanddisseminationoffinancialstatementsmaydifferfromlegislationinotherjurisdictions.

GoingConcernFollowingtheJuly2015BudgetandtheimposedrentreductionSHreviewedtheircoststructureandidentifiedon-goingannualsavingsofapprox.£1.5m.Thesesavings,togetherwiththerevisedincomestreams,wereusedtocreateanew30yearfully-fundedGroupFinancialPlanwhichmetallfunderscovenantsandwasdeliveredtotheHCAinSeptember2015resultingintheconfirmationofaV1FinancialViabilityrating.ThisconfirmsthatSHmeetsalltheviabilityrequirementsassetoutinHCA’sgovernanceandfinancialviabilitystandardandhasthecapacitytomitigateitsexposureseffectively.Asaresultofthis,andthesignificantstresstestingscenarioswhichareincludedintheexercisetheBoardhasareasonableexpectationthatSHanditson-going

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StrategicReport(incorporatingOperatingandFinancialReview)BackgroundSHisbasedontwositesinShrewsbury,andisoneofShropshire’slargestsociallandlords,with5,469(2015:5,389)homesinShrewsbury,Broseley,Wellington,Telford,Wemandthesurroundingruralareas.Itsprincipalactivitiesarethemanagementanddevelopmentofaffordablehousing.SHisactivelydevelopingnewaffordablehomestoaddresshousingneedsinthelocalarea,aswellasinvestinginexistingproperties.SHisasignificantemployerwith242(2015:247)FTEstaff,includinganin-houseworkforceof65(2015:68)tradespeoplewhorepairandmaintainitsproperties;SHoperatesinbothurbanandruralenvironments.Theassociationisnon-charitableandoperatesfivekeybusinessstreams:

• Housingforrent,primarilyforthosewhoareunabletorentorbuyatopenmarketrates;• Supportedhousingandservicesforpeoplewhoneedadditionalhousing-relatedsupport

oradditionalcare;and• Low-costhomeownership,primarilysharedownership.• Marketrent• Outrightmarketsale

Aswellasmanaging5,469properties,SHdevelopsnewaffordablehousingandisafoundingmemberoftheS3PartnershipprovidingaccesstograntfundingundertheHomesandCommunitiesAgency(HCA)AffordableHomesProgramme(AHP).Duringtheyear,SHdeveloped8(2015:64)generalneeds,8(2015:4)sharedownership,28(2015:0)marketrentand21(2015:0)outrightmarketsalepropertiesatatotalschemecostof£8.286m(2015:£7.045m)with£0.154m(2015:£0.624m)grant.InadditionSHpurchasedofftheshelf,34(2015:6)generalneed,17(2015:0)sharedownershipand11(2015:9)marketrentpropertiesatatotalcostof£6.488m(2015:£1.703m)with£0.060m(2015:£0)grant.However,SH’sfocusremainsitssocialhousingactivitiesandtheseareexpectedtocontinuetoconstituteover94%ofSH’sactivitiesbyturnover.ExternalInfluencesTheGovernment’sbenefitreformshavenotyethadamaterialimpactonourfinances;mostofourcustomerscontinuetopaytheirrentpromptly,thisisbackedupbyourarrearsperformance.However,furtherchangeswillcomeintooperationovertheyearandwewillcontinuetomonitorthepositionveryclosely.Stresstestingour40yearFinancialPlanhasdemonstratedthechallengesofthesummer2015budgetforsociallandlordsespeciallythereductionsinrentalincomeoverthenextfouryearsand

20

isembeddedwithinSH’sassuranceandriskmanagementframework.AppropriatemitigationsplanshavebeenagreedbytheBoardforimplementationshouldtheneedarise.

InJune2016BritainvotedinareferendumtoleavetheEuropeanUnion. ThereisuncertaintyacrosstheSectorwithregardsthewiderimplicationsofthisdecision,butSHwillcontinuetomonitorthesituationandwillkeepincontactwithitsregulatorsandfunders.Businessandfinancialreview–SevernsideHousingAssociationTheBoardispleasedtoreportfortheyearending31March2016SH’sturnoverwas£30.957m(2015:£26.646m(*))andasurplusfortheyearof£3.223m(2015:£1.344m(*)).Wehavecontinuedtoinvestinbothourexistinghousingstockandundertakeaseriesofnewdevelopments,forbothsocialandaffordablerent,sharedownershipandmarketrent.AsubstantialelementoftheincreaseinbothturnoverandsurplusrelatedtoSH’sfirstdevelopmentofmarketsalesunitsonitsRowlandCourt,Shrewsburydevelopment.Principalaccountingpolicies,approvedbySHBoardaresetoutonpages40to44oftheFinancialStatements.TheonlysignificantchangestoaccountingpoliciesinthecurrentyearareresultingfromFinancialReportingStandard(FRS)102.SH’sthreeyearincomeandexpenditureaccountsandbalancesheetsaresummarisedbelow:-Table1–SH(Associationonly)highlights,threeyearsummary(*)All2014/15figureshavebeenrestatedtoallowfortheimpactofthetransitiontoFRS102.2013/14figuresarethepreviouslystatedfiguresunderoldUKGAAP.

Fortheyearended31March

2016

£000’s

2015

£000’s

2014

£000’s

StatementofComprehensiveIncome

TotalTurnover 30,957 26,646 25,250

OperatingSurplus 9,607 7,683 6,557

Surplusfortheyeartransferredtoreserves 3,223 1,344 1,143

StatementofFinancialPosition

Intangibleassets - 117 233

Housingproperties,netofdepreciation 132,765 129,055 125,163

Socialhousinggrant - - (11,226)

Othertangibleassets 2,981 3,034 4,247

InvestmentProperties 13,472 8,690 -

Netcurrentassets/(liabilities) 3,868 567 (8,207)

Totalassetslesscurrentliabilities 153,086 141,463 110,210

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Creditors(dueoveroneyear) (138,791) (130,548) (100,853)

FRS17Liability (10,579) (11,638) (7,285)

NetAssets/(Liabilities) 3,716 (723) 2,072

RevenueReserves 14,295 10,915 9,357

PensionReserves (10,579) (11,638) (7,285)

Surplus/(Deficit) 3,716 (723) 2,072

Housingpropertiesownedatyearend 2016 2015 2014

SocialHousing 5,366 5,325 5,372

NonSocialHousing 103 64 55

TotalUnits 5,469 5,389 5,427

Noofdevelopmentunitscompleted 127 83 43

Statistics(Associationonly) 2016 2015 2014

OperatingSurplusfortheyearas%

turnover

31.0 28.8 26.0

OperatingSurplusfortheyearas%incomefromSocialHousinglettings

37.55 31.2 27.7

Rentarrearsatyear-end £405k £663k £561k

CurrentRentarrearsas%ofdebit 0.83% 0.80% 0.72%

Rentalincomecollection/rentalincomedue

99.7% 100.7% 101.3%

Assetcoverratio* 1.22 1.28 1.51

EBITDAMRI** 1.56 1.31 n/a

Emergencyrepairswithintarget(24hours) 99.8% 99.9% 99.8%

Urgentrepairswithintarget(7days) 98.9% 98.7% 99.2%

Routinerepairswithintarget(31days) 99.2% 98.2% 98.5%

Decenthomescompliant 100% 100% 100%

SAP(StandardAssessmentProcedure)rating

73.67 73.11 72.27

Procurementefficiencysavingsachieved 6.8% 6.1% 4.8%

%ofdwellingswithgassafetycertificate 100% 100% 100%

Overallsatisfactionwithservices*** 88% 88% 88%

%Customersatisfactionwithneighbourhood

85% 85% 86%

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%Staffsatisfaction 80% 80% n/a

%workingdayslostduetosickness 4.45% 4.85% 5.0%

*Calculatedastotalassetvalue/totalloanvalue**Specificloancovenantstipulatedbyfinanceprovider***ResultsobtainedfromSTARsurvey(SurveyofTenantsandResidents)ValueforMoney(VfM)Statement

Introduction

ThisstatementisasummaryofSH’sannualvalueformoneyself-assessment.Itprovidesanoverviewofourcriticalanalysisofourvalueformoneyobjectives,anassessmentofprogressduring2015-16,andourplansfortheyearahead.Thefullvalueformoneyself-assessmentcanbefoundat:www.severnsidehousing.co.uk/value-for-money

SHconsidersValueforMoneywillbeachievedwhen:

‘weknowwhatoutcomeswewantanduseourresourcesinthemosteffectivewaytoachievethoseoutcomes’

Ouraimistobeahighperformingorganisation,wewillalwaysaskourselveswhetherwecandeliverabetterservicemorecosteffectively.

GovernanceandmonitoringSHhasaCorporatePlanobjectivetodemonstrateandcontinuouslyimprovevalueformoneyacrosstheorganisation.TheBoardandparticularlytheAudit&RiskCommitteehastakenanactiveroleinthedevelopmentofournewVfMStrategyandSelf-Assessmentsoverthepastfouryears.OverthepastyearSHhasfurtherembeddedVfMinallbusinessprocessestoensurethereisagoldenthreadrunningthroughtheorganisationsothatVfMisconstantlybeingmonitoredandreviewed:

• OurBoardisbriefedannuallyonourHousemarkbenchmarkingresultsandreviewquarterlyKPIdataincludinginformationonprocurementandefficiencysavings.

• TheBoardanditsAuditandRiskCommitteehaveassistedinthedevelopmentofanewVfMStrategy,ProcurementStrategyandtheVfMself-assessment.

• Audit&RiskCommitteewiththeChairmeetonanannualbasistoreviewtheBoardKeyPerformanceIndicatorBalancedScorecardtoensurethedeliveryoftheCorporateObjectivesarebeingmonitored.

• TheExecutiveTeamreviewperformanceacrossthebusinessonamonthlybasisviaaBusinessReviewprocess.AVfMDashboardhasbeenintroducedfor2015/16onaquarterlybasisforeachbusinessareatomonitorkeyVfMperformance.

• StaffareencouragedtocontributeVfMideas,over200ideashavebeenreceivedviaannualappraisals,afurther120ideashavebeenreceivedthroughstaffsuggestions

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duringtheyear.Forexample,theresidents’newsletterhasbeenreducedfrombeingpostedquarterlytotwiceperyear,savingover£7,500.

• InvolvedcustomershaveassistedSHinallmajorProcurementexercises,andtheResidentSenatehasbeeninvolvedinthenewVfMandProcurementStrategies.Thisensuresthatwearelisteningtoourcustomers,andprovidingtheproducts,servicesandvaluethattheyrequire.

ANewValueforMoneyStrategyhasbeendraftedincollaborationwithandapprovedbyBoardandSenate.ThekeyprinciplesofthenewStrategyare:

• VfMOutcomeswhichcontributetoCorporatePlanobjectives• Understandcostsandoutcomesofeachactivitytomaximisecapacity• EmbedVfMinallbusinessprocesses• StrategicProcurement

InparalleltothisanewProcurementStrategyhasalsobeenapprovedwhichfocuseson“BuyingBetter”byadoptingbestpracticesuchaselectronicprocesses,developingstaffskills,categoryandcontractmanagementanddataanalysis.Costs&PerformanceSHutilisevarioussourcesofbenchmarkingtomonitorperformanceagainstourpeerssuchastheHCAGlobalAccountsandHousemark.WearealsobeginningtoidentifysourcesoutsideofHousingtoensurebestpracticecomparisonsarenotlimitedtoourownindustry.AtthetimeofwritingthissummaryfortheFinancialStatements,Housemarkdatafor2015/16isnotyetavailable.Analysisof2014/15datahasdemonstratedapositivetrend.WiththeexceptionofResidentInvolvement,alldepartmentsareholdingVfMperformanceinthe“GoodPerformance/LowCost”quadrant,ortrendingtowardsit.Detailedanalysisofthesetrendsduringtheyearhashelpeddirectbusinessdecisions,forexampletheNeighbourhoodsandCommunityDirectoratehavesincerestructured,withareductioninmanagementfrom6to4whichwillsave£100,000perannumfrom1stJanuary2016onwards.

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PerformancecomparedwithHCAGlobalAccounts2013–2015(allLSVT)

KeyRatios(LSVT) HCA2015

Severnside2015 HCA2014 Severnside

2014HCA2013

Severnside2013

Quartile2015

HeadlineSocialHousingCostperunit

£3,550 £3,420 Comparabledatanotavailable,noCapitalisedcostsinGlobalAccounts

ManagementCosts(inc.OtherCosts)perunit

£1,125 £1,529 £1,201 £1,550 £1,168 £1,479

Repairs&Maintenance(incCapitalisedcosts)costsperunit

£2,054 £1,891

Comparabledatanotavailable,noCapitalisedcostsinGlobalAccounts

GrowthinTurnover 5.0% 4.9% 4.3% 6.0% 8.0% 4.6%

OperatingMargin 28.8% 28.1% 27.2% 26.0% 26.7% 26.0%

Currenttenantarrearsattheendoftheyear

4.2% 0.8% 4.1% 0.72% 4.0% 1.5%

%lostthroughvoidproperty 1.6% 0.86% 1.7% N/A 1.5% N/A

Baddebtsfortheyear 0.8% 0.65% 1.0% 0.3% 0.8% 0.26%

UpperQuartile

MiddleUpper

MedianMiddleLower

LowerQuartile

Tosummarisetheresultsinthetable:• OverallheadlinecostsforManagement,RepairsandMaintenancearebelowtheaverageof

allLSVT’sat£3,420perunitwhichis£230perunithigherthantopquartileperformance.• Over22%ofourstockisdedicatedtoHousingforolderpeople,whichtheHCAhave

calculatedcost£1,800moreperunittoservicethangeneralneedsproperties.• Wehavehighmanagementcosts,whichweareactivelyreviewingandtakingstepsto

reducebyundertakingprocessreviews,andenteringintoamergerprocess.• OurtotalcostsofrepairandmaintenancearebelowthemedianforallLSVT’s.• GrowthinTurnoverandOperatingMarginarejustbelowaverage

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• SHperformexcellentlyinthemanagementofarrears,debtcollectionandrentlossthroughvoidproperties.

Inlastyear’sVfMself-assessmentwecommittedtoreviewcostsfurther:

• ReviewedPolicies,ProcessesandProceduresinourNeighbourhoodandCommunity

ServicesDirectorate.Leadingtoarestructureofthedepartment,removingduplicationandensuringthemostappropriatespecialistteamsareengagingwithourcustomerstoproducethebestoutcomesforourcustomersinthemostefficientwayforourteams.

• WehavecreatedanEmploymentandMoneyAdviceteamwhichisfocussedongivingourcustomersthesupporttheyneedtosustaintheirtenancy.

• Eventhoughourcurrentarrearsperformanceisbestin-classwehavebeencollaboratingwithanotherRegisteredProviderwhichisprovidingexpertiseintheautomationandintegrationofincomecollectionusingtextingtoprovideafutureproofsystem,toensurefurtherefficiencies.

• SHhavealsoengagedwithHousingQualityNetwork(HQN)toactasacriticalfriendonaprojecttoprocessmapoldandsundrydebtcollection.

• WehavemergedourFacilitiesandHealthSafetyteamswithasavingof1managementpost.• HeadcountinourHRdepartmenthasdecreasedby2,whichgivesaHRstafftoemployee

ratioof41.5whichistopquartileperformanceaccordingtotheCIPD.• Undertakenareviewofgovernancecostswhichincludedexternalbenchmarkingofsalaries

paidtoBoardMemberswhichwerefoundtobecompetitiveandhavebeenheldfor2015/16.

• Saved£40,000byin-sourcinglegalservicesforHousingManagementissues.

BenchmarkingisalsousedduringProcurementexercises.AbenchmarkingexerciseevidencedthefactthatthecurrentKitchenunitswerebeingboughtatthebestcostpriceversus4othermanufacturersofequivalentproductsontwodifferentprocurementframeworks.Asaresultofthisexercise,theincumbentKitchenmanufacturerproposedachangetoamoremoderndoordesignwhichwouldsave20%onthecostofthekitchen,customerswereconsultedandhaveapprovedthechangeswhichwillsave£40,000perannum.

AlltenderreportsforproposeddevelopmentsincludeaVfMsection,whichcomparestenderedbuildcostspersquaremeteragainstanexternalcomparator-theBuildingCostInformationService(BCIS)operatedbytheRoyalInstitutionofCharteredSurveyors(RICS).Constructioncostsforthemostrecentdevelopmentsare10.5%belowtheBCISindexwhenadjustedfortheShropshirelocationwhichindicatesthatweareprovidinghomesofahighstandardforbelowaveragecost.

Annualspendonresponsiverepairsreducedby4%from£1.56min2014/15to£1.49m.Repairsvolumesandstandardsremainedthesamehowevertheaveragecostofrepairreducedfrom£83tobelow£80.Theaveragetimetocompleteresponsiverepairsalsoreducedduringtheyearwithrepairsbeingcompletedinanaverage3.7daysfromreportingtocompletionagainst4.5daysachievedin2014/15.Thepercentageofappointmentsmadeandkeptalsoincreasedto98.9%.

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Voidrepairunitcostsreducedby15%during2015/16withratesreducingfrom£2,000pervoidto£1,700.Overallspendreducedby8%,saving£67,000,whilstthenumberofvoidsincreasedby7%from408to438.

ActiveAssetManagement

Weknowfromourassetdatathatsomepropertiesaremoreexpensivetorepairandsomearelesspopularthanothers.SHusesanAssetPerformanceModel(APM)toaidourunderstandingofthefinancialperformanceofourpropertiesbycomparingthefuturerentalincomeforeachpropertywithitsprojectedcostsofmaintenance.TheAPMwasupdatedbySavillsin2014/15.Wecurrentlyhave3assetgroupsof143propertieswithanegativeNetPresentValue(NPV–wherecostsexceedincome),investmentdecisionsforthesepropertiesareonholdwhilstanalysisoffuturemaintenancerequirementsisundertakenaspartofthe2016/17stockconditionsurvey.

Inadoptinganactiveassetmanagementapproachwehave:

• Takenstepstoaddresstheproblemoflackofdemandforsomeofourlesspopularshelteredhousingschemes,garagesitesandvacantlandincluding:o HeathsHouses–Redeveloped88lowdemandshelteredflatstoprovide41homes

formarketsale,marketrent,discountedrentandsharedownership.o NewParkClose–PoorlyutilisedShelteredHousingmeetingroomandscheme

managershousereplacedwith3bungalows,securingsocialhousinganda12%localauthoritygrantcontribution.

o BellLane&AllertonRoadGarages–Unpopulargaragesitesconvertedinto8newhomes.

o BrookClose–Underutilisedlandadjacenttoshelteredhousingschemecreating10newhomes.

o Sold2lowperforminghouses,andhave3moreinthepipelinefordisposal,creating£560kforreinvestmentinnewhomes.

• Implementedamobileworkingsolutionforsurveyors:o Stockconditionandothersurveysarecompletedelectronicallyfromsiteeliminating

themanualupdatingofstockconditiondata.Wehavecompleted350surveyselectronicallysofar,whichmeanswiththecurrent10%stockconditionsurveythatwewillhave42%ofourstocksurveyedwithinthepast5years,and99.5%ofallpropertieswithindividualstockconditiondata.

• PublishedanewPropertyStrategyfocusingonusingthisdatainatargetedway,usingindividualpropertyperformanceleadingtobetterinvestmentplanninganddeliveryinordertomaximisepropertyreturn.

• Thechartsbelowdemonstratehowwearediversifyingourassetstoensurethebestoverallratesofreturn.Thismixedtenuremodelhasenabledustore-invest£3.4mfromthereceiptsofmarketsalesbackintoourbusinessplan,andinvestin39propertiesformarketrentwhichprovidea6%returnonassetsviaourSevernHomesteam.

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SocialRentAffordable&Discounted

Rent

SharedOwnership

MarketRent MarketSale Total

13 29 25 39 21 127

CustomerSatisfaction

SHcommissionedacensusstyleSTARtenantsatisfactionsurveyin2014.Atthattimesatisfactionwiththeoveralllandlordservicewas87%forgeneralneedstenantsand91%forshelteredtenants,theHousemarknationwideaverageswere87%and84%respectivelysoSevernsideareslightlyabovethenationalaverage.

Researchundertakenintosurveyshasshownthatcensusstylesurveystendtoproduceacentraltendency,wherebythepersoncompletingthesurveywillgivethesamescoreagainandagain.Thiswasborneoutwhencalling200dissatisfiedrespondentstounderstandthereasonsforpoorscores.

SHareundertakingareviewofhowcustomersatisfactiondataiscollected,reviewingcustomertouchpointswiththeobjectiveofreducingthecostofsurveys,whilstimprovingcustomersatisfactionandusingsurveysasawaytocontinuouslyimproveourservicesbycapturinglivepositiveandnegativefeedback.

Procurement

ProcurementatSHcontinuestoaddvalueformoney,saving£213,760for2015/16,includingthefollowingprojects:

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• ImplementingnewStoresMaterialsContract–Saving£80,000inmaterialcosts,£38,000byclosingthein-housestores.Reducingthenumberofsuppliersfrom230to168,reducingthenumberofpaperinvoices,reducingwaitingandshoppingtimefortradesmenandhavingincreasedManagementInformationleadingtomorecontrolovermaterialcostsandspecifications.

• Boiler&BoilerFiltersavings-£17,000–reviewedandamendedourspecificationforgascentralheatingboilersandre-negotiatedourdirectrebate.Thenewboilersareeasiertoservice,andhavemorefunctionality,plusalargerinternalcondensesyphonwhicheliminatestheissueofcondensepipesfreezing.Average£50savingperboilerequatingtocirca£13.5ksavingperannum,theboilersarealsomoreenergyefficient,savingourcustomersmoneyontheirbills.WehavealsochangedsupplyofMagneticFilterswhicharecheaperandhavea20yearwarranty.

• Kitchens–ChangeddoordesignsonKitchens,samequality,moremoderndesign,approvedbycustomerssaving£40kperannum

• Lifts–NewcontractwithlocalSME’sofferingbetterservice,savingof£20k• MobilePhone&Landlines–Saving£80kperannumforSH,jointlyprocuredwith

ShropshireHousingGroupsavingthemasimilaramount.• Vanservicing–saved£15kinyear1.

AnewProcurementStrategyhasbeenapprovedwhichfocusesonfurtherincreasingvalueforthenext3yearsusingbestpractice,electronictoolsanddata.

HowhaveweusedEfficiencySavings

DetailsofourachievementsinrelationtovalueformoneyareprovidedinthefullversionofourVfMSelf-Assessment.ThisgroupsoursuccessesundertheheadingsinournewCorporatePlanshowinghowourachievementslinktoourcorporateobjectives.In2015/16wemadesavingsofaround£3.2maboveourbudgetwhichexceededthe£2.9mofsavingsin2014/15.Mostofthesesavingswereusedtoreduceoutstandingloanbalanceswhichsupportour40yearfinancialplanandourdevelopmentprogramme.

OurDevelopmentProgrammehasadded573propertiestothehousingstockinShropshiresince2001.Thishashelpedtocountertheimpactofthe457RighttoBuy/RighttoAcquirepropertiessoldtodate.

In2015/16SHhavecompletedthedevelopmentof127newproperties,tohouse465people,investing£12.3m,someofwhichhascomefromadditionalprofitgeneratedfromthesaleofnewproperties.Ourcurrentdevelopmentprogrammeaimstoprovideatleast485furtherhomesovertheperiod2016/17-2019/20assetoutbelow:

Tenure Social Rent

Affordable /Discounted Rent

For Sale

Shared Own

Market Rent

Total Units

No of homes

14 300 69 78 24 485

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ThecurrentDevelopmentProgrammefacilitatesforcirca£57.4m,withsome£16.9mincomefromnewpropertysales,togetherwitharound£3.7mgrantandothersubsidy.Our40yearfinancialplanassessestheviabilityofeachfundingstreamandtestsitsvalueformoney.

FuturePlans

Duringthefinancialyear2015/16,SHcommencedmergerdiscussionswithanotherregisteredprovider,HousingPlus.Extensiveduediligenceworkwasundertakenandnobarrierstomergerwerefound.Thisduediligencework,anddiscussionsatExecutiveTeamandBoardlevel,hasshownthatthereisanexcellentvaluesbasedfitbetweenthetwoorganisationsandthatbusinessefficienciescanbeachievedwerethemergertobeprogressed.

TheBoardsofbothSHandHousingPlusrecognisedthatinanewpartnership,anewmergedbusinesswillbemoreresilient,financiallystrongandbeabletodelivermoretogetherthanthetwoorganisationscoulddoseparately.Theneworganisationwillbeabletorealiseefficiencies,releasecapacity,providemorenewhomesanddelivercareservicestoawiderrangeofcustomers.

Accordingly,inMay2016,whenthefullbusinesscasewaspresentedandseparatelyconsideredbytheBoardsofSHandHousingPlus,bothBoardsagreedthatnecessarystepsshouldbetakentoeffectamergerofthetwobusinessesduringthe2016/17financialyear.Itisanticipatedthatfollowingmerger,recurringefficiencysavingswillboostsurplusesandincreasepotentialborrowingcapacityby£50million.Thenewcombinedbusinesswill:

• Ensurefinancialresilienceandthecapacitytocontinuetogrow• Increasehousingsupplyviaamorediversedevelopmentprogramme• Enhanceproductivityandperformanceinthepropertycarebusiness• OffergrowthopportunitiestoCarePlus• Sustainanddevelopfitforfutureservicestocustomersandinvestmentinhomes• Deliversuccessfultransformationanddriveouttheintendedvalueofthemergerforthe

benefitofexistingandfuturecustomers

FurtherdetailsregardingspecificplansonhowSHplantoimproveValueforMoneycanbefoundinthefullVFMself-assessmentviatheSHwebsite…http://www.severnsidehousing.co.uk/main.cfm?type=VALUEFORMONEYandcopiescanalsobeobtainedfromourmainofficereception.

HighlightsandAchievementsSHhascontinuedtoinvestsignificanttimeandenergyintoensuringthatSHisawell-managedbusinessthatisfitforthefuture.Achievementsduringtheyearinclude:

• FollowingtheJuly2015budgetwhichsawtheimpositionofa4yearrentreductionanewfullyfundedfinancialplanwascreatedwhichnotonlymetallcovenantrestrictionsbutsawthecreationofanewdevelopmentplanfacilitatingafurther485newhomescombinedwiththere-profilingofourAssetManagementbusinessplan

30

• AsaresultofthisrevisedfinancialplanourratingwiththeHCAwasmaintainedasV1/G1• Our2015/16developmentprogrammedeliveredatotalof127propertiesduringtheyear

comprising67socialhousingproperties,anadditional39propertiesforourmarketrentportfolioand21propertieswhichweredevelopedforoutrightmarketsale.

• Themarketsalepropertiesareincludedinthetotalof41mixedtenurepropertieswhichweredevelopedonthesiteofoneofourlowdemandbedsitschemesasaresultofouractiveassetregeneration/managementpolicy

• Atotalof£1.4mwasreceivedfordevelopmentpurposesthroughvariousgrantstreamsincluding200%oftheoriginalfigurebidforfromtheHCA.

• OurCurrentTenantrentarrearsremainedattopquartileperformancewiththefigureat31.03.16being0.83%oftotalannualrentdebit

• Anti-SocialBehaviourandcrimecontinuedtoreduceinthoseareaswhereneighbourhoodagreementsareinplace

• InresponsetothechangingeconomicenvironmentanewPropertyStrategywasdevelopedfocusingonmaximisingpropertyreturncombinedwiththeintroductionofanewAssetInvestmentReportandServicePlansincludingthe30yearpropertyinvestmentrequirements;therisksattachedtothis;astrategicactionupdateandanimprovementimpact.

• OurVoidsperformanceremainedattopquartilewithturnaroundforstandardvoidsat18.9daysandvoidrentlossat0.79%

• 100%DecentHomescompliancewasmaintainedwithourSAPratingincreasingto73.67andTargetedimprovementsreducingthenumberofpropertieswithaSAPratinglowerthan50to21

• Afurther1yearextensiontooursupportingpeople"Sustain"contractwasnegotiatedwithShropshireCouncilwhichcombinedwithourTenancySustainmentServicehasallowsustocontinuetoprovidesupportservicestoourmorevulnerabletenants.

• OurSustainableCommunitiesteamcontinuetoprovidesupporttoourtenantsresultingin306tenantsreceiving£223kofincreasedon-goingbenefitsandanadditional£77kinoneoffpayments,10movingintoemploymentafterreceivingsupportand8workplacementsbeingofferedatSevernsidetogainemploymentskills

• Theestablishmentofourin-housecleaningcompanyservicingnotonlyourofficepremisesbutalsothecommunalareasofourschemesandflatshasresultedinannualsavingsof£20k

• OurDesignandMarketingserviceswerealsobroughtin-houseandalsoachieved£20kannualsavings

• Aflexiblebenefitschemewasrolledouttoallstaffcomprisinganumberofavailableservicesandproductsandwastakenupby16%ofstaff

• Ourtwoelectricalcontractorsubsidiariescontinuedtoperformstronglythroughouttheyearresultinginatotalvalueof£56kbeingpaidviagiftaidtoourcharitablesubsidiarySevernsideCommunityAssociation

RisksanduncertaintiesRisksthatmaypreventSHachievingitsobjectivesareconsideredandreviewedmonthlybytheExecutiveTeamandregularlyreviewedbytheBoard.TherisksarerecordedandassessedintermsoftheirimpactandprobabilitythroughtheuseoftheSHriskmatrix.Majorrisks,presentingthegreatestthreatstoSH,arereportedtotheBoardquarterlytogetherwithactiontakentomanagetherisks,includingassessmentofkeycontrolsandtheoutcomeoftheaction.Themajorriskstosuccessfulachievementofbusinessobjectivesgoingforwardareconsideredbelow:-

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Keyrisks Actionbeingtaken

WelfareBenefitReformAct

WelfareBenefitReform–ImpactonarrearsduetotheintroductionofUniversalCredit

WelfareBenefitReform–Impactonarrears,duetotheintroductionofdirectpayments

• Monitoring rental arrears and workingcloselywith tenants to recover theseonatimelybasis

• Monitordirectbenefitenvironment• Deliverfinancialinclusionstrategy• AgreedHBservicelevelagreements• Anti-povertystrategy• Monitoringregulatoryandlegislative

changes• CloserworkingwithCreditUnion• Identifyunderoccupiedproperty

IncreaseinPensionContributions

Increaseinpensioncontributionsasaresultofrevisedvaluationabovebudget

• Full Pension Review in line with theActuarialReviewSCLGPS

Health&Safety

Non-compliancewithfiresafetyregulations

BreachofHealthandSafetylegislationleadingtoenforcementaction

Non-compliancewithworkingatheightlegislation

Non-compliancewithAsbestosRegulations

HealthandSafetyarrangementsforsubsidiaries

• Statementofarrangements• Riskassessments• Training• Policy&Procedures• Informationtotenants• Workinggroups• BSCAudit• Manuals• Inductions• Investigations• H&SCommittee• BSCAudit

Development

FailuretodelivertheDevelopmentBusinessPlanandStrategy

Failuretodeliverdevelopmentschemeswithinbudgetandtimescales

Failuretomeetsharedownershipsalestargets

• CreationofDevelopmentPipeline• StrategicreviewofLocalPlansites• DevelopmentStrategyactionplan• DevelopmentGroupMeetings

Treasury

Funderscovenantsnotmet

Futurerentalincomedoesnotmeetbusinessplanassumptions

Increaseinthenumberofsaleslinkedto

• Regularmeetingswithfunders• Regularexternalandinternalaudits• Regularcashflowandcovenantforecasts• Yearlyfundingvaluations• Quarterlybusinessreviewmeetings• Monitoring of government policy

changes

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RightToBuyandtheimplementationofVoluntaryRighttoBuyproposalsleadtoincreasedlossofincomeduetosaleofstock

CapitalStructureandTreasuryManagementThefollowingparagraphshighlightthekeyfeaturesofSHfinancialpositionasat31March2016.At31March2016SHmanaged5,469(2015:5,389)housingproperties.Thesepropertiesareshowninthebalancesheetatcost(afterdepreciation)at£132,765k(2015:£129,055k).Duringtheyeartherewere106additions(2015:83)tohousingpropertiesof£11.8m(2015:£8.8m)and25sales(2015:22)producinganetsurplusof£389k(2015:£325k)mainlyundertherighttobuyscheme.ForthefirsttimeSHalsodevelopedpropertiesformarketsaleandfromthe21propertiescompleted16soldbefore31stMarch2016producinganetsurplusof£722k.FollowingtheJuly2015budget,thepropertieswerevaluedbyprofessionalvaluerstotakeintoconsiderationanyimpactoftheimposedrentreduction,andasat31stMarch2016thevaluationonanexistinguseforsocialhousingbasisbasedonmortgageeinpossessionstatuswas£180m.Duringtheyear,theborrowingswereincreasedby£7m.Attheyear-endborrowingsamountedto£125,554kwiththefollowingrepaymentprofile:Maturity 2016

£000’s2015

£000’sWithinoneyear 56 53

Betweenoneandtwoyears 57 55

Betweentwoandfiveyears 18,690 182

Afterfiveyears 106,751 118,311

Total 125,554 118,601

AsummaryofSH’sheadroomattheyear-endisasfollows: Facility

£000’sDrawn£000’s

Available£000’s

Nationwide 105,000 88,500 16,500

CanadaLife 35,000 35,000 -

ShropshireCouncil 10,000 2,280 7,720

TotalBorrowings 150,000 125,780 24,220

Cashatbank 7,215

34

Independentauditor’sreporttothemembersofSevernsideHousingWehaveauditedthegroupandcompanyfinancialstatementsofSevernsideHousing(‘theAssociation’)fortheyearended31March2016setoutonpages36-74.ThefinancialreportingframeworkthathasbeenappliedintheirpreparationisapplicablelawandUKAccountingStandards(UKGenerallyAcceptedAccountingPractice),includingFRS102TheFinancialReportingStandardapplicableintheUKandRepublicofIreland.ThisreportismadesolelytotheAssociation’smembers,asabody,inaccordancewithChapter3ofPart16oftheCompaniesAct2006andsection128oftheHousingandRegenerationAct2008.OurauditworkhasbeenundertakensothatwemightstatetotheAssociation’smembersthosematterswearerequiredtostatetotheminanauditor’sreportandfornootherpurpose.Tothefullestextentpermittedbylaw,wedonotacceptorassumeresponsibilitytoanyoneotherthantheAssociationandtheAssociation’smembers,asabody,forourauditwork,forthisreport,orfortheopinionswehaveformed.RespectiveresponsibilitiesofdirectorsandauditorAsexplainedmorefullyintheStatementofDirectors’Responsibilitiessetoutonpage17,theBoardisresponsibleforthepreparationofthefinancialstatementsandforbeingsatisfiedthattheygiveatrueandfairview.Ourresponsibilityistoaudit,andexpressanopinionon,thefinancialstatementsinaccordancewithapplicablelawandInternationalStandardsonAuditing(UKandIreland).ThosestandardsrequireustocomplywiththeAuditingPracticesBoard’sEthicalStandardsforAuditors.ScopeoftheauditofthefinancialstatementsAdescriptionofthescopeofanauditoffinancialstatementsisprovidedontheFinancialReportingCouncil’swebsiteatwww.frc.org.uk/auditscopeukprivate.OpiniononfinancialstatementsInouropinionthefinancialstatements:• giveatrueandfairviewofthestateofaffairsoftheGroupandtheAssociationasat31March

2016andoftheGroup’sandtheAssociation’ssurplusfortheyearthenended;

• havebeenproperlypreparedinaccordancewithUKGenerallyAcceptedAccountingPractice;and

• have been prepared in accordance with the Companies Act 2006, the Housing andRegenerationAct2008andtheAccountingDirectionforPrivateRegisteredProvidersofSocialHousing2015.

OpiniononothermatterprescribedbytheCompaniesAct2006InouropiniontheinformationgivenintheReportoftheBoardandtheStrategicReportandtheDirectors’Reportforthefinancialyearforwhichthefinancialstatementsarepreparedisconsistentwiththefinancialstatements.

36

ConsolidatedStatementofComprehensiveIncome

Fortheyearended31March2016 Notes 2016 2015

£000’sGroup

£000’sAssociation

£000’sGroup

£000’sAssociation

Turnover 2

31,694 30,957 27,291 26,646

Less:Operatingcosts 2 (22,120) (21,350) (19,484)

(18,963)

Operatingsurplus

9,574 9,607 7,807 7,683

Surplusonsaleofhousingproperties 3 389 389 325 325

Deficitondisposalofothertangiblefixedassets

(15) (8) (2) -

Interestreceivableandotherincome 16 12 40 33

Interestpayableandsimilarcharges 4 (6,440) (6,440) (6,445) (6,445)

OtherFinancingCosts 5 (365) (365) (306) (306)

Increaseinvaluationofinvestmentproperty 12 28 28 54 54

(6,387) (6,384) (6,334)

(6,339)

Surplusonordinaryactivitiesbeforetaxation

6 3,187 3,223 1,473 1,344

Taxchargeonsurplusonordinaryactivities 7 - - -

-

Surplusfortheyear 3,187 3,223 1,473 1,344

Othercomprehensiveincome

Netgain/(loss)ondefinedbenefitliability 23 1,059 1,059 (4,353) (4,353)

Pensiontransfer 157 157 198 198

Totalcomprehensiveincomefortheyear 4,403 4,439 (2,682) (2,811)

TheGroup’sturnoverandoperatingsurplusallrelatetocontinuingoperations.

Historical costs, surplus and deficits are identical to that shown in the financial statements unlessnotedotherwise.

38

StatementofChangesinEquityGroup Revenuereserve Pensionreserve TotalEquity £000’s £000’s £000’s

Balanceat1April2014aspreviouslyreported 9,847 (7,285) 2,562EffectsofadoptionofFRS102 7 - 7Balanceat1April2014(restated)

9,854 (7,285) 2,569

Totalcomprehensiveincomefortheperiod

Surplusfortheyear 1,473 - 1,473Pensiontransfer 198 (198) -Gains&losses,net - (4,155) (4,155)Balanceat31March2015

11,525 (11,638) (113)

Balanceat1April2015

11,525 (11,638) (113)


Surplusfortheyear 3,187 - 3,187Pensiontransfer 157 (157) -Gains&losses,net - 1,216 1,216Balanceat31March2016

14,869 (10,579) 4,290

Association Revenuereserve Pensionreserve TotalEquity £000’s £000’s £000’s

Balanceat1April2014aspreviouslyreported 9,357 (7,285) 2,072EffectsofadoptionofFRS102 15 - 15Balanceat1April2014(restated)

9,372 (7,285) 2,087


Surplusfortheyear 1,344 - 1,344Pensiontransfer 198 (198) -Gains&losses,net 1 (4,155) (4,154)Balanceat31March2015

10,915 (11,638) (723)

Balanceat1April2015

10,915 (11,638) (723)


Surplusfortheyear 3,223 - 3,223Pensiontransfer 157 (157) -Gains&losses,net - 1,216 1,216Balanceat31March2016

14,295 (10,579) 3,716

39

ConsolidatedCashflowstatementFortheyearended31March2016 Notes 2016

£000’s2015£000’s

NetCashfromoperatingactivities 18 15,851 12,426

Cashflowsfrominvestingactivities

Purchaseoftangiblefixedassets (16,392) (16,281)

Proceedsfromsaleoftangiblefixedassets 1,530 1,363

Grantsreceived 1,399 684

Interestreceived 16 40

NetCashfrominvestingactivities (13,447) (14,194)

Cashflowfromfinancingactivities

Interestpaid (6,435) (6,596)

Newsecuredloans 7,000 38,780

Repaymentsofborrowing (53) (25,879)

NetCashfromfinancingactivities 512 6,305

Netchangeincashandcashequivalents 2,916 4,537

Cashandcashequivalentsatbeginningoftheyear 5,084 547

Cashandcashequivalentsatendoftheyear 8,000 5,084

40

Notestothefinancialstatements1a Basisofaccounting

ThesefinancialstatementshavebeenpreparedinaccordancewithFinancialReportingStandard102TheFinancialReportingStandardapplicableintheUKandRepublicofIreland(FRS102),andtheStatementofRecommendedPractice:AccountingbyRegisteredSocialHousingProvidersUpdate2014andcomplywiththeAccountingDirectionforPrivateRegisteredProvidersofSocialHousing2015.

AnexplanationofhowthetransitiontoFRS102hasaffectedthefinancialpositionandfinancial

performanceofthegroupisprovidedinnote27. ThefinancialstatementsaregroupstatementsandconsolidatetheresultsofSHandits

subsidiariesA.WaltersElectricalContractorsLtd(AWEC),AWaltersElectricalLtd(AWE),ShrewsburyHomesforAll(SHFA)andSevernsideCommunityAssociation(SCA).

AWEC&AWEareprivatecompanieslimitedbyshares,theirsharecapitaliswholly-ownedbySH.

SHFAisacompanylimitedbyguaranteeandacharityregisteredwiththeCharitiesCommission.SCAisanEnglandandWalesIndustrialandProvidentSocietyregisteredwiththeFinancialConductAuthority.SevernsidehascontrolofbothSHFAandSCAviastepinrightsandpowertoappointandremoveBoardmembersifappropriate.

Thedirectorshavepreparedtradingandcashflowforecastsforthegroup.Theseforecastsshow

thatthegrouphassufficientfinancialresourcestomeetitsobligationsastheyfalldueforaminimumof12monthsfromthedatethatthesefinancialstatementswereapproved.

Accordingly,afterconsideringtheforecast,appropriatesensitivities,currenttradingandavailable

facilities,thedirectorshaveareasonableexpectationthatthegrouphasadequateresourcestocontinueinoperationalexistencefortheforeseeablefutureandhaveconcludedthatthegoingconcernbasisofpreparationisappropriatetoenablethegrouptocontinuetradingforatleastoneyearfromthedateofsigningthesefinancialstatements.

1b Accountingpolicies The followingaccountingpolicieshavebeenappliedconsistently indealingwith itemswhichare

consideredmaterialinrelationtotheGroup’sfinancialstatements. Measurementconvention Thefinancialstatementsarepreparedonthehistoricalcostbasisexceptthatthefollowingassets

and liabilities are stated at their fair value: non-basic financial instruments and investmentproperties.

Basicfinancialinstruments Tenantarrears,tradeandotherdebtors,tradeandothercreditorsandallnon-cancellableinterest-

bearingborrowingshavebeenclassifiedasbasicfinancial instrumentsandarerecognisedinitiallyat transactionprice lessattributable transaction costs. Subsequent to initial recognition theyarerecognisedatamortisedcost.

41

Otherfinancialinstruments Cancellable interest-bearingborrowingsnotmeeting thedefinitionofbasic financial instruments

are recognised initially at fair value. Subsequent to initial recognition they aremeasured at fairvaluewithchangesrecognisedinthestatementofcomprehensiveincome.

Turnover Turnover represents rental and service charge income and amounts invoiced in respect of the

provisionofotherservices. SupportingPeople

SupportingPeopleincomeisrecognisedintheaccountsandmatchedtoexpenditureasservicesareprovided.GoodwillGoodwillarisingfromthepurchaseofAWECrepresentsthedifferencebetweentheconsiderationpaidandthefairvalueofthenetassetsacquired.Goodwillisbeingamortisedover3years.

Housingproperties

Housingpropertiesarestatedatcostlessaccumulateddepreciationandaccumulatedimpairmentlosses.Completedhousingpropertieshavebeensplitbetweentheirlandandstructurecostsandaspecificsetofmajorcomponentsthatrequireperiodicreplacement.

Refurbishmentorreplacementofsuchacomponentiscapitalisedandthendepreciatedovertheestimatedusefullifeofthecomponentatthefollowingrates:Properties(Structure) 50-120yearsKitchens 20yearsBathrooms 30yearsCentralHeating 15yearsDoors 30yearsWindows 30yearsElectricalRewire 30yearsSolarPanels 30yearsLifts 30years

Roofs 70years

Costincludesthecostofacquiringlandandbuildings,developmentcostsandinterestchargesduringthedevelopmentperiod.

Direct costs relating to development activities are capitalised and all other works to existingpropertiesarechargedtoincomeandexpenditure.

Sharedownershippropertiesandassetsheldforsale

Undersharedownershiparrangementstheoccupierhastherighttopurchaseproportionsatthecurrentvaluationupto100%.Proceedsofsaleoffirsttranchesofequityarerecognisedinturnoverwiththeattributablecostsincludedincostofsales.

42

Subsequenttranchessold(‘staircasing’)areaccountedforasdisposalsofhousingproperties,asnotedabove.FirsttranchesawaitingsalearerecognisedwithincurrentassetsontheBalanceSheet. InvestmentpropertiesInvestmentpropertiesarepropertieswhichareheldeithertoearnrentalincomeorforcapitalappreciationorforboth.Investmentpropertiesarerecognisedinitiallyatcost.Subsequenttoinitialrecognitioninvestmentpropertieswhosefairvaluecanbemeasuredreliablywithoutunduecostoreffortareheldatfairvalue.Anygainsorlossesarisingfromchangesinthefairvaluearerecognisedinthestatementofcomprehensiveincomeintheperiodthattheyarise.Nodepreciationisprovidedinrespectofinvestmentpropertiesapplyingthefairvaluemodel.Investments

Investmentsarestatedatcostlessanyprovisionforimpairment.

Impairment Afinancialassetnotcarriedatfairvaluethroughprofitorlossisassessedateachreportingdateto

determinewhether there isobjectiveevidence that it is impaired.A financialasset is impaired ifobjectiveevidenceindicatesthatalosseventhasoccurredaftertheinitialrecognitionoftheasset,andthatthelosseventhadanegativeeffectontheestimatedfuturecashflowsofthatassetthatcanbeestimatedreliably.

Financial assets that are considered to be permanently impaired are written down to their

recoverableamounts. SocialHousingGrant SocialHousingGrant(SHG)isinitiallyrecognisedatfairvalueasalongtermliability,specificallyas

deferredgrantincomeandreleasedthroughthestatementofcomprehensiveincomeasincomeoverthelifeofthestructureofhousingpropertiestowhichthegrantsrelate,inaccordancewiththeaccrualmethodapplicabletosociallandlordsaccountingforhousingpropertiesatcost.

SHGmayberecycledorrepaidundercertaincircumstances,primarilyfollowingsaleofaproperty

butwillnormallyberestrictedtonetproceedsofsale.Grantsforrevenueexpenditurearecreditedtotheincomeandexpenditureaccountastheybecomereceivable.

Taxation

Thechargefortaxationisbasedonthesurplus/deficitfortheyearandtakesintoaccounttaxationdeferredbecauseoftimingdifferencesbetweenthetreatmentofcertainitemsfortaxationandaccountingpurposes.

Deferredtaxisrecognised,withoutdiscounting,inrespectofalltimingdifferencesbetweenthetreatmentofcertainitemsfortaxationandaccountingpurposeswhichhavearisenbutnotreversedbythebalancesheetdate,exceptasotherwiserequiredbyFRS102.

43

ValueAddedTax SHisVATregisteredbutalargeproportionofitsincome,rents,isexemptforVATpurposesand

thereforegivesrisetoapartialexemptioncalculation.ExpenditureisshowninclusiveofVATasVATrecoveredisaminimalamount.Inputtaxrecoveredisdeductedfromoperatingcosts.

Depreciation Depreciationiscalculatedtowriteoffthecostoftangiblefixedassetsonastraightlinebasisover

theirestimatedusefullives.Thefollowingdepreciationrateshavebeenused: Properties 50-120years Propertycomponents 15-70years Fixturesandfittings 33%perannum Fixturesandfittings(solarpanelsonly) 30years Plant&Equipment 33%perannum Computerequipmentandsoftware 33%perannum Motorvehicles 33%perannum Stocks Stocksarestatedatthelowerofcostandtheestimatedsellingpricelesscoststocompleteand

sell.Thisincludesa10%obsolescenceprovisionappliedtomaterialsstocks. Baddebtsandwrite-offs

BaddebtsarechargedtotheStatementofComprehensiveIncomeintheyearinwhichtheyareincurred.AprovisionforbadanddoubtfuldebtsismadeonanestimationofthosedebtsthatwillnotberecoveredattheStatementofFinancialPositiondate.Inrespectofrentaldebtorsinternalpolicydictatesprovisionismadeonthefollowingbasis:Currenttenants0-4weeksarrears noprovision5-13weeksarrears 20%provision14-26weeksarrears 50%provision27-52weeksarrears 75%provision52weeks+arrears 100%provisionFormertenants 100%provisionInrespectofotherdebtorsprovisionismadeatvaryingpercentagesbasedonthesizeorageofthedebt.

44

Operatingleases

Rentalspayableunderoperating leasesarechargedona straight linebasisover the termof thelease.

Interestandfinancecosts Interestandfinancecostsonborrowingsarecapitalisedtotheextentthattheyaredeemedtobe

financingthedevelopmentprogramme.Allotherinterestischargedtotheincomeandexpenditureaccountintheyearinwhichitisincurred.

In accordance with FRS 102, issue costs incurred on the raising of loan finance are netted off

against the loanbalancesandreleasedto the income&expenditureaccountover the lifeof theloan.

Pensioncosts SHparticipatesintheLocalGovernmentPensionScheme(LGPS).Theschemeisadefinedbenefit

pensionschemebasedonfinalpensionablesalary.Theassetsoftheschemeareheldseparatelyfromthoseoftheassociationinanindependentlyadministeredfund.

Pensionschemeassetsaremeasuredusingmarketvalues.Pensionschemeliabilitiesaremeasured

usingaprojectedunitmethodanddiscountedatthecurrentrateofreturnonahighqualitycorporatebondofequivalenttermandcurrencytotheliability.

Thepensionschemesurplus(totheextentthatitisrecoverable)ordeficitisrecognisedinfull.The

movementintheschemesurplus/deficitissplitbetweenoperatingcharges,financeitemsand,inthestatementofrecognisedgainsandlosses,actuarialgainsandlosses.

Thepensionreserverepresentstheimpactofactuarialgainsand/orlosses,lesstax,whichhave

beenaccountedforinthestatementoftotalrecognisedgainsandlosses. ThereisanelementofestimationuncertaintyrelatingtothevaluationoftheschemeandSHplaces

relianceontheworkofactuariesforthisdisclosure. UndertherequirementsofFRS102,theassociationdisclosesfurtherinformationonassetsand

liabilitiesonamarketvaluebasisattheendoftheaccountingperiod. Lessoraccounting Paymentsreceivedfromthelesseearetreatedasrentalrevenueontheincomeandexpenditure

accountandtheassociationisaccountingfortheleasedassetasafixedassetonthebalancesheet. TransactionsbetweenGroupEntities TheAssociationisexemptfromtherequirementofFRS102todisclosetransactionsbetween

Groupundertakingsasallsubsidiarycompaniesarewholly-ownedbySevernside.HowevertheAccountingDirectionforPrivateRegisteredProvidersofSocialHousing2015requiresthatdisclosurebemadeofrelatedpartytransactionswithunregisteredgroupmembers.

45

2 Turnoverandoperatingcosts–2016 Group

Turnover Operating

costsOperatingsurplus

£000’s £000’s £000’s

Incomeandexpenditurefromlettings

GeneralNeedsHousing 19,333 (14,491) 4,842Garages 345 2 347SupportedHousing 5,799 (2,896) 2,903SharedOwnership 109 (90) 19 Socialhousinglettings 25,586 (17,475) 8,111 OtherSocialHousingactivities SupportingPeople 1,151 (1,120) 31Leaseholders 27 (20) 7SaleoffirstTranche-LCHO 518 (368) 150

1,696 (1,508) 188

TotalSocialHousingLettings 27,282 (18,983) 8,299 NonSocialHousingLettings Shops 43 - 43Market&CommercialRentMarketSalesServiceCostsMarketSalesCommercialSalesCharitableActivityDonationsReceived

754-

2,8786268229

(110)(3)

(2,156)(598)(270)

-

644(3)72228

(188)29

TotalNonSocialHousingLettings 4,412 (3,137) 1,275

TotalTurnover&OperatingCosts 31,694 (22,120) 9,574

46

2 Turnoverandoperatingcosts–2016 Association

Turnover Operating

costsOperatingsurplus

£000’s £000’s £000’s


GeneralNeedsHousing 19,333 (14,587) 4,746Garages 345 2 347SupportedHousing 5,799 (2,897) 2,902SharedOwnership 109 (90) 19 Socialhousinglettings 25,586 (17,572) 8,014 OtherSocialHousingactivities SupportingPeople 1,151 (1,120) 31Leaseholders 27 (20) 7SaleoffirstTranche-LCHO 518 (368) 150

1,696 (1,508) 188

TotalSocialHousingLettings 27,282 (19,080) 8,202 NonSocialHousingLettings Shops 43 - 43Market&CommercialRent 754 (111) 643MarketSalesServiceCosts - (3) (3)MarketSales 2,878 (2,156) 722 TotalNonSocialHousingLettings 3,675 (2,270) 1,405


47

2 Turnoverandoperatingcosts–2015 Group

Turnover Operatingcosts

Operatingsurplus

£000’s £000’s £000’s


GeneralNeedsHousing 18,527 (15,008) 3,519Garages 335 (1) 334SupportedHousing 5,659 (2,619) 3,040SharedOwnership 105 (34) 71 Socialhousinglettings 24,626 (17,662) 6,964 OtherSocialHousingactivities SupportingPeople 1,069 (840) 229Leaseholders 26 (21) 5SaleoffirstTranche-LCHO 332 (253) 79

1,427 (1,114) 313

TotalSocialHousingLettings 26,053 (18,776) 7,277 NonSocialHousingLettings Shops 44 - 44MarketRentCommercialSalesCharitableActivityDonationsReceived

5495279424

(117)(463)(128)

-

43264

(34)24

TotalNonSocialHousingLettings 1,238 (708) 530


48

2 Turnoverandoperatingcosts–2015 Association

Turnover Operatingcosts

Operatingsurplus

£000’s £000’s £000’s


GeneralNeedsHousing 18,527 (15,077) 3,450Garages 335 (1) 334SupportedHousing 5,659 (2,618) 3,041SharedOwnership 105 (35) 70 Socialhousinglettings 24,626 (17,731) 6,895 OtherSocialHousingactivities SupportingPeople 1,069 (840) 229Leaseholders 26 (21) 5SaleoffirstTranche-LCHO 332 (253) 79

1,427 (1,114) 313

TotalSocialHousingLettings 26,053 (18,845) 7,208 NonSocialHousingLettings Shops 44 - 44MarketRent 549 (118) 431 TotalNonSocialHousingLettings 593 (118) 475


49

2(a). Operatingsurplusonsocialhousinglettings–2016 Group

GeneralNeedsHousing

Garages SupportedHousing

SharedOwnership

Total2016

£000’s £000’s £000’s £000’s £000’s

Incomefromlettings

Rentsreceivablenetofidentifiableservicecharges

18,935 345 5,639 100 25,019

ServiceChargeIncome 147 - 135 - 282 Netrentalincome 19,082 345 5,774 100 25,301 OtherIncome 169 - 6 - 175GrantAmortisation 82 - 19 9 110

Turnover,net 19,333 345 5,799 109 25,586

Management (7,186) - (145) (49) (7,380)

RoutineMaintenance (2,832) - (455) - (3,287)PlannedMaintenance (1,721) - (1,604) - (3,325)BadDebts (94) 2 (18) - (110)Depreciation-Properties (2,658) - (674) (41) (3,373) Operatingcosts (14,491) 2 (2,896) (90) (17,475)

Operatingsurplus 4,842 347 2,903 19 8,111

Voids 134 20 60 - 214

50

2(a). Operatingsurplusonsocialhousinglettings–2016 Association

GeneralNeedsHousing


SharedOwnership

Total2016

£000’s £000’s £000’s £000’s £000’s

Incomefromlettings


18,935

345 5,639 100 25,109

ServiceChargeIncome 147 - 135 - 282 Netrentalincome 19,082 345 5,774 100 25,301 OtherIncome 169 - 6 - 175GrantAmortisation 82 - 19 9 110

Turnover,net 19,333 345 5,799 109 25,586

Management (7,179) - (146) (49) (7,374)

RoutineMaintenance (2,847) - (455) - (3,302)PlannedMaintenance (1,809) - (1,604) - (3,413)BadDebts (94) 2 (18) - (110)Depreciation-Properties (2,658) - (674) (41) (3,373) Operatingcosts (14,587) 2 (2,897) (90) (17,572)


Voids 134 20 60 - 214

51

2(a). Operatingsurplusonsocialhousinglettings–2015 Group

GeneralNeedsHousing


SharedOwnership

Total2015

£000’s £000’s £000’s £000’s £000’s

Incomefromlettings


18,212 335 5,468 95 24,110

ServiceChargeIncome 139 - 135 - 274 Netrentalincome 18,351 335 5,603 95 24,384 OtherIncome 94 - 51 - 145AmortisedGrant 82 - 5 10 97

Turnover,net 18,527 335 5,659 105 24,626

Management (7,078) - (127) (5) (7,210)

RoutineMaintenance (2,882) - (527) - (3,409)PlannedMaintenance (2,404) - (1,346) - (3,750)BadDebts (139) (1) (16) - (156)Depreciation-Properties (2,504) - (603) (30) (3,137) Operatingcosts (15,007) (1) (2,619) (35) (17,662)


Voids 122 38 47 - 207

52

2(a). Operatingsurplusonsocialhousinglettings–2015 Association

GeneralNeedsHousing


SharedOwnership

Total2015

£000’s £000’s £000’s £000’s £000’s

Incomefromlettings


18,212 335 5,468 95 24,110

ServiceChargeIncome 139 - 135 - 274 Netrentalincome 18,351 335 5,603 95 24,384 OtherIncome 94 - 51 - 145AmortisedGrant 82 - 5

10 97

Turnover,net 18,527 335 5,659 105 24,626

Management (7,089) - (127) (5) (7,221)

RoutineMaintenance (2,892) - (527) - (3,419)PlannedMaintenance (2,453) - (1,345) - (3,798)BadDebts (139) (1) (16) - (156)Depreciation-Properties (2,504) - (603) (30) (3,137) Operatingcosts (15,077) (1) (2,618) (35) (17,731)


Voids 122 38 47 - 207

53

3. SurplusonsaleofHousingPropertiesGroup&Association

Proceeds Costs TransfertoGrant

Surplus2016 Surplus2015

£000’s £000’s £000’s £000’s £000’s

RTBProperties 1,232 336 745 151 140

RTAProperties - - - - 176

OtherProperties 180 53 - 127 9

SharedOwnershipStaircasing

114 3 - 111 -

Total 1,526 392 745 389 325

4 Interestpayableandsimilarcharges Group&Association

2016£000’s

2015£000’s

Bankloans,andotherloansrepayable 6,222 5,943Fairvalueadjustment 1 3OtherFinancingCosts&Interest 217 499

6,440 6,445

5 Otherfinancecosts/(income) Group&Association

2016£000’s

2015£000’s

Expectedreturnonpensionschemeassets (990) (1,192)

Interestonpensionschemeliabilities 1,355 1,498 365 306

6 SurplusonordinaryactivitiesbeforetaxationGroup 2016

£000’s2015£000’s

Surplusonordinaryactivitiesfortheyearisstatedaftercharging:

• Depreciationonproperties 3,373 3,137• Depreciationonothertangiblefixedassets 293 315• Deficitondisposalofotherfixedassets 15 2• Amortisationofgoodwill 117 116• Reversalofimpairmentlosses - (48)

54

• Revaluationgain (28) (6)

Note6(continued)• Auditor’sremuneration:

ExternalAudit–AuditServices(*) 36 35ExternalAudit–Other(*) 48 38InternalAudit–AuditServices 31 25

• Operatingleasecharges

159 211

Association 2016£000’s

2015£000’s

Surplusonordinaryactivitiesfortheyearisstatedaftercharging:

• Depreciationonproperties 3,373 3,137• Depreciationonothertangiblefixedassets 259 294• Deficitondisposalofotherfixedassets 8 -• Amortisationofgoodwill 117 116• Reversalofimpairmentlosses - (48)• Revaluationgain (28) (6)• Auditor’sremuneration:

ExternalAudit–AuditServices(*) 36 35ExternalAudit–Other(*) 48 38InternalAudit–AuditServices 31 25

• Operatingleasecharges

159 211

*UnderSORPrequirementstheservicesprovidedbytheexternalauditorshavebeenstatedexcludingVAT.

Theparentcompanyhasbornetheoverallauditfeeonbehalfofallsubsidiaries.

55

Notes(continued)

7 Taxation Group (a)Analysisofchargefortheyear

2016£000’s

2015£000’s

Currenttaxonincomefortheyear - -Tax(credit)/chargeondeficitonordinaryactivities - -

(b)Factorsaffectingtaxchargeforperiod

ThetaxassessedfortheperiodislowerthanthestandardrateofcorporationtaxintheUK(20%).Thedifferencesareexplainedbelow.

2016£000’s

2015£000’s

Surplusonordinaryactivitiesbeforetax 3,187 1,473 Currenttaxat20%(2015:21%) 637 308Fixedassetdifferences 529 538Expensesnotdeductiblefortaxpurposes 74 55Incomenottaxablefortaxpurposes (120) -Capitalallowancesforperiodinexcessofdepreciation - (19)ReliefobtainedforhistoricFRS102adjustments - (3)Amounts (charged)/credited directly to equity or otherwisetransferred

212 (913)

ChargeableGains 30 31Othershorttermtimingdifferences 2 4

Deficit/(Surplus)attributabletocharitableactivities 20 (2)Adjustclosingdeferredtaxtoaveragerateof20% 248 -Utilisationoftaxlosses 10 1Deferredtaxnotrecognised (1,642) - Corporationtaxchargefortheperiod - -

(c)Factorsthatmayaffectfuturetaxcharges

TheGrouphasadeferredtaxassetof£2,232k(2015:£3,885k)inrespectoftimingdifferencesandtaxlossescarriedforward,whichhasnotbeenrecognisedasnotexpectedtobeutilisedintheforeseeablefuture.FurtherdetailsareshownatNote17.

From1April2016SHacquiredcharitablestatussignificantlyreducingtheimpactoffuturetaxcharges.

56

Notes(continued)

7 Taxation Association (a)Analysisofchargefortheyear

2016£000’s

2015£000’s

Currenttaxonincomefortheyear - -Tax(credit)/chargeondeficitonordinaryactivities - -

(b)Factorsaffectingtaxchargeforperiod

ThetaxassessedfortheperiodislowerthanthestandardrateofcorporationtaxintheUK(20%).Thedifferencesareexplainedbelow.

2016£000’s

2015£000’s

Surplusonordinaryactivitiesbeforetax 3,223 1,338 Currenttaxat20%(2015:21%) 644 282Fixedassetdifferences 528 537Expensesnotdeductiblefortaxpurposes 74 55Incomenottaxablefortaxpurposes (120) -Amounts (charged)/credited directly to equity or otherwisetransferred

211 (912)

ChargeableGains/(losses) 30 31Grouplossrelief 26 7

Adjustclosingdeferredtaxtoaveragerateof20% 250 -Deferredtaxnotrecognised (1,643) - Corporationtaxchargefortheperiod - -

(c)Factorsthatmayaffectfuturetaxcharges

SHhasadeferredtaxassetof£2,252k(2015:£3,907k)inrespectoftimingdifferencesandtaxlossescarriedforward,whichhasnotbeenrecognisedasnotexpectedtobeutilisedintheforeseeablefuture.FurtherdetailsareshownatNote17.

From1April2016SHacquiredcharitablestatussignificantlyreducingtheimpactoffuturetaxcharges.

57

Notes(continued)

8 StaffcostsGroup 2016

£000’s2015£000’s

Staffcostsincludingthedirectors: • Wagesandsalaries 7,328 7,021

• Socialsecuritycosts 614 599

• Otherpensioncosts 799 935 8,741 8,555 F.T.E. F.T.E. 2016 2015Numberofpersons(includingthedirectors)employedduringtheyearexpressedasfulltimeequivalents(37hoursperweek):

• Officestaff–SevernsideHousingnonPropertyServices 159 161• Officestaff–PropertyServices 18 18• PropertyServicesstaff• Otherstaff

6530

6825

Totalemployees 272 272

StaffcostsAssociation 2016

£000’s2015£000’s

Staffcostsincludingthedirectors: • Wagesandsalaries 6,462 6,266• Socialsecuritycosts 544 532

• Otherpensioncosts 763 899 7,769 7,697 F.T.E. F.T.E. 2016 2015Numberofpersons(includingthedirectors)employedduringtheyearexpressedasfulltimeequivalents(37hoursperweek):

• Officestaff–SevernsideHousingnonPropertyServices 159 161• Officestaff–PropertyServices 18 18• PropertyServicesstaff 65 68

Totalemployees 242 247

58

Note8(continued)

DirectorsGroup&Association

ThedirectorsaredefinedastheBoardofDirectorsandExecutiveOfficers.TheremunerationoftheExecutiveOfficerswas: 2016

£000’s2015£000’s

Emoluments(includingBenefitsinKind) 412 446

PensionContributions 84 98

Total 496 544

Theemolumentspaidtothehighestpaiddirectordisclosedabove(excludingpensioncontributions)

139

136

TheChiefExecutiveisanordinarymemberoftheLGPSpensionscheme.Contributionsarepaidinlinewithothermembersofitsschemeandnoenhancedorspecialtermsapply.TheChiefExecutiveisthehighestpaiddirector,andreceivesnoadditionalremunerationforherserviceasanexecutivedirectorontheboardofSevernsideHousing.

Staffwhoreceivedremuneration(includingbenefitsinkind)inexcessof£60karesummarisedinthefollowingbands:

2016 2015£60,000-£69,999 4 3

£70,000-£79,999 3 4

£80,000-£89,999 1 -

£110,000-£119,999 - 1

£120,000-£129,999 2 1

£130,000-£139,999 1 1

£160,000-£169,999 - 1

£170,000-£179,999 1 -

Totalhigherpaidstaff 12 11

59

Note8(continued)

TheremunerationoftheNon-ExecutiveOfficerswas:

2016£000’s

2015£000’s

PaulSmith 8.5 8.5ElaineGanderton 4.5 4.5RoryO’Byrne 4.5 4.5AndrewParkes 4.5 4.5PaulWilliams 4.5 4.5MichaelRoughan 4.5 3GarethEvans 3 3AlysonLanning 3 3MalcolmPrice 3 3PeterPrice 3 3RobinPritchard 3 3PaulBeaman 1.5 1.5

47.5 46

9 Goodwill Group&Association 2016

£000’s2015£000’s

Cost At1stApril 350 350Purchasedintheyear - -At31stMarch 350 350Amortisation

At1stApril (233) (117)Amortisedduringtheyear (117) (116)At31stMarch

(350) (233)

Total31stMarch - 117

60

10 Tangiblefixedassets–Housingproperties Group&Association

AssetsUnder

Construction£000’s

Propertiesheldforletting£000’s

Totalhousingproperties£000’s

Cost At1stApril2015 8,970 143,527 152,497Additions:

Properties 4,526 8,587 13,113Components - 3,160 3,160

UnsoldLCHO(1sttranche)movedtocurrentassets (4) (831) (835)UnsoldMarketSalesmovedtocurrentassets - (819) (819)Disposals/Write-offs - (2,460) (2,460)ComponentsDisposals - (738) (738)CompletedinyeartransferredtoInvestmentProperties - (4,758) (4,758)CompletedinyeartransferredtoPHFL (6,144) 6,144 -At31stMarch2016 7,348 151,812 159,160

Depreciation At1stApril2015 - (23,443) (23,443)Chargeforperiod - (3,228) (3,228)DepreciationonDisposal-Components - 276 276At31stMarch2016 - (26,395) (26,395)

NBVat31stMarch2016 7,348 125,417 132,765

NBVat31stMarch2015 8,970 120,084 129,054

Properties held for rent include 103 Market Rent Properties and 54 New Built Shared OwnershipProperties.Garagesandtheremaining25SharedOwnershipPropertiesweretransferredatnilcost.Assetsunderconstructionincludesurveyordevelopmentfeesforcapitalworks.AfullimpairmentreviewwascarriedoutforallrelevantpropertiesasaresultoftherentreductionimposedintheSummer2015Budget.Themostrelevantcalculationfortherecoverablevalueoftheassetwasdeemedtobedepreciablereplacementcost.Thiswascalculatedbyevaluatingthebuildcostsforallnewlydevelopedunitsovertheprevious2yearswhichwhencombinedwiththoseincludedinthecurrentdevelopmentpipelineprovidedvaluebypropertytype.Whenthiswascomparedtothehistoriccostvaluecarriedintheaccountsitwasconcludedthatnoimpairmentwasrequired.

61

Housingpropertiesunitscomprise: 2016 2015 GeneralNeedsHousing 3,767 3,796AffordableRent 292 241MarketRent 103 64HousingForOlderPeople 1,217 1,220SupportedHousing 10 10Other 1 1Sharedownership 79 57 5,469 5,389

Nointeresthasbeencapitalisedfor2015/16(2014/15:nil).

11 Tangiblefixedassets–other Group

Land&Buildings

Fixtures&fittings

PlantandEquipment

MotorVehicles

IT

Total

£000’s £000’s £000’s £000’s £000’s £000’sCost At1stApril2015 2,834 701 98 232 2,415 6,280AdditionsReclassification

--

8017

21-

69-

165(17)

335-

Disposals - (65) (4) (58) (183) (310) At31stMarch2016 2,834 733 115 243 2,380 6,305

Depreciation At1stApril2015 (273) (631) (49) (93) (2,060) (3,106)Currentcharge (56) (21) (17) (42) (157) (293)Disposals - 66 3 48 173 290 At31stMarch2016 (329) (586) (63) (87) (2,044) (3,109)

NBV31stMar2016 2,505 147 52 156 336 3,196 NBV31stMar2015 2,561 70 49 139 355 3,174

Thevalueofnon-depreciablelandincludedwithintangiblefixedassets–otherland&buildingsis£74k(2015:£74k).Thisisheldonalong-lease.

62

Tangiblefixedassets–otherAssociation

Land&Buildings

Fixtures&fittings

PlantandEquipment

MotorVehicles

IT

Total

£000’s £000’s £000’s £000’s £000’s £000’sCost At1stApril2015 2,834 693 86 42 2,399 6,054Reclassification - 17 - - (17) -Additions - 51 7 - 155 213Disposals - (66) - - (177) (243) At31stMarch2016 2,834 695 93 42 2,360 6,024

Depreciation At1stApril2015 (272) (629) (45) (17) (2,056) (3,019)Currentcharge (56) (21) (14) (14) (154) (259)Disposals - 66 - - 169 235 At31stMarch2016 (328) (584) (59) (31) (2,041) (3,043)

NBV31stMar2016 2,506 111 34 11 319 2,981 NBV31stMar2015 2,562 63 41 25 343 3,035

Thevalueofnon-depreciablelandincludedwithinassetsnotforrentis£74k(2015:£74k).Thisisheldonalong-lease.

12 InvestmentProperties Group&Association

2016£000’s

Balanceat1stApril 8,690

Additions 4,754

Netgainfromfairvalueadjustments 28

Otherchanges -

Balanceat31stMarch 13,472

Historicalcostnetbookvalue 13,437

63

13 Stocks Group

2016 2015 £000’s £000’s

Materialsstocks 75 123Workinprogress

- SharedOwnershipunsold–Completedproperties- SharedOwnershipunsold–Workinprogress- MarketSaleunsold–Completedproperties

832104819

155296

- 1,830 574Association

2016 2015 £000’s £000’s

Materialsstocks - 50Workinprogress

- SharedOwnershipunsold–Completedproperties- SharedOwnershipunsold–Workinprogress- MarketSaleunsold–Completedproperties

832104819

154296

- 1,755 500

14 Debtors Group

2016 2015Amountsfallingduewithinoneyear £000’s £000’sRentaldebtors 405 664Less:provisionforbaddebts (195) (475) 210 189 Otherdebtors 561 397Less:provisionforbaddebts (178) (118)Prepayments 416 328

1,009 796

Association

2016 2015Amountsfallingduewithinoneyear £000’s £000’sRentaldebtors 405 663Less:provisionforbaddebts (195) (475) 210 188 Otherdebtors 458 327Less:provisionforbaddebts (167) (111)Prepayments 416 328

917 732

64

15 Creditors:amountsfallingduewithinoneyear Group

2016 2015 £000’s £000’s

LoanspayablewithinoneyearTradeCreditorsHirePurchase

562,259

31

531,86815

Othertaxationandsocialsecuritycosts 195 213Othercreditors 241 131Accruals 1,666 1,654Deferredincome 2,130 1,459 6,578 5,393

Association

2016 2015 £000’s £000’s

Loanspayablewithinoneyear 56 53TradeCreditors 2,187 1,894Othertaxationandsocialsecuritycosts 166 189Othercreditors 60 78Accruals 1,620 1,607Deferredincome 2,130 1,459 6,219 5,280

16 Creditors:amountsfallingdueafteroneyear Group

2016£000’s

2015£000’s

HousingLoantoberepaid 125,498 118,548DeferredGrant 13,293 12,000HirePurchase 34 23Total 138,825 130,571Association

2016£000’s

2015£000’s

HousingLoantoberepaid 125,498 118,548DeferredGrant 13,293 12,000Total 138,791 130,548

65

Thehousingloanfacilitiesdueaftermorethanoneyearcomprise£17,000k(2015:£10,000k)variableand£108,701k(2015:£108,754k)fixedloans,andaresecuredbyspecificchargesonthefreehold&leaseholdhousingproperties.Interestispayableatratesbetween0.55%(2015:3.09%)and5.45%(2015:5.45%).

17 Deferredtaxation

Thedeferredtaxliabilities/(assets)providedandunprovidedintheaccountsareasfollows:

Group

Provided Provided Unprovided Unprovided 2015 2015 2016 2015

£000’s £000’s £000’s £000’sAcceleratedcapitalallowances - 236 227Othertimingdifferences - (2,011) (2,383)Taxlossescarriedforward - (457) (1,729) - (2,232) (3,885)Association

Provided Provided Unprovided Unprovided 2015 2015 2016 2015

£000’s £000’s £000’s £000’sAcceleratedcapitalallowances - 210 201Othertimingdifferences - (2,005) (2,379)Taxlossescarriedforward - (457) (1,729) - (2,252) (3,907)DeferredtaxassetshavenotbeenprovidedforinrespectoftaxlossesandothertimingdifferencesassetoutatNote7.Inaddition,noprovisionhasbeenmadeindeferredtax(2015:nil)fortaxrelatingtocapitaldisposalsinthecurrentandpriorperiodwherethegainistoberolledoverintoreplacementassets.Itisnotenvisagedthatanytaxwillbecomepayableinrespectofthesegainsintheforeseeablefuture.

66

18 Reconciliationofoperatingprofittonetcashinflow/(outflow)fromoperatingactivities Group

2016£000’s

2015£000’s

OperatingSurplus 9,574 7,807Depreciationcharges 3,666 3,454Amortisationcharges 117 117LGPScharge (208) (108)SharedOwnershipcosts 368 243MarketSalecosts 2,156 Aborteddevelopmentcosts - 29WIPtransferred - 121AmortisedGrant (110) (98)(Increase)/Decreaseinstocks 48 1(Increase)/Decreaseindebtors (178) 432Increaseincreditors 418 428Netcashinflowfromoperatingactivities 15,851 12,426

19 Analysisofthechangesinnetdebt Group&Association

1stApril2015£000’s

Cashflows£000’s

31stMarch2016£000’s

Cashinhand,atbank(includinginvestments)

5,084

2,916 8,000

Totaldebtdue

(118,601) (6,953) (125,554)

Total (113,517) (4,037) (117,554)

20 Reconciliationofthemovementinnetdebt Group&Association

2016£000’s

2015£000’s

Netdebt1stApril (113,517) (105,305)Increaseincash 2,916 4,537Increaseindebt (6,953) (12,749)Changeinnetdebtduetocashflow (4,037) (8,212) Netdebt31stMarch (117,554) (113,517)

67

21 DeferredCapitalGrantGroup&Association

2016 2015 £000’s £000’sAmortisedbalanceat1stApril 12,115 10,593Grantsreceivedduringtheyear 1,399 1,606Releasedtoincomeduringtheyear (110) (83)Amortisedbalanceat31stMarch 13,404 12,116 Originaltotalvalueofgrant 14,231 12,832 AmountrecognisedinStatementofComprehensiveIncome (827) (717) Duewithinoneyear 110 116 Dueafteroneyear 13,294 12,000

22 Analysisofchangesinfinancing Group&Association

2016£000’s

2015£000’s

Balanceat1stApril 118,601 105,852Netcashinflow 6,952 12,746Fairvalueadjustment 1 3Balanceat31stMarch 125,554 118,601

68

23 Pension

Group&Association

InaccordancewithFRS102,Severnsideisrequiredtodisclosecertaininformationregardingassets,liabilities,incomeandexpenditurerelatingtopensionschemesforitsemployees.

SevernsideHousingparticipatesintheLocalGovernmentPensionScheme.TheLocalGovernmentPensionSchemeisadefinedbenefitschemebasedonfinalpensionablesalary.

ThemostrecentvaluationoftheShropshireCountyPensionFund(thefund)wascarriedoutasat31March2013andhasbeenupdatedbyindependentactuariestotakeaccountofFRS102requirementsinordertoassesstheliabilitiesoftheFundasat31March2016.Liabilitiesarevaluedonanactuarialbasisusingtheprojectedunitmethodwhichassessesfutureliabilitiesdiscountedtotheirpresentvalue.

TheprioryearfigurespresentedinrelationtothefundarerevisedfiguresaccordingtoIAS19disclosurerequirements.

2016 2015

£000’s £000’s

PresentValueofFundeddefinedbenefitobligations (40,643) (41,494)

FairValueofplanassets 30,064 29,856

Netliabilityinbalancesheet (10,579) (11,638)

Movementsinpresentvalueofdefinedbenefitobligation 2016 2015

£000’s £000’s

At1stApril (41,494) (33,476)

CurrentServicecost (928) (790)

InterestCost (1,355) (1,498)

Remeasurements 2,465 (6,121)

Contributionsbymembers (251) (271)

BenefitsPaid 1,038 662

Curtailments (118) -

At31stMarch (40,643) (41,494)

69

Movementsinfairvalueofplanassets 20162015

£000’s£000’s

At1stApril 29,856 26,191

Interestonplanassets 990 1,192

Remeasurements (1,062) 1,896

Administrationexpenses (18) (20)

Employercontributions 1,085 988

Membercontributions 251 271

Benefitspaid (1,038) (662)

At31stMarch 30,064 29,856

ExpenserecognisedintheStatementofComprehensiveincome 2016 2015

£000’s £000’s

Currentservicecost 928 790

Administrationexpenses 18 20

Netinterestcost 365 306

Effectofcurtailments 118 -

Total 1,429 1,116

TheexpenseisrecognisedinthefollowinglineitemsintheStatementofComprehensiveIncome:

2016 2015

£000’s £000’s

OperatingCosts 1,064 810

OtherFinancingCosts 365 306

1,429 1,116

TheamountrecognisedintheStatementofComprehensiveIncomeinrespectofremeasurementsis£1,059k(2015:£(4,353k)).

70

Thefairvalueoftheplanassetsandthereturnonthoseassetswereasfollows:-

2016 2015

£000’s £000’s

Equities 15,350 15,528

CorporateBonds 7,736 7,619

Property 1,608 1,224

Cash 517 929

Alternatives 4,853 4,556

Total 30,064 29,856

TheestimatedMacaulaydurationofliabilitiesis20years(2015:20years).

Principalfinancialassumptions(derivedusingamaturedurationprofile)attheyear-endwereasfollows:

2016 2015

RateofCPIinflation 2.00% 2.00%

Rateofincreaseinsalaries3.50% 3.50%

Rateofincreaseinpensions2.00% 2.00%

Discountrate3.60% 3.30%

Invaluingtheliabilitiesofthepensionfundat£40,643k,mortalityassumptionshavebeenmadeasindicatedbelow.

Theassumptionsrelatingtolongevityunderlyingthepensionliabilitiesatthebalancesheetdatearebasedonstandardactuarialmortalitytables.Theassumptionsareequivalenttoexpectinga65-yearoldtoliveforanumberofyearsasfollows:-

• Currentpensioneraged65:23.9years(male),26.4years(female).• Futureretireeuponreaching65in20years’time:26.2years(male),29.2years(female)

Thehistoryoftheplansforthecurrentandpriorperiodsisasfollows:

Balancesheet

2016 2015 2014 2013 2012 2011 2010

PresentValueofSchemeLiabilities

(40,643) (41,494) (33,476) (35,766) (29,878) (26,956) (26,714)

FairValueofSchemeAssets

30,064 29,856 26,191 24,229 20,744 19,655 17,181

Theassociationexpectstocontributeapproximately£961ktoitsdefinedbenefitplansinthenextfinancialyear.

71

PensionBond

SevernsidehasenteredintoaPensionGuaranteeBondAgreementwithShropshireCountyPensionFundandNationwideBuildingSociety,wherebyShropshireCountyPensionFundmay,ifSevernsideHousingfailstomakeappropriatepensionschemepayments,seekrecoveryfromNationwideBuildingSociety.Thepensionbond,nottoexceed£5,240k,(2015:£5,240k)isbasedonactuarialassessmentsofthescheme’sliability.

24Investmentsandsubsidiaryundertakings

Severnsideistheparententityofallofthefollowingsubsidiaryundertakingsasat31March2016.Allhavebeenconsolidatedintothegroupaccounts.

Name CountryofRegistration/Status

BasisofControl

PrincipalActivity

A.WaltersElectricalContractorsLtd

EnglandandWalesPrivateLimitedCompany

Ownershipof2£1sharesbeing100%oftheissuedsharecapital

ElectricalcontractorstodelivermaintenanceservicestoSevernside.

AWaltersElectricalLtd

EnglandandWalesPrivateLimitedCompany

Ownershipof1£1sharesbeing100%oftheissuedsharecapital

Electricalcontractors.

SevernsideCommunityAssociationLtd

EnglandandWalesIndustrialandProvidentSocietyregisteredwiththeFinancialConductAuthority(formerlytheFSA).

StepinrightsandpowertoappointandremoveBoardmembers

Toprovidesupporttocommunitiesinneed,includingtheprovisionofgrantstoassistindividualsandgroupstoimprovetheirenvironmentandeducationaloremploymentopportunities.

ShrewsburyHomesforAll

CompanylimitedbyguaranteeandacharityregisteredwiththeCharitiesCommission.

StepinrightsandpowertoappointandremoveBoardmembers

Torelievethoseinneedofassistance,peoplewhoarehomeless,inhousingneedorwhoneedhelptoavoidhomelessness.

25 CapitalcommitmentsGroup&Association

2016£000’s

2015£000’s

Capitalexpenditureauthorisedbutnotyetcontractedfor 18,333 16,261

Capitalexpenditurecontractedforbutnotprovidedforinthefinancialstatements

8,656 13,504

26,989 29,765

Theabovecommitmentswillbefundedthroughcurrentcashresources(£7,215k)andborrowings(£24,220k),whichareavailablefordraw-downundercurrentloanarrangements.

72

26 Othercapitalcommitments

Group&Association

At31stMarch2016Severnsidewascommittedtomakingthefollowingminimumpaymentsundernon-cancellableoperatingleasesforeachofthefollowingperiods:

2016

£000’s2015£000’s

Notlaterthanoneyear 3 12Laterthanoneyearandnotlaterthan5years 134 134Laterthan5years - - 137 146

27 ExplanationoftransitiontoFRS102fromoldUKGAAP

Group Surplusforthe

yearended31stMarch2015

Revenuereservesasat31stMarch2015


£000’s £000’s £000’s

AmountunderoldUKGAAP

1,190 11,235 9,847

AmortisedGrant

97 717 620

RevisedhousingpropertydepreciationonFRS102treatmentofgrants

(1) (458) (457)

Reversalofdepreciationchargeonpropertiesreclassifiedasinvestmentproperties

98 98 -

Revaluationofinvestmentproperty

54 6 (48)

Holidaypayaccrual

38 (71) (109)

FairValueadjustmentonnon-basicloanbalances

(3) (2) 1

AmountunderFRS102 1,473 11,525 9,854

73

Association Surplusforthe

yearended31stMarch2015



£000’s £000’s £000’s

AmountunderoldUKGAAP 1,060 10,616 9,357AmortisedGrant 98 717 619RevisedhousingpropertydepreciationonFRS102treatmentofgrants

(2) (458) (456)

Reversalofdepreciationchargeonpropertiesreclassifiedasinvestmentproperties

98 98 -

Revaluationofinvestmentproperty 54 6 (48)Holidaypayaccrual 39 (62) (101)FairValueadjustmentonnon-basicloanbalances

(3) (2) 1

AmountunderFRS102 1,344 10,915 9,372

28 FinancialInstruments

Thecarryingamountsofthefinancialassetsandliabilitiesinclude:

2016

£000’s2015£000’s

BasicLoansatamortisedcost 115,551 108,559Non-basicloans–Fairvaluethroughprofitandloss 10,003 10,002

Financialliabilitiesmeasuredatamortisedcostcomprisebankloansandoverdrafts,tradecreditorsandothercreditors.

Financialliabilitiesmeasuredatfairvaluethroughtheprofitandlosscomprisebankloans.Fairvaluerepresentsthenetpresentvalueofthenon-basicloansusingtheweightedaveragecostofcapitalassociatedwiththoseloans.

74

29 Relatedpartytransactions

Therehavebeennotransactionswithanyrelatedpartieswhicharenotincludedwithinthegroupfinancialstatements.

Duringtheyear,SevernsideHousingrechargedcostsof£17,081(2015:£7,687)incurredonbehalfofotherGroupundertakings.Suchcostsincludetherechargingofinformationsystems,officecostsandgeneralmanagementcosts.Theserechargesareagreedbymanagementandarebasedonrelevantcostinformation.

Duringtheyear,SevernsideHousingpurchasedservicesfromA.WaltersElectricalContractorsLtd,asubsidiarycompany,totalling£1,420,495(2015:£1,336,826),andservicesfromAWaltersElectricalLtd,asubsidiarycompany,totalling£66(2015:£4,307).

Atthereportingdate,SevernsideHousinghadthefollowingtradingbalanceswithnon-regulatedGroupundertakings:£103,723(2015:£234,691)wasowedtoA.WaltersElectricalContractorsLtd,£78(2015:nil)wasowedtoAWaltersElectricalLtd.

30 PostBalanceSheetEvents

SHbecamearegisteredcharityon1April2016.Seepage12formoredetails.

On1April2016therewasamutualdecisiontakenforShrewsburyHomesforAlltoleavetheSHGroup.

InMay2016SH’sBoardapprovedthefullbusinesscasetoproceedwithamergerwithanotherRegisteredProviderduring2016/17.Seepage12formoredetails.

directors’ report, strategic report and consolidated ... · rory o’byrne (vice-chair &...

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