annual report & financial statements 2017/18...3 board chair r bailey (from 8 may 2017, chair...

Annual Report & Financial Statements2017/18

GreenSquare Group Limited

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ContentsBoard members, executive directors, advisors and bankers 3

Chair’s statement 4

Report of the board 7

Strategic report 12

Independent auditor’s report 42

Consolidated statement of comprehensive income 44

Association statement of comprehensive income 45

Consolidated and association statement of changes in reserves 46

Consolidated statement of financial position 47

Association statement of financial position 48

Consolidated statement of cash flows 49

Notes to the financial statements 50

Report and financial statementsFor the period ended 31 March 2018

GREENSQUARE GROUP LIMITED

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Board

Chair

R Bailey (from 8 May 2017, Chair from 26 July 2017)

H Gardner (to 26 July 2017)

Vice Chair

C Victory-Rowe

Other MembersM Clarke (from 25 July 2017)P McLaughlinA Willis (Chair of the Audit & Risk Committee from 26 July 2017)P Starkey D SwannJ TibbittsD Cash (to 26 July 2017)P Lowe (to 26 July 2017)

H Toplis - co-opted annually

Registered numbers

Co-operative and Community Benefit SocietyNo. 7418

Homes and Communities AgencyNo. 4833

Executive directors

Chief Executive

H Toplis

Finance Director

S Murray

Operations Director

A Smith

Managing Director Development

B Wood

OD and Corporate Services Director

A Reilly

Secretary

M Arnold

Registered office

Methuen ParkChippenhamWiltshireSN14 0GU

www.greensquaregroup.com

External auditors

BDO LLP2 City PlaceGatwickWest SussexRH6 0PA

Principal solicitors

Anthony Collins LLP134 Edmund StreetBirminghamB3 2ES

Principal bankers

Lloyds Bank PLCOxfordOX1 4AA National Westminster Bank PLCChippenhamSN15 3HB

Board members, executive directors, advisors and bankers

BOARD MEMBERS, EXECUTIVE DIRECTORS, ADVISORS AND BANKERSGREENSQUARE GROUP LIMITED

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Chair’s statement

SummaryAs this is my first Chair’s statement, I would like to say how pleased I am to become Chair of GreenSquare where the Board, Executive, and staff are demonstrably so committed to the vision and values of a progressive housing association group. To ensure we continue to improve our offering we have however more to do in terms of understanding the customer experience as strong satisfaction with our delivery of services must be a key priority for the Group. We have already seen some excellent initiatives in that area, and with the support of the positive Group culture, I am optimistic for future progress delivered with passion.

StrategyDuring the year the Board refreshed its corporate strategy, re-confirming the emphasis on customer satisfaction and building more affordable homes.

The customer emphasis has seen a push to improve satisfaction levels at pace. There are measures in place, plus additional investment, which customers should see feeding through in better services in 2018/19.

GreenSquare’s strategy has also been about increasing the number of new homes, not only rent and shared ownership but for outright sale as well. The production levels are on track to get to 200 new homes a year, providing three tenure types social rent, affordable rent and shared ownership. Plus, up to 140 homes built for outright sale. That represents a 3% increase in existing homes in management.

Growing the homes for sale is one of the Board strategies in response to the 2015 government rent cut. The Board continues to ensure that the group structure is robust and protects the social housing assets, demonstrated through comprehensive stress testing. In addition, the activity of outright sale of homes is resourced with staff skilled at operating within a commercial house building environment. The Board was aware that the move to outright sale of homes would have an impact on the credit perception of the organisation by the Regulator of Social Housing (RSH). The consequence was a viability re-grade from V1 to V2. However, shortly after that re-grade, GreenSquare was awarded a strong Standard & Poor’s A minus stable outlook, credit rating.

Operational performanceThe year-to-date customer satisfaction for GreenSquare has gradually improved over the year, rising to 75.3% by the end of March 2018. That compares unfavourably to our benchmark group which has a median of 87%. However, the Board is confident that overall satisfaction will continue to improve, a view justified with recent and steady 90% resident satisfaction with their last contact with GreenSquare. The satisfaction with quality of some existing homes remains lower than our ambitions but is being tackled with the regeneration work and direct investment into certain properties. This contributes to our total social housing cost per unit being just below the median for our benchmark group of housing associations.

CHAIR’S STATEMENTGREENSQUARE GROUP LIMITED

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We continue to improve our rent collection and control our rent loss from homes in the process of being let. This operational focus feeds through to our above median operating margin for social housing lettings, at 38.9%.

Development of new affordable homes is in line with our business plan objectives, with 241 new affordable rented and shared ownership homes coming into management in the year. This exceeded our business plan target. In the final six months of the year, GreenSquare re-financed to BlackRock £75m of debt and secured an additional £110m of new funding through a private placement. This provides medium term liquidity to meet our development aspirations, and significantly lowers our weighted cost of capital, thereby creating more value for money for the Group. GreenSquare staff have responded to the Board’s performance challenges, and how they engage with the organisation. This has been enhanced by the Board further developing the culture of the organisation, which has become a focus in the year. The results see the level of staff engagement rising to 77%, and satisfaction with GreenSquare as an employer up to 82%. These strong results will continue to help drive improvements in operational performance.

The BoardI would like to offer my thanks to Hilary Gardiner who successfully chaired the group for seven years. In addition, Philippa Lowe and Derek Cash came to the end of their tenures as board members having made a long and valuable contribution to GreenSquare.

Eleanor House, Northway, OxfordStart on site of phase two at Culverhay, Cricklade

New houses at Abberd Way, Calne

Robin Bailey meets GreenSqauare residents


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The Board and committees have developed to reflect the needs of the business with the recruitment to the Board of Mandy Clarke to chair the Remuneration and People Committee, and Andrew Willis to chair the Audit & Risk Committee. In addition, the committees have been strengthened with the recruitment of Claire Jenkins to the Customer Service Committee and Lorna Harrison to the Finance Committee.

The Board has worked hard to find ways to improve the governance of the Group, and strengthening the accountability and skills for the development of new homes in the housing associations, as distinct from the more commercial development within our subsidiary GreenSquare Homes.

Initial impressions A phrase that is frequently used within the housing sector is to “make a difference”. My work experience was latterly as a senior executive director of the Nationwide Building Society. Since taking early retirement I have served on a number of Boards primarily as Chair and still continue to do so for a Building Society. While I have had excellent governance and strategic experience, the sector knowledge of housing was more limited.

I have spent the first few months at GreenSquare getting to know the sector, key stakeholders and the services we offer. Having spent time on the frontline within the housing and repair service, plus with the support services that we run (Gloucestershire Housing Support and Gloucestershire Domestic Abuse Support Service), I have seen for myself the genuine difference that we make to people’s lives on a day by day basis. And it is truly inspiring.

New resident Loraine gets keys for home at Stockley Grange, Calne

Looking forwardThe housing sector is facing significant challenges for the future, by being social enterprises operating in places where the market has failed. In addition, it needs to make itself more sustainable in terms of driving operational value for money and finding innovative ways of operating to meet the aspiration of those who live in the communities it seeks to serve.

GreenSquare is well placed to make a difference. It can and will do more to improve, and through that change, deliver more in terms of customer satisfaction and new homes. It’s an exciting prospect.

Robin BaileyChair24 July 2018


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Report of the Board

The Board of GreenSquare Group Limited is pleased to present its report together with the audited financial statements for the period ended 31 March 2018. During the financial year the accounting reference date of GreenSquare Group Limited parent Association was changed back from 7 April to 31 March so as to remain coterminous with the year end of the rest of the group. Accordingly, the current financial statements are prepared for 11 months and 23 days from 8 April 2017 to 31 March 2018. The comparative figures presented within these accounts are for the 12 months and 7 day period ending 7 April 2017 and are comparable.

GreenSquare Group (‘the Group’) now comprises GreenSquare Group Limited (‘the Association’) and its subsidiaries Westlea Housing Association Limited, GreenSquare Community Housing, GreenSquare Homes Limited, GreenSquare Construction Limited, GS Energy Services Limited, and GreenSquare Estates Limited.

The financial statements are prepared on a group basis thus reflecting activities of the subsidiary companies as well as the Association.

Principal activities

GreenSquare is a public benefit entity administered by a Board of Management. Its subsidiaries provide and manage affordable rented housing and develop private housing for rent and sale.

As well as owning and managing 11,877 properties, GreenSquare is a major developer of new affordable housing and is a lead development partner under the Homes England National Affordable Housing Programme (NAHP). The Group employs 521 staff on a full time

equivalent basis. Any surpluses made by the subsidiaries are retained within the Group.

GreenSquare is a major provider of housing, regeneration, care and support and commercial services across Wiltshire, Oxfordshire and Gloucestershire and the surrounding areas.

Business review and future developments

Details of the Group’s performance for the year and factors likely to affect its future development are contained within the strategic review that follows this report.

Basis of accounting

The Group transitioned from previously extant UK GAAP to FRS 102 in 2016. The key changes were the adoption by the Group of deemed cost transitional relief and to account for its housing property assets at deemed cost and the recognition of the net present value of any contractual agreements for past deficit pension contributions. There have been no further material changes this financial year.

Customer involvement in governance

The involvement of our customers in our governance framework is pivotal to how we shape and develop our new homes and services. Customers are involved with some of our Committees, in particular the Customer Service Committee which comprises five Customer members and five Independent members.

REPORT OF THE BOARDGREENSQUARE GROUP LIMITED

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The Customer Service Committee is responsible for approval of stakeholder engagement arrangements and communication with residents, including the annual report. The Committee hears the voice of the customer, look to understand their needs and seek to drive improvements in satisfaction. Their role also includes approval of key customer strategies and policies, as well as monitoring the delivery of action plans and performance information, which underpin these (this includes key performance indicators and complaints reports). The Committee also recommends the operational budget to the Group Board, and undertakes ongoing monitoring of the budget during the year.

Efficiency

The Board is committed to delivering an effective and efficient service to residents and other stakeholders, and uses a range of strategies to increase efficiency including re-evaluating procurement policies; use of our own building contractor and direct maintenance team; strict budgetary control; applying techniques to improve procedures that add value to the customer; benchmarking with others; and reducing staff turnover, sickness and absenteeism.

EmployeesOne strength of the Group lies in the quality and commitment of its employees.

The Group’s ability to meet its objectives and commitments to residents in an efficient and effective manner depends on the contribution of employees throughout the Group. The Group aims to be an employer of choice in the area in which it works.The Group is committed to ensuring a diverse and

inclusive environment for all its employees, continues to invest in staff training and development and has improved systems of appraisal and performance management.

Health and safety

The Board is very much aware of its responsibilities on all matters relating to health and safety. The Group has adopted robust health and safety policies, and provides Board and staff training and education on health and safety matters.

Board members and executive directorsThose Board members who served during the period and the Group’s executive directors are set out on page 3. This year there have been changes to the Board, as follows:

As part of our succession planning we are pleased to welcome Robin Bailey who joined the Board in May 2017 and brings a wide range of experience to the Group. Other appointments to the Board during the year were Mandy Clarke and Andrew Willis, who was appointed chair of Audit & Risk Committee. Three Board members, Hilary Gardner, Derek Cash and Philippa Lowe stood down having in July after completing their maximum terms of office.

GreenSquare provides a range of central services – governance, finance, development, human resources and information technology – to its subsidiaries, under the scope of an intra-group agreement.

The executive directors are the Chief Executive, the Operations Director, the Finance Director, the Managing Director Development and the OD and Corporate Services Director. They act as executives within the authority delegated by the Board and have been employed directly by GreenSquare, providing services via this intra-group agreement.

The Chief Executive holds no interest in the Association’s shares and has been co-opted to, and acts within, the authority delegated by the Board.

The Group has insurance policies which indemnify its Board members and executive directors against liability when acting for the Association.

The Board

The Board comprises up to twelve non-executive members and is responsible for the Group and Association’s strategy, policy framework and managing the affairs of the Group.

The Board members are drawn from a wide background bringing together professional, commercial and local experience.

The Board delegates the day-to-day management and implementation of that framework (via the intra group agreement) to the Chief Executive and other members of the Group’s executive team.

Independent and resident Board members are selected by a panel of Board members (including the Chair and the Chief Executive) following public advertisement for recruitment.

REPORT OF THE BOARD GREENSQUARE GROUP LIMITED

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Service contractsThe executive directors are employed on the same terms as other senior managers – their notice periods are three months.

PensionsThe executive directors are members of the Social Housing Pension Scheme, which includes both a closed defined benefit (final salary) and defined contribution pension scheme. They participate in the schemes on the same terms as all other eligible staff and the Group contributes to the schemes on behalf of its employees.

Other benefitsThe executive directors are entitled to other benefits such as the provision of cash allowances in lieu of a company car. Full details of their individual remuneration packages are included in note 11 to the audited financial statements.

Remuneration policyThe Remuneration Committee, comprising the Chair and a minimum of two other Board members, is responsible for setting the Group’s remuneration policy for its executive directors and other staff. It also recommends to the Board the remuneration levels for Board members.

The Committee pays close attention to remuneration levels in the sector in determining the remuneration packages of the executive directors. Basic salaries are set having regard to each executive director’s responsibilities and pay levels for comparable positions.

Statement of the responsibilities of the management board for the report and financial statements

The Board is responsible for preparing the report and financial statements in accordance with applicable law and regulations.

Co-operative and Community Benefit Society legislation requires the Board to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards as reflected in FRS 102 and applicable laws). Under the Co-operative and Community Benefit Society legislation the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs and surplus or deficit of the Association for that period. In preparing these financial statements, the directors are required to:

• select suitable accounting policies and then apply them consistently;• make judgments and accounting estimates that are reasonable and prudent;• state whether applicable UK Accounting Standards and the Statement of Recommended Practice (SORP) Accounting by Registered Social Housing Providers update 2014, have been followed, subject to any material departures disclosed and explained in the financial statements;• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The Board is responsible for keeping proper accounting records, which disclose with reasonable accuracy at any time the financial position of the Group and Association and enable it to ensure that the financial statements comply with the Co-operative and Community Benefit Societies Act 2014, the Housing and Regeneration Act 2008 and the Accounting Direction for Private Registered Providers of Social Housing 2015. It is also responsible for safeguarding the assets of the Association and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. In so far as each member of the Board is aware:

• there is no relevant audit information of which the Association’s auditors are unaware; and• the Board has taken all the steps that they ought to have taken to make itself aware of any relevant audit information and to establish that the auditors are aware of that information.

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

Code of Governance

The Association and all registered provider subsidiaries in the Group comply with the principal recommendations of the NHF Code of Governance 2015 and have adopted a number of policies and procedures to help achieve these.


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Statement of compliance

In preparing this report a review of Group governance procedures has been undertaken and the Group complies with the Governance and Financial Viability Standard.

GreenSquare is aware of its obligations as a Data Controller under the General Data Protection Regulations (GDPR) and we are working to ensure that all GreenSquare services to which the GDPR applies are compliant.

GreenSquare has always prioritised the privacy and security of the content we protect with our applications and services. As part of our GDPR compliance efforts, we will continue to refine, improve and document our security measures to protect against unauthorised access, use or disclosure of the content we protect.

Internal controls assurance

The Board acknowledges its overall responsibility, applicable to all organisations within the Group, for establishing and maintaining the whole system of internal control and for reviewing its effectiveness.

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

The process for identifying, evaluating and managing the significant risks faced by the Association is ongoing and has been in place throughout the period commencing

8 April 2017 up to the date of approval of the annual report and financial statements.

Key elements of the control framework include:

• Board approved terms of reference, including a detailed intra-group agreement between the Association and its subsidiaries, supported by detailed service level agreements and delegated authorities for Group Audit & Risk, Finance and Remuneration & Selection Committees;• clearly defined management responsibilities for the identification, evaluation and control of significant risks;• robust strategic and business planning processes with detailed financial budgets and forecasts;• review of the Association’s risks by the Board and Group Audit & Risk Committee;• formal recruitment, retention, training and development policies for all staff;• established authorisation and appraisal procedures for all significant new initiatives and commitments;• appraisal of major development projects by the Group Development Committee; • a sophisticated approach to treasury management which is subject to external review on a regular basis;• regular reporting to senior management and the Board/appropriate committee of key business objectives, targets and outcomes;• Board approved whistleblowing, disciplinary and capability policy which covers expectations of fraud and code of conduct;• detailed policies and procedures in each area of the Association’s work; and• regular monitoring of loan covenants and requirements for new loan facilities.

A monitor on fraud is maintained and reviewed by the Group Audit & Risk Committee at every meeting. There were no frauds reported during the period under review.

The Board cannot delegate ultimate responsibility for the system of internal control but has delegated authority to the Group Audit & Risk Committee to regularly review the effectiveness of the system of internal control. The Group Audit & Risk Committee was formed to oversee the internal control framework for all companies within the Group.

The means by which the Group Audit & Risk Committee reviews the effectiveness of the system of internal control include considering risk reports, internal audit reports, fraud reports, management assurances, the external management letter and specialist reviews on areas such as treasury, health and safety, and efficiency. The Group Audit & Risk Committee received and considered reports from management on these risk management and control arrangements at each meeting during the year and the Board received its risk report quarterly during the year.

The Group Audit & Risk Committee has received the Finance Director’s annual review of the effectiveness of the system of internal control for the Group, and the annual report of the internal auditor, and has reported its findings to the Board.

Going concern

The Group’s business activities, its current financial position and factors likely to affect its future development are set out within the strategic report. The Group has in place long-term debt facilities, which


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provide adequate resources to finance committed reinvestment and development programme, along with the Group’s day-to-day operations. The Group also has a long-term business plan which shows that it is able to service these debt facilities while continuing to comply with lenders’ covenants

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

Auditors

A resolution to reappoint BDO LLP as auditors will be proposed at the forthcoming Annual General Meeting.

The report of the Board was approved on 24 July 2018 and signed on its behalf by:

R BaileyChair

Northway resident Rachel and son


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FRS1022018

£’000

FRS1022017

£’000

FRS1022016

£’000

FRS1022015

£’000

Old UK – GAAP2014

£’000

Group Statement of Comprehensive Income

Total turnover 83,759 85,838 83,826 80,316 62,665

Income from lettings 62,496 63,494 60,212 57,342 53,007

Operating surplus 25,868 22,854 18,191 17,941 11,132

Surplus for the period before transfers 12,800 10,815 5,698 8,533 4,060

Group Statement of Financial Position

Housing properties net of depreciation and investment properties 701,385 675,764 662,863 666,682 622,150

Net current assets 83,467 68,974 42,870 32,037 20,466

Loans (due over one year) 392,328 365,844 339,096 338,876 312,077

Provisions 377 165 6,619 4,759 118

Net pension liability 6,627 8,410 6,918 8,793 7,939

Reserves

Revenue 89,956 74,632 60,420 49,479 50,108

Revaluation 276,186 277,228 280,802 284,334 278,148

Total 366,172 351,891 341,256 333,849 328,256

Accommodation figures

Total housing stock owned and managed at year end (number of units): 11,877 11,685 11,998 11,734 11,520

In development 271 210 147 303 471

Strategic reportFive year summary

The Group’s five year income and expenditure accounts and balance sheets are summarised below:

STRATEGIC REPORTGREENSQUARE GROUP LIMITED

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Principal activities

GreenSquare Group is a major provider of housing, regeneration, care and support and commercial services across Wiltshire, Oxfordshire and Gloucestershire and the surrounding areas.

We have the following key business streams:• ‘general needs’ housing for rent, primarily by families who are unable to rent or buy at open market rates;• supported housing and housing for older people who need additional housing-related support or additional care; • low-cost home ownership, primarily shared ownership whereby residents purchase a share in the equity of their homes and pay rent to the Association on the remainder;• property development and construction undertaken by our commercial subsidiary GreenSquare Homes Limited;• installation of gas heating systems is undertaken by our commercial subsidiary GS Energy Services Limited; and• investment and maintenance of public open spaces is undertaken by our commercial subsidiary GreenSquare Estates Limited.

As well as owning and managing over 11,800 properties, we are a major developer of new affordable housing and a lead development partner under the Homes England National Affordable Housing Programme (NAHP).

The Group’s focus remains on its social housing activities and these are expected to continue to constitute the majority of the Group’s activities by turnover.

Business and financial review

The Board is pleased to report a surplus for the period before transfers of £12.8m (2017: £10.8m) on a turnover of £83.8m (2017: £85.8m).

We see maintaining strong financial strength and sustainability as one of our key corporate objectives, because without it we will not be able to achieve our broader aims. We have continued to invest in both our existing housing stock and undertake a series of new developments, for both sale and rent.

241 new homes were transferred into management during the year. There were 33 strategic property disposals, 7 RTB sales and 13 full staircase shared ownership sales plus 23 outright sales as part of the successful GreenSquare Homes development for sale.

The Group continues looking forward to future development opportunities and there are 271 more properties/bed spaces on site in development.

The net worth of the Group increased to £366.2m (2017: £351.9m).

The Group had net current assets of £83.5m and manages its working capital around the loan facility.

Objectives and strategy

Our Corporate Plan 2015-25, approved by the Board in January 2015 and reviewed every year, provides an exciting and challenging focus of the choices we face and the changes we need to make to the way we do business over the next ten years.

Ribbon cutting at new homes in Calne


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Our purpose is ‘Passionate about great places to live’.

We increase the opportunities for people to thrive by giving them access to great homes and services to match. This supports the creation of strong and vibrant communities.

We make a difference to people’s lives – and this is something we want to continue doing, for more people, every day Our values guide our actions.

All for one – we work as a team Do what it says on the tin – we get it right first timeThe things we could do – we actively look for ways to improve. Boo to bureaucracy – we keep it simple

We have revised our organisational objectives, agreed-long term aspirations, identified focused business change priorities and reviewed our operating model. We have defined six key strategic objectives that guide our direction of travel to achieve future success:

• Valuing our customers• Meeting housing and related needs• Growth with a purpose• Every penny counts• Able to stand on our own• A great team

The Board and senior management have developed a series of key performance objectives to monitor performance against this vision. The Board reviews these objectives annually in order to support our commitment to continuous service improvement.


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• To be proud of the experience our customers get when accessing our services.

• To ensure that our customers can contact us and easily get the help and information they need, taking into account those who may be vulnerable or less able to access our services.

• To involve and engage with our customers to enable us to effectively ‘hear their voice’ and ensure we understand, learn and act on any feedback to inform our services.

• Have an approach to complaints that is clear, simple and accessible that ensures that complaints are resolved promptly, politely and fairly. And that we learn from the process to improve our services.

• Work in conjunction with partner agencies, to tackle and prevent antisocial behaviour.

• Ensure timely and good quality repairs and grounds maintenance services.

• Invest in our homes so that they are at a quality that we can be proud of.

• Ensure our homes are economical for our customers to live in.

• Feedback And Satisfaction Tracking (FAST) gas survey 100% FAST customer service 90% FAST responsive repairs 94% Institute of Customer Services (ICS) Business Benchmarking Customer Satisfaction Index (CSI) – 70% (Annual measure)• FAST Ease of contact Gas 95% Customer service 90% Responsive repairs 90% ICS Business Benchmarking Customer effort score – 4.8 (Annual measure) ICS Business Benchmarking Satisfaction by channel – 70% consistent level of satisfaction across channels (person, writing, website, phone, email ) (Annual measure) • 72% satisfaction with complaints handling• 85% of customers who reported antisocial behaviour were satisfied in how the case was handled• 94% jobs completed first time

• Reinvestment 3.7% (existing stock)

• Additional targets to be set for this goal based on 2018/19 activities

• Maintain average Standard Assessment Procedure (SAP) rating >72%

• Reduce the number of properties with a SAP rating below 60

Valuing our customersOur homes will be at a quality that we can be proud of, with services to match. When someone is looking for a great place to live, we want them to think about GreenSquare first. We will have a good understanding of all our customers so that we can deliver what they need in a way that suits them.

Strategic objectives Outcome Five year performance target

Meeting housing and related needsOur customers will include those looking for their first home right through to those who need a home that meets their support needs. We aim to protect the valuable social housing we have.

We will use our particular skills and resources to help provide support services to help people improve their lives.

• Protect the number of homes available for social rent.

• To minimise the number of our properties that are empty or unavailable for someone to live in.

• To minimise failure of GreenSquare tenancies.

• To support customers living in our sheltered schemes to access the support services they need.

• Provide good quality support services (existing contracts).

• Provide an appropriate mix of accommodation to meet customer needs.

• >9,565

• 99.67% Occupancy metric (sector scorecard) 17.15 days void re-let time

• Evictions and abandonments to increase by less than 5% Number of failed tenancies to be less than 0.5% of all tenancies

• Positive outcomes for at least 85% of support customers

• Secure continuing funding for current support contracts

• Increase the number of good quality homes available to meet the housing needs of customers (social, affordable and shared ownership homes).

• Increase the number of high quality homes available to meet the housing needs of customers (non-social housing).

• Strategically manage our assets (regeneration and strategic disposals) to optimise our ability to increase the number of good quality affordable homes.

• New supply delivered 1,503 new affordable homes, to achieve the 2,000 new homes in the 10 years to 2025 95% satisfaction with retained homes

• New supply delivered 1% (non-social housing)

• 90% satisfaction with homes.

Growth with a purposeWe will increase the number of new good-quality homes for affordable rent, purchase and shared ownership.


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Strategic objectives Outcome Five year performance target

Every penny countsBy maximising opportunities, working smarter and increasing efficiency across the group, we will have more resources to create more great places where people want to live.

• Maximise our financial potential to deliver more great places where people want to live.

• Focus on working smarter and increasing efficiency through the transformation of our processes, structures, systems and technology.

• Ensure that we better understand our assets to enable us to optimise our return on them.

• Maintain our assets cost effectively.

Annual targets are set and new five year financial plan targets are redefined as part of the Business Plan review.

• 54% gearing

• 26% operating margin (overall)

• Improve the overall NPV of our assets

• 0.68% ratio of responsive to planned maintenance

• £1,259 maintenance costs per unit

• £938 major repairs costs per unit

Able to stand on our ownWe will develop our commercial activities to make a profit to support our growth and add financial strength to the group. We will carry out commercial activity to support our social purpose, never as an end in itself.

A great teamWe will continue to develop a culture that encourages people to meet their potential and deliver excellent customer service.

• For colleagues to see GreenSquare as a great place to work and be engaged in what we are trying to achieve.

• To build a culture where people feel empowered and constantly strive to improve our performance, particularly in relation to providing great customer service.

• Ensure colleagues have the right skills and capabilities to do their jobs and develop to meet their potential.

• To have a diverse team so that we can shape and influence the delivery of fair and accessible services.

• Engagement Index 80% Achieve ‘Great Place to Work’ accreditation 2019/2020. Committed to our vision and values 90% Motivated to actively contribute to GreenSquare’s success 85%• 80% of colleagues feedback that the culture in their own team is consistent with our culture framework ‘How we do things around here’ External ‘Serv Check’ accreditation achieved (3 years) and maintained (overall score of 70)• 75% of colleagues report that our leaders and managers meet our leadership expectations 80% of colleagues say they have had adequate training to do their job properly.• 11.6% of Black, Asian & Minority Ethnicities (BAME) colleagues representative of population demographic 7% of colleagues with a disability representative of population demographic

• Generate profit from GreenSquare Homes Ltd (build and sales programme).

• Generate profit from GS Energy Services Ltd (gas installation/ servicing subsidiary).

• Generate profit from GreenSquare Estates Ltd (public open spaces).

• Generate profit from 1st tranche shared ownership sales.

• £5.2m operating surplus before tax 15.8% operating margin 20.9% ROCE

• £92k operating surplus before tax 1.9% operating margin 9.5% ROCE

• £10k operating surplus before tax

• £989k total operating surplus 21.8% operating margin


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Value for money statement

Our group-wide Corporate Plan outlines our overall purpose, how we plan to deliver our strategic objectives and our approach to achieving value for money (VFM) in delivering these. This report looks back at how we have done against the 2017/18 plan and provides an overview of the priorities we have identified for our 2018/19 plan.

Our purpose:

We are passionate about great places to live

At GreenSquare we make a difference.

We increase the opportunities for people to thrive by giving them access to great homes and services to match. This supports the creation of strong and vibrant communities.

We make a difference to people’s lives – and this is something we want to continue doing, for more people, every day.

Our strategic objectives:

Valuing our customersOur homes will be at a quality that we can be proud of, with services to match. When someone is looking for a great place to live, we want them to think about GreenSquare first. We will have a good understanding of all our customers so that we can deliver what they need in a way that suits them.

Meeting housing and related needsOur customers will include those looking for their first home right through to those who need a home that meets their support needs. We aim to protect the valuable social housing we have.

We will use our particular skills and resources to help provide support services to help people improve their lives.

Growth with a purposeWe will increase the number of new good-quality homes for affordable rent, purchase and shared ownership.

Every penny countsBy maximising opportunities, working smarter and increasing efficiency across the Group, we will have more resources to create more great places where people want to live.

Able to stand on our own We will develop our commercial activities to make a profit to support our growth and add financial strength to the group. We will carry out commercial activity to support our social purpose, never as an end in itself.

A great teamWe will continue to develop a culture that encourages people to meet their potential and deliver excellent customer service.

Our priorities 2017/18 We identified the following priorities for our 2017/18 business plan:

• Improving our customer’s experience • Achieving better VFM with a particular focus on digital transformation and procurement• Increased delivery of new homes (social and affordable rent, shared ownership and outright sale)• Raise new income from existing operations to support our wider business objectives• Improve staff engagement and build the right culture to act as the foundation for ongoing transformation


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Maintaining a strategic focus on value for money

Our business planning cycle and performance management approach ensures that we maintain a strategic focus on value for money.

Access to a range of benchmarking data and other metrics allows us to see:

• how performance in key areas of the business compares with others (are we good?); • what it costs to deliver our services relative to others (are we expensive?); and • what are our cost drivers (why our costs are what they are).

We use this information to make informed decisions about what we need to do differently as part of the business planning process. In other words, we actively look at the information and identify what changes we need to make – for example do we have the right model for delivering ‘x’ service, do we have the right structure? This information is used to set our targets for the group-wide Business Plan and operational metrics to measure progress. Performance is then monitored and challenged via our collaborative management teams, who have specific focus on key business areas, our Leadership Team and our Board.

During the year we participated in the pilot of the Sector Scorecard, the information from which has been used to inform the development of targets for our 2018/19 Business Plan.

Our VFM approach is embedded in our Business Plan For example, our strategic objectives have the following VFM specific goals and related measures/targets:

Every penny counts• Focus on working smarter and increasing efficiency through the transformation of our processes, structures, systems and technology.• Improve our approach to procurement to enable us to ‘buy better’.• Minimise the level of lost income through voids, arrears, and bad debts.

Growth with a purpose• Increase the number of high quality homes available to meet the housing needs of customers.• Strategically manage our assets (regeneration and strategic disposals) to maximise our ability to increase the number of good quality affordable homes.

The group-wide business plan also included a number of key projects/activities to drive VFM:• Review of sustainability of commercial activities to ensure we maximise the returns on our investments to support the delivery of our plans.• Grow GreenSquare Homes – generate £5m profit by 2020 and through the housing associations within the Group, to develop an additional 2000 retained homes by 2025.• Digital transformation of the customer experience – ability for customers to access services online at their convenience including booking repairs and checking rent statements. Greater efficiency and provision of customer information in the delivery of our responsive repairs service resulting in better customer experience.

• Digital transformation of the workplace – greater efficiency and automation of business processes, faster information flows, more informed decision making.• Complete our office accommodation review.


19

Managing and monitoring our performance

Our ‘plan on a page’ (see next page) provides an at a glance overview of performance against all our business plan targets on a quarterly basis. This is supported by more detailed performance dashboards.

Our key performance indicators (KPIs) provide a focus on those areas deemed most important to our performance. For example, our aim to achieve an absolute reduction in management costs and still improve customer satisfaction is monitored here.

2016/17Actual

Outcome

Customer

Customer satisfaction with GreenSquare as their landlord (Rolling year to date)

Satisfaction with last contact

Customers satisfaction with quality of their home

Delivery

Total housing owned

Rent lost due to homes being vacant as a percentage of the annual rent roll

Financial

Management cost per total units

Operating margin (RP only)

Colleagues

Engagement index

Voluntary Turnover

2017/18Target

2017/18Actual

PerformanceImproved?

75.4%

88.87%

77.81%

11,685

1%

£1,053

29.0%

67%

12.80%

86%

90%

80%

11,867

<1%

£1,037

28.8%

75%

5-15%

75.3%

90%

72.9%

11,877

0.93%

£1,019

35.0%

77%

15.13%

Same

Yes

No

Yes

Yes

Yes

Yes

Yes

No

How have we done - our performance 2017/18

Our KPIs


20

Our strategic objectives

Plan on a pageEach kite represents a strategic objective and each section within the kite a goal in our 2017/18 business plan.

The details of the performance against each of the objectives are provided on the following pages.

L A N D L O R D S AT I S FA C T I O N

L A S T C O N TA C T S AT I S FA C T I O N

% V O I D R E N T L O S S

O P E R AT I N G M A R G I N

M A N A G E M E N T C O S T P E R U N I T

Valuing our customers

Meeting housing and related needs

Able to stand on our own

A great team

Growth with a purpose

Every penny counts

Business plan performanceQuarter 4 2017-18

1

1a

1a

1

11

2

1b

2

1b

2

2

2

3a

3

3a

3

33b

2

3b

4a4b4

4

5

67

8

S h a r i n g s u c c e s s m e a s u re s


21

Valuing our customersOur priority was to improve customer experience.

A key activity this year was to develop a new customer experience strategy working with the Institute of Customer Service. Our specific goals were:

1 Ensure customer satisfaction with the services we deliver.2 Understand our customers’ diversity to help inform the development of services.3 Ensure that our customers can contact us and get the help and information they need, taking into account those who may be vulnerable or less able to access our services.4 Ensure we listen to and act on feedback from our customers.5 Ensure that we resolve complaints effectively and use what we learn from them to improve our services.6 Working in conjunction with partner agencies, to tackle and prevent antisocial behaviour.7 Ensure timely and good quality repairs and grounds maintenance services.8 Maintain the customer satisfaction with quality of our homes.

Nichola and Pat, GreenSquare residents win Good Neighbour Award


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Our 2017/18 Business Plan recognised that there was a need to tackle the decline in Customer satisfaction. This decline has been driven by GreenSquare not dealing with the more complex repairs as quickly as our customers expect and the ease of communication with the organisation needing to be improved.

This is being addressed with a new customer experience strategy, that seeks to fully understand the customer offer, and thereby provides a series of measures to improve the service. The Board agreed to the strategy and the associated costs because of the payback in terms of improving the services that GreenSquare offers to its customers. It was acknowledged that the impact would not be immediate but there should be tangible returns on the investment over the subsequent year ending 31 March 2019.

There has been some immediate success in that the decline in overall satisfaction has been reversed.

85.00%

90.00%

80.00%

75.00%

70.00%

65.00%

60.00%

Satisfaction with GreenSquare as a landlord (RYTD)

Q115 16 17

Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Also, the customer satisfaction with the last contact with GreenSquare has been high for the majority of the year and ended year at target.

However, the real impact on customer satisfaction will be seen after the year end, from the digital transformation of the repairs service through the implementation of dynamic workforce scheduling. This was a significant investment of time and money through the year and went live on time, on budget and in line with the original specification in the first weekend in May 2018. Alongside that project was the development of the self-service customer portal which will also go live in 2018/19.

95%

100%

90%

85%

80%

75%

70%

Satisfaction with last contact

Mar

17

Apr

17

May

17

Jun

17

Jul 1

7

Aug

17

Sep

17

Nov

17

Dec

17

Jan

18

Feb

18

Mar

18

Oct

17


23

The ease in which customers can contact GreenSquare is a key driver for overall satisfaction. Consequently additional resources have been put in the customer contact centre to improve this aspect of our service. Next year this will be further enhanced through the introduction of the ability of our customers to access services digitally, again delivering improvements in the service offered and thereby driving up satisfaction levels.

Finally, for this strategic area, there has been a decline over the year in relation to satisfaction with quality of home (goal 8). This links with both the repairs service and wider approach to strategic assets/maintenance. This is identified as a priority in the 2018/19 plan, together with the significant regeneration plans of the older pre-reinforced concrete properties such as we are seeing in the Culverhay in Cricklade (see Growth with a Purpose on page 21).

Meeting housing and related needs

We achieved all our targets in this area

1 Protecting number of homes for social rentThe first goal achieved is around maintaining those homes let on a social rent, which the Board sees as a valuable resource within GreenSquare. The performance shows that we have protected the number more than the target of 9,565, as originally set in April 2015. These social rented homes create a significant social dividend, a key value for money outcome of achieving this goal.

2 Minimise failure of tenanciesIn light of the changes brought in under Welfare Reform, and the potential for an increase in the number of failed tenancies and associated impact on our customers, we set ourselves a target to ensure we took steps to mitigate the impact. We are pleased to have met our target of ensuring failed tenancies do not exceed 0.5% of our overall tenancies

Our goals:

1 Protect the number of homes available for social rent.

2 Minimise failure of GreenSquare tenancies.

3 Provide good quality support services (existing contracts).

Case study Our in-house tenancy sustainment officer worked with Ms B who suffers from depression, anxiety and various physical health problems. She had rent arrears after migrating over to Universal Credit (UC) and we were close to taking court action.

We struggled to engage with Ms B initially, but we persisted and explained how we could help her sustain her tenancy. We discovered mountains of unopened post that was stacked in her hallway and how, as she had no money to pay for these, she had gone without food and utilities.

We discovered her UC had been calculated wrongly and liaising with the Department for Work and Pensions were able to get this backdated and full housing costs were awarded. In addition, working with the CAB, an application for Personal Independence Payment was applied for, as well as obtaining a grant to cover the cost of utilities and broadband. We also delivered several food parcels during this interim period.

Ms B’s rent account is now clear and she responds to letters and telephone calls. She has told us she now feels in control of her life, as well as her tenancy.


24

3 Provide good quality support servicesLast year we supported over 9,400 people, many of whom had multiple support needs. We exceeded our target of 85% with 93% reporting positive support outcomes.

Case study We helped M with the multiple needs of domestic abuse, finance, and gaining a more suitable home.

M was living with her husband and 18 year old daughter in a joint tenancy. She was subject to abuse from her husband, who controlled her finances. She wanted to separate but rent arrears were preventing the transfer of tenancy to her sole name. We supported M with a referral to Gloucestershire Domestic Abuse Support Service (GDASS) and a Helping Hands application to clear the rent arrears. With the arrears cleared, the tenancy was transferred to her sole name and her husband moved out. We supported her with charity applications to purchase a washing machine, bed and clothes, to claim Employment and Support Allowance and Personal Independence Payment (PIP), and discretionary housing payments towards the rent shortfall. She is now actively bidding on choice based lettings to move to smaller accommodation.

Street naming at Culverhay, Cricklade


25

Our goals:

1 Increase the number of high quality homes available to meet the housing needs of customers. a) Affordable homes b) Outright sale 2 Strategically manage our assets (regeneration and strategic disposals) to maximise our ability to increase number of good quality affordable homes.

Growth with a purpose

1 Increase the number of homes available to meet the housing needs of customersWe met our target and delivered 241 new affordable rented and shared ownership homes during the course of 2017/18. This means we can meet more people’s housing needs across our area and improve their lives.

We also built 23 homes for outright sale during the year which was also on target.

12000

11800

11600

11400

11200

11000

Number of homes

Mar

15

Jun

15

Sep

15

Dec

15

Mar

16

Jun1

6

Sep

16 Mar

Jun

17

Sep

17

Dec

17

Mar

18

Dec

16

Case study Mrs A was living in a two-bed house with her husband and four children. They moved to a new GreenSquare home and contacted us to describe how this had changed their lives. As well as the health of the whole family improving, school grades improved and her youngest children who struggled to sleep, began to sleep through the night. Mrs A’s agoraphobia also improved to the point where she could come off medication and achieve her goal of picking her children up from school.


26

2 Strategically manage our assets (regeneration and strategic disposals) to maximise our ability to increase number of good quality affordable homes

As part of our strategic asset management strategy, we seek to dispose of homes which have low demand and/or high maintenance liabilities. The volumes are dependent of what becomes empty for sale. Our disposals target was 64 homes – we disposed of 69.

That said, we have been busy during 2017/18 with a number of regeneration schemes across our areas, which have provided more new homes and helped address the issues we have with post war non-standard house types that would otherwise have required significant investment to maintain them.

Case study In December 2017, we completed phase one of our Culverhay regeneration in Cricklade. Work began in May 2017 with the demolition of four houses, which have now been replaced with five bungalows and a further three new houses.

We recognise the need to maintain a focus on our approach to strategic asset management in order to optimise our ability to increase number of good quality affordable homes. We also recognise that this drives satisfaction with the quality of home – one of our KPIs. We have just created a new post, Assistant Director Assets, to continue to drive this piece of work forward in 2018/19.

Our goals:

1 Focus on working smarter and increasing efficiency through the transformation of our processes, structures, systems and technology a) Reduce management costs b) Increase Operating margin

2 Improve our approach to procurement to enable us to ‘buy better’

3 Minimise the level of lost income through voids, arrears, and bad debts

Every penny counts

1 Working smarter and increasing efficiencyWe have exceeded our targets in both our management cost per unit metric and operating margin. These are both key indicators of increased efficiency and value for money.

This has been achieved through a general focus on achieving better value for money across the organisation and through specific projects to achieve greater efficiency, economy and effectiveness.


27

£0

£200

£400

£600

£800

£1,000

£1,200

£1,400

£1,600

Group Management Cost per Unit

Q115 16 17

Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Group Management Cost per Unit Target

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

RP only Operating Margin

Q115 16 17

Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Group Operating Margin Target


28

Looking to the future, GreenSquare will drive further efficiencies through its digital transformation.

We started the year setting out our vision for the digital transformation of the organisation. During the year we have rolled out Office 365 across the organisation and implemented a new scheduling system as part of our transformation agenda. This transformation is helping us to improve our efficiency through more automation and the ability to work remotely and collaboratively.


29

2 Improve our approach to procurement to enable us to ‘buy better’We met our target to save £250K per annum through the transformation of our approach to procurement across the Group.

Case study Outsourcing its supply of materials, GreenSquare opened a new dedicated stores facility in Calne, Wiltshire, in partnership with builders’ merchants Buildbase.

GreenSquare’s Procurement Transformation Lead, Charles Hyde, said: “With this new depot, and thanks to this partnership, our teams will spend less time travelling to get materials, and will therefore be able to offer a faster, and more cost efficient repairs and maintenance service to our customers across Wiltshire, Gloucestershire and Oxfordshire.”

GreenSquare has plans to convert its current onsite stores area, located at its head office at Methuen Park in Chippenham, into additional office space, while the stores yard will become car parking.

Charles added: “By having a larger office space at Methuen Park, we will be able to vacate our leased office in Swindon, and invest the rental savings in providing services for our customers, and building much needed new homes.”

3 Minimise the level of lost income through voids, arrears, and bad debts

The target is this areas was made up of four areas:

• Rent lost due to homes being vacant as a percentage of the annual rent roll. • Rent arrears as a percentage of rent we are owed.• Rent arrears for former tenants as % of rent due. • Leaseholder arrears.

We met our targets in all but former tenant rent arears hence amber overall. We expect this measure to improve with the appointment of a new former tenant collection agency in 2018/19.

The area out of the four which has the greatest financial impact for the organisation is that of the overall rent lost due to homes being vacant, as well as the wider impact of those homes being unavailable for people to live in. We met our target in this area throughout the year:

1.0%

1.2%

08%

06%

0.4%

0.2%

0%

Void rent loss (all features)

Q4 17 Q1 17 Q2 17 Q3 17 Q4 18

Void rent loss (all tenures)


30

Our goals:

1 Generate profit from GreenSquare Homes (build and sales programme)

2 Generate profit from GS Energy Services Ltd (Gas installation/ servicing subsidiary)

3 Generate profit from Green Square GS Estates Ltd (Public open spaces)

4 Generate profit from first tranche shared ownership sales

Able to stand on our own

1 Generate profit in GreenSquare Homes A key part of our Business Plan is that GreenSquare Homes has a goal to generate £5m profit in 5 years. This year it achieved £746K before exceptional items and tax, which was better than budgeted.

2 Generate profit in GS Energy Services LtdPerformance of GS Energy has been under review through 2017/18. Remedial action has been taken to improve profitability including relocating the company to reduce overheads. The remedial action will continue into 2018/19.

3 Generate profit in GreenSquare EstatesGreenSquare Estates made a trading loss this year, however, following a review of the business, which is now complete, there is a positive outlook for future years.

4 Generate profit from first tranche shared ownership salesWe also exceeded our target for operating surplus from first tranche sales of shared ownership properties. Our budgeted surplus was £796K with an actual performance of £1.41m

In March 2018 GreenSquare Group Limited (GreenSquare) was assigned an ‘A minus, stable outlook’ long-term issuer credit rating by Standard and Poor’s (S&P) Global Ratings.

S & P’s assessment report says that “GreenSquare’s high quality asset base in the dynamic South of England, its low industry risk, and very strong liquidity position all buoy its credit profile.”

This credit rating will support our ability to stand on our own through funding to support both our commercial and charitable objectives.


31

Our goals:

1 For colleagues to see GreenSquare as a great place to work and are engaged in what we are trying to achieve.

2 To build a culture where people feel empowered and constantly strive to improve our performance, particularly in relation to providing great customer service.

3 Ensure colleagues have the right skills and capabilities to do their jobs and develop to meet their potential: 3a) Meeting leadership expectations; 3b) Adequate training to do role.

4 To have a diverse team so that we can shape and influence the delivery of fair and accessible services: 4a) Black, Asian & Minority Ethnicities (BAME) are a representative demographic; 4b) Colleagues with a disability are a representative demographic.

A great team 1 Staff engagementWe are very pleased to have seen a marked increase in staff engagement as it feeds through to customer satisfaction. At the end of the year we exceeded our target for staff engagement. This will be an ongoing focus into 2018/19 with more challenging targets to meet.

74%

76%

72%

70%

68%

66%

64%

78%

Staff Engagement Index

2016 Q1 2017 Q2 Q3 Q4


32

2 CultureHaving started the work on transforming our culture a year or so ago, we are pleased to have seen a significant improvement over the last 12 months. We are now meeting our target in three of the four areas we measure but we fell short in terms of staff perceptions around ‘Boo to bureaucracy – keep it simple’. This is a focus for us to improve in 2018/19.

3 Skills and capabilitiesWe met our targets in this area. Colleagues report that our leaders and managers meet our leadership expectations. This is key to driving the culture shift to deliver our plans. This is an ongoing focus and we have a more challenging target for 2018/19.

Our Learning and Development (L&D) colleagues launched our new leadership development programme, which is taking place over the next 18 months to ensure all our managers are equipped to deliver our Corporate Plan objectives.

4 Diversity and inclusionWe have not met our target in this area although there has been an improvement in relation to the proportion of colleagues with a disability where we now have a workforce that reflects the wider demographic. We are working to continue to improve the ethnic diversity of our workforce to be equally representative.


33

VFM indicators/sector scorecard analysisThe revised VFM regulatory standard came into effect from 1 April 2018. The following table outlines our performance against these new metrics. Full benchmarking data is not yet available, however, there is significant overlap with many of the sector scorecard metrics detailed above.

Outcome

Reinvestment %

New supply delivered % (Social Housing)

New supply delivered % (Non-social Housing)

Gearing

EBITDA MRI/interest cover

Headline social housing cost per unit

Operating margin (Social housing lettings)

Operating margin

ROCE

16/17Actual

3.9%

1.6%

0.3%

45%

188%

£3,565

35.4%

26.6%

3.5%

17/18Actual

6.9%

2.4%

0.1%

45%

175%

£3,495

38.9%

30.9%

3.7%

18/19Budget

9.0%

2.0%

0.1%

52%

134%

£3,846

35.8%

27.2%

2.9%

2016/17UQ

n/a

n/a

n/a

40%

273%

£2,910

43.2%

40.7%

5.5%

2016/17Median

n/a

n/a

n/a

53%

235%

£3,285

36.3%

35.5%

4.2%

2016/17LQ

n/a

n/a

n/a

62%

170%

£3,782

32.4%

27.8%

3.7%

GreenSquare* 16/17 Sector Scorecard benchmarking**

* New VFM 2018 definitions ie unit numbers now excluding leasehold units**Housemark Sector scorecard 2016/17 South East and South West Peer Group. Old VFM definitions.


34

Headline social housing costs per unit – breakdown

Outcome

Management cost per unit

Service charge cost per unit

Maintenance cost per unit

Major repairs cost per unit

Other social cost per unit

16/17Actual

£1,161

£277

£1,030

£763

£334

17/18Actual

£1,099

£312

£1,018

£780

£287

18/19Budget

£944

£323

£1,303

£1,034

£243

2016/17UQ

£700

£233

£741

£566

£45

2016/17Median

£933

£291

£972

£755

£107

2016/17LQ

£1,109

£364

£1,179

£1,087

£320

GreenSquare* Sector Scorecard benchmarking**

* New VFM 2018 definitions ie unit numbers now excluding leasehold units**Housemark Sector scorecard 2016/17 South East and South West Peer Group. Old VFM definitions.

Analysis of the sector scorecard data indicates that GreenSquare has further work to do to drive value for money across the organisation, particularly in relation to our maintenance and repair costs which feeds through to other metrics including Headline Social Housing cost, EBITDA and ROCE.

However, it is noted that our performance has improved in some key areas notably a reduction in management costs. This was identified as a priority over the last few years. We have also seen a significant increase in reinvestment as well as a sustained increase in the delivery of new social housing units.

The analysis of this data has been used to inform our 2018/19 Business Plan.


35

Looking forward – 2018/19 PrioritiesOur overall strategic objectives remain unchanged in our 2018/19 Business Plan. The priorities identified for this year, informed by the benchmarking analysis, are:

- Continuing work to improve the customer experience. This includes a significant step change in our digital offering to our customers in the form of self service and the use of dynamic scheduling for our property services team.

- A focus on driving VFM across the organisation. This includes our ongoing digital transformation of both our customer offer and our internal working practices. We will also be undertaking a particular focus on our approach to both maintenance and strategic assets over the course of the year, so we better understand our assets to enable us to optimise our return on them and ensure that our approach to maintenance provides the best VFM.

- Increasing our delivery of new retained homes into the registered providers within the GreenSquare Group remains a core priority alongside looking at how we can optimise our ability to increase the number of good quality affordable homes through a combination of regeneration and disposals.

- Increasing our income from our commercial subsidiaries, particularly GreenSquare Homes, through outright sales and reviewing our wider non-social housing activities to ensure that these generate commensurate returns relative to risk and effort.

- Addressing the poor commercial performance in GS Energy, where the financial return is below that expected of such a commercial organisation.

- Improve the capability of the organisation to deliver the aspirations of the plan, which includes leadership and change capabilities, staff engagement and culture.

Northway Community Centre


36

Risks and uncertaintiesThe main risks that may prevent the Group achieving its objectives are considered and reviewed quarterly by the senior management team and Board as part of the corporate planning processes. The risks are recorded and assessed in terms of their impact and probability and against the level of risk appetite that the Board is prepared to accept. Major risks, presenting the greatest threats to the Group, are reported to the Group Audit & Risk Committee together with action taken to manage the risks and the outcome of the action. These risk reports include assessments of key controls used to manage the risks. The major risks to successful achievement of the Group’s objectives are considered below.

Key risk

Failure to generate £5m per annum profit from GreenSquare Homes (build and sales programme) by 2020/21House prices drop; construction costs increase; market sales rate drops; production rates reduce; delays in planning permission (including delays arising from the Government planning policy); interest rates rise: insufficient land available.

Action being taken

• Quarterly monitoring of financial performance and operational KPIs by GreenSquare Homes board.• Comprehensive financial planning undertaken regularly.• Annual budget prepared and approved.• Skilled resources in construction, development and sales.• Monitoring of financial performance and operational KPIs by management.• Site appraisals providing viability.• Monthly monitoring of financial performance and operational KPIs by Development management team. • Executive review of business plan and financial projections.• Board approval of business plan and financial projections.• Continual training regarding construction industry changes.• Business specific database in operation to support the service delivery.

Key risk

Non compliance with contract management and procurement legislation and proceduresRegistered Providers are subject to the UK Public Contract Regulations, a flow down of the EU Procurement Regulations which dictate the formal procurement procedures to be undertaken by organisations such as GreenSquare. These Regulations are incorporated in the refreshed Contract Standing Orders approved by the Group Board in January 2018. Omissions and deviations from the set procedures lead to non-compliance and limit the ability of the organisation to demonstrate value for money is being achieved.

Action being taken

• Contract Standing Orders.• Standard Operating Procedures.• In-Tend Supplier Portal with Contracts Register.• Experienced Procurement Team.• Fraud Policy.• Anti-Corruption and Bribery Policy.• Standards of Conduct.• Staff induction process.• Supplier setup procedure & Master Supplier File housekeeping.• Procurement team will support any non compliance as soon as possible by insuring an appropriate contract is put in place.• Procurement Groups applicable to commercial subsidiaries.


37

Key risk

Failure to deliver growth in our commercial activities to achieve the profit targetInsufficient resources; lack of clear approved strategy; lack of opportunity.

Action being taken

• Governance structure that has a commercial board dedicated to each commercial activity, which reports directly to the GreenSquare parent board.• Recruitment of staff and board members that have experience of the commercial sectors where GreenSquare operates. • Development of a suite of key performance measures.• Monitoring forward order book.• Reducing operating costs through office relocation, retaining vans etc.• Detailed costing system in place.• Improve length of order book.• Review of staff t’s & c’s. Relocation of office/stores.

Key risk

The strategic target for 2,000 new homes in the next 10 years is not metLack of capital funding.Increasing numbers of disposals affecting nett delivery target.Unforeseen site problems.Lack of suitably skilled staff.Inadequate performance management.Insolvency or poor performance of contractors.Planning consent delay.Poor performance of consultants.Insufficient reserve schemes.Lack of suitable schemes.Delays in obtaining site ownership.

Action being taken

• Regular programme reporting.• Regular cashflow analysis.• Strong treasury management.• Staff training based on team training plan.• Review of development KPIs.• Use of project plans and risk registers.• Carry out financial checks on contractors. • Review performance of consultants and reallocate work where performance is not adequate.• Actively manage pipeline opportunities.• Design freeze of schemes prior to planning.• Public consultations undertaken.• Regularly meet with RSH and other key stakeholders to review policy and provide consultation feedback on policy proposals.• Maintain regular contact with agents and developers to ensure S106 opportunities are offered.• Optimise grant opportunities through working with RSH and other funding stakeholders.


38

Key risk

Failing to secure funding for current support contractsSupport services decreased or cease.Redundancies/other winding up costs.Vulnerable tenants.Service could become unsustainable.

Action being taken

• Support services strategy.• Regular financial & operational KPIs report.• Utilise Intensive Housing Management funding to help support bids be cost effective.• Bids robustly reviewed and approved by management.• Good knowledge of service cost base through regular financial reporting.

Key risk

Lower rent collection than anticipatedRent arrears greater than they have been historically. With a further benefit cap reduction nationally from November 2016 and full roll out of Universal Credit (UC) from December 2016, it’s likely we will see an increase in rent arrears, void rent loss, bad debt and cost of recovery increases.

Action being taken

• KPI reporting and monitoring.• Benchmarking with other registered providers.• Review policies and procedures.• Dedicated arrears team. • Financial inclusion strategy. • Outsourced debt and benefit advice. • Effective pre-tenancy procedure.• Arrears Lean Review.• Review of ICT systems around arrears collection and these remaining fit for purpose.• Manager attendance at court user groups meetings; lobbying with other local housing associations who are being affected by closures and impact on service.• Effective former tenant debt collection service.• Access to the Department for Work and Pensions (DWP) landlord portal for Universal Credit claimants in Westlea. This will allow us to view payment dates and amounts and streamline the admin process for these Universal Credit claimants to speed up payments.


39

Key risk

The Group could face significant liabilities for meeting pension fund deficits. The Group’s contributions to the funds may need to increase significantly in order to fund the schemes.Social Housing Pension Scheme or Local Government Pension Scheme deficit crystallises or rise in defined benefit pension scheme past deficit contributions become unaffordable.

Action being taken

• Closure of defined benefit and future accruals to existing members as from 31 March 2016.• Exposure regularly monitored through review of valuations and option appraisal project with actuarial professionals.• Financial plan completed annually with pension liabilities scenario tested to ensure resilience.• Flexible benefit packages to ensure maximum value for money achieved through remuneration of key staff.

Key risk

The desired culture is rejected or fails to embed. Culture doesn’t support delivery of objectivesPoor leadership.Lack of clarity (culture).Communication failures.Failure to role model.Conflicting systems and processes.

Action being taken

• Leadership development activities to support development of leadership behaviours to drive the culture.• Board inform the desired culture, lead by example and role model the behaviours to support the culture.• 360 feedback to support leadership behaviours to drive the culture.• Clear communication around desired culture via colleague assemblies and other activities.• Inclusion of culture/behaviour in performance management approach.• Interventions at team level following pulse surveys to address issues.


40

Financial position

The consolidated statement of comprehensive Income and statement of financial position are summarised on page 12 and the following paragraphs highlight key features of the Group’s financial position at 31 March 2018:

Accounting policiesThe Group and Association’s principal accounting policies are set out on pages 50 – 55 of the financial statements. The policies that are most critical to the financial results relate to accounting for housing properties and capital grants, pension costs and financial instruments and include: capitalisation of interest and development administration costs; housing property depreciation; and treatment of shared ownership properties.

Housing propertiesAt 31 March 2018 the Group owned and managed 11,877 housing properties (2017: 11,685).

Housing properties are carried at deemed cost in the statement of financial position at £695.9m (2017: £668.8m).

Our investment in housing properties this year was funded through a mixture of social housing grant, loan finance and working capital where we continue to show a strong current asset balance. The Group’s treasury management arrangements are considered below.

Pension costsThe Group and Association participates in one pension scheme; the Social Housing Pension Scheme (SHPS). The

SHPS final salary and Career Average Related Earnings (CARE) scheme were closed to all members and future accruals on the 31 March 2016.

Membership and auto enrolment for all employees is now only available in the SHPS defined contribution scheme.

The Group has contributed to the schemes in accordance with the levels set by the actuaries of between 2.0% and 6.0% for SHPS plus annual monetary deficits.

One subsidiary, Westlea, participated in the Wiltshire County Council Pension Scheme (WCCPS) and the Pension Trust’s Growth Plan (PTGP). The WCCPS was a final salary scheme and was closed to new members and future accruals on 31 March 2016. The PTGP was an additional voluntary contribution (AVC) scheme and had no employer contributions. In compliance with section 75 of the Pensions Act 1995 the scheme actuary calculated the employer debt on withdrawal and in accordance with The Occupational Pension Schemes (Employer Debt) Regulations 2005 (as amended) and Statutory Instrument 2008/731 full settlement of any PTGP employer debt was made in September 2016.

Capital structure and treasury policyWe adopt a conservative approach to treasury management. No stand alone derivatives are used and the Board seeks independent advice from external consultants along with quarterly reports from officers on treasury and investment performance.

As at 31 March 2018 the Group had drawn loans amounting to £401.6m, an increase of £35m on the

previous year which are used to continue to develop general family housing. Of this, 67% of debt was fixed at an average interest rate of 4.5%, with the remaining floating debt at an average interest rate of 2.3%. Total interest costs for the Group before capitalisation were £16.8m for the year (2017: £15.7m).

The Group aims to fix at least 60% of its debt, with maturities spread over the medium term. The Group borrows and lends only in sterling and is not exposed to currency risk.

The Group’s lending agreements require compliance with a number of financial and non-financial covenants. The Group’s position is monitored on an on-going basis and reported to the Board each quarter. Our financial performance has meant we have met lenders’ covenants and the Board expects to remain compliant in the foreseeable future.

CashflowsThe Group has achieved a net cash increase during the year of £13.0m (2017: increase £37.6m) and the cash inflows and outflows are shown in the Group statement of cash flows (page 49).

At the year end, the Group’s current assets included £87.5m (2017: £74.4m) in liquid funds (cash at bank including overnight money market).

Future developmentsAs expressed in our Corporate Plan, we will continue to reinvest in our existing property, based upon an asset management strategy. We will also continue to develop the housing stock to further meet housing need in our areas of operation.


41

The Group completed a private placement for £110m in January 2018 which will provide funding for developing new homes for the next two to three years. £35m was drawn in the year with £75m being deferred.

In April 2018, the Group raised further finance of £75m through a private placement to refinance some of its existing funders.

A key influence on the timing of borrowings is the rate at which development activity takes place. The Board has approved plans to spend £51m during the next financial year to develop general needs and shared ownership accommodation in the Group area.

The above commitments will be financed primarily through existing or our new funding, property sales and internal cash balances.

The Group continues to assess the impact of government policy on its business plan and intended future developments. The Group’s resources are only committed to a scheme once funding has been secured. Other initiatives will be developed over the next year to assist our tenants in dealing with changes to housing and other benefits.

Statement of complianceIn preparing this Strategic Report and Board report, the Board has followed the principles set out in the Statement of Recommended Practice (SORP) for Registered Social Housing Providers 2014.

Howard ToplisChief Executive24 July 2018

Michelle Donelan MP with Howard Toplis and GreenSquare resident


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Independent auditor’s report to the members of GreenSquare Group Limited

OpinionWe have audited the financial statements of GreenSquare Group Limited (“the Association”) and its subsidiaries (“the Group”) for the year ended 31 March 2018 which comprise the consolidated and Association statements of comprehensive income, the consolidated and Association statement of changes in reserves, the consolidated and Association statements of financial position, the consolidated statement of cash flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion, the financial statements:• give a true and fair view of the state of the Group’s and of the Association’s affairs as at 31 March 2018 and of the Group’s and the Association’s surplus for the year then ended;• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and• have been properly prepared in accordance with the Co-operative and Community Benefit Societies Act 2014, the Co-operative and Community Benefit Societies (Group Accounts) Regulations 1969, the Housing and Regeneration Act 2008 and the Accounting Direction for Private Registered Providers of Social Housing 2015.

Basis for opinionWe conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the Group and Association in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concernWe have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:• the board members use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or• the board members have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the Group’s or the Association’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF GREENSQUARE GROUP LIMITEDGREENSQUARE GROUP LIMITED

43

Other informationThe board are responsible for the other information. Other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information including the Chair’s Statement, Report of the Board and Strategic Report, and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information we are required to report that fact.We have nothing to report in this regard.

Matters on which we are required to report by exception We have nothing to report in respect of the following matters where we are required by the Co-operative or Community Benefit Societies Act 2014 or the Housing and Regeneration Act 2008 to report to you if, in our opinion:• the information given in the Report of the Board for the financial year for which the financial statements are prepared is not consistent with the financial statements;

• adequate accounting records have not been kept by the parent Association; or• a satisfactory system of control has not been maintained over transactions; or• the parent Association financial statements are not in agreement with the accounting records and returns; or• we have not received all the information and explanations we require for our audit.

Responsibilities of the boardAs explained more fully in the Statement of the Responsibilities of the Management Board set out on page 9, the board is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the board members determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.In preparing the financial statements, the board are responsible for assessing the Group and the Association’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the board either intend to liquidate the Group or the Association or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statementsOur objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit

conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

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

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

BDO LLP, Statutory AuditorGatwick, West Sussex, United Kingdom 5 September 2018

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

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF GREENSQUARE GROUP LIMITEDGREENSQUARE GROUP LIMITED

44

Consolidated statement of comprehensive incomeFor the Period ended 31 March 2018

Note 2018£’000

2017£’000

Turnover 3 83,759 85,838

Operating expenditure 3 (57,891) (62,984)

Operating surplus 3,6 25,868 22,854

Gain on disposal of fixed assets 7 3,130 3,531

Interest receivable and other income 8 291 170

Interest and financing costs 9 (16,164) (15,233)

Movement in fair value of financial instruments - 92

Other finance charges 26(a) (204) (226)

Surplus before tax 12,921 11,188

Taxation 12 (121) (373)

Surplus for the financial year 12,800 10,815

Unrealised surplus on revaluation of investment properties 14 - 1,737

Actuarial gain/(loss) in respect of pension schemes 26(a)(b) 1,495 (1,962)

Total comprehensive income for the year 14,295 10,590

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEGREENSQUARE GROUP LIMITED

45

Association statement of comprehensive incomeFor the Period ended 31 March 2018

The financial statements were approved by the Board on 24 July 2018 and signed on its behalf by:

R BaileyChair

C Victory-RoweVice Chair

M ArnoldCompany Secretary

The Association’s results relate wholly to continuing activities. The accompanying notes on pages 42 to 79 form part of these financial statements.

Note 2018£’000

2017£’000

Turnover 3 30,517 33,209

Operating expenditure 3 (18,007) (23,616)

Operating surplus/(deficit) 3,6 12,510 9,593

Gain on disposal of fixed assets 7 505 740

Interest receivable and other income 8 154 123

Interest and financing costs 9 (6,050) (5,166)

Movement in fair value of financial instruments _ 92

Gift aid receivable – (850)

Surplus before tax 7,119 4,532

Taxation _ –

Surplus for the financial year 7,119 4,532

Actuarial gain/(loss) in respect of pension schemes 26(a)(b) 10 (110)

Total comprehensive income for the year 7,129 4,422

ASSOCIATION STATEMENT OF COMPREHENSIVE INCOMEGREENSQUARE GROUP LIMITED

46

Consolidated and Association statement of changes in reservesFor the Period ended 31 March 2018

The accompanying notes on pages 50 to 85 form part of these financial statements.

GroupRevaluation

Reserve£’000

RestrictedReserve

£’000

RevenueReserve*

£’000

Total£’000

As at 31 March 2016 280,802 34 60,420 341,256

Comprehensive income 1,737 – 8,853 10,590

Revaluation adjustments (370) – 415 45

Transfer of restricted expenditure from unrestricted reserve – (3) 3 –

Transfer from revaluation reserve to revenue reserve (4,941) – 4,941 –

As at 7 April 2017 277,228 31 74,632 351,891

Comprehensive income – – 14,295 14,295

Revaluation adjustments (14) – – (14)

Transfer of restricted expenditure from unrestricted reserve – (1) 1 –


As at 7 April 2018 276,186 30 89,956 366,172

AssociationRevaluation

Reserve£’000

RestrictedReserve

£’000

RevenueReserve*

£’000

Total£’000

As at 31 March 2016 112,244 34 46,321 158,599


Revaluation adjustments 45 – – 45

Transfers – (3) 3 –


As at 7 April 2017 110,939 31 52,096 163,066


Revaluation adjustments (14) – – (14)

Transfers – (1) 1 –

Transfer from revaluation reserve to revenue reserve (92) – 92 –

As at 31 March 2018 110,833 30 59,318 170,181

*Included in the Revenue Reserve is £445 (2017:£6,392) of BIG Lottery Restricted Funding

CONSOLIDATED AND ASSOCIATION STATEMENT OF CHANGES IN RESERVESGREENSQUARE GROUP LIMITED

47

Consolidated statement of financial positionAt 31 March 2018.


R BaileyChair



The accompanying on pages 50 to 85 notes form part of these financial statements.

Note 2018£’000

Restated2017

£’000

Intangible fixed assets

Goodwill 32 – –

Tangible fixed assets

Housing properties 13 695,933 668,841

Investment properties 14 5,452 6,923

Other tangible fixed assets 15 7,291 7,823

708,676 683,587

Current assets

Stock and properties held for sale 17 14,134 11,729

Trade and other debtors 18 5,476 5,537

Asset held for resale – –

Investments 19 523 537

Cash at bank and in hand 87,474 74,431

107,607 92,234

Creditors: amounts falling due within one year 20 (24,140) (23,260)

Net current assets 83,467 68,974

Total assets less current liabilities 792,143 752,561

Creditors: amounts falling due after more than one year 21 (418,967) (392,095)

Provisions for liabilities 27 (377) (165)

Net pension liability 26(a) (6,627) (8,410)

Total Net Assets 366,172 351,891

Capital and reserves

Non-equity share capital 28 – –

Restricted reserve 30 31

Revaluation reserve 276,186 277,228

Income and Expenditure Reserve 89,956 74,632

Total reserves 366,172 351,891

CONSOLIDATED STATEMENT OF FINANCIAL POSITIONGREENSQUARE GROUP LIMITED

48

Association statement of financial positionAt 31 March 2018.


R BaileyChair



The accompanying notes on pages 50 to 85 form part of these financial statements.

Note 2018£’000

Restated2017

£’000

Tangible fixed assets

Housing properties 13 283,366 249,369

Investment properties 14 5,452 6,923

Other tangible fixed assets 15 3,613 3,956

Investments in subsidiaries 16 3,315 3,315

295,746 263,563

Current assets

Stock and properties held for sale 17 2,978 6,136

Trade and other debtors 18 2,675 1,991

Investments 19 523 537

Cash at bank and in hand 55,619 38,198

61,795 46,862

Creditors: amounts falling due within one year 20 (14,433) (7,219)

Net current assets 47,362 39,643

Total assets less current liabilities 343,108 303,206

Creditors: amounts falling due after more than one year 21 (172,843) (140,069)

Provisions for liabilities 27 (84) (71)

Total net assets 170,181 163,066

Capital and reserves

Non-equity share capital 28 – –

Restricted reserve 30 31

Revaluation reserve 110,833 110,939

Revenue reserve 59,318 52,096

Total reserves 170,181 163,066

ASSOCIATION STATEMENT OF FINANCIAL POSITIONGREENSQUARE GROUP LIMITED

49

Consolidated statement of cash flowsFor the Period ended 31 March 2018.

Note 2018£’000

2017£’000

Net cash generated from operating activities 30 28,171 38,503

Cash flow from investing activities

Interest received and similar income 291 170

Purchase and refurbishment of tangible fixed assets (34,794) (24,259)

Payments to acquire other tangible fixed assets (691) (1,257)

Receipts from sales of tangible fixed assets 6,584 7,631

Payments to acquire investments – (142)

Receipts from sales of investments – 142

Receipt of government grants 1,578 955

(27,032) (16,760)

Cash flow from financing activities

Interest paid (13,783) (14,836)

Corporation Tax paid (95) (565)

New long term loans 35,000 34,000

Repayment of long term loans (9,218) (2,760)

11,904 15,839

Net change in cash and cash equivalents 13,043 37,582

Cash and cash equivalents at beginning of the year 74,431 36,849

Cash and cash equivalents at 31 March 2018 87,474 74,431

CONSOLIDATED STATEMENT OF CASH FLOWSGREENSQUARE GROUP LIMITED

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Notes to the financial statements31 March 2018.

1. Legal status

The Association is registered under the Co-operative and Community Benefit Societies Act 2014 and is a registered housing provider in England. The Association and Group are public benefit entities.

2. Accounting policies

Basis of accountingThe financial statements of the Group and Association are prepared in accordance with UK Generally Accepted Accounting Practice (UK GAAP) including Financial Reporting Standard 102 (FRS102) and the Housing SORP 2014 Statement of Recommended Practice for Registered Social Housing Providers and comply with the Accounting Direction for Private Registered Providers of Social Housing 2015. The Board is satisfied that the current accounting policies are the most appropriate for the Group and Association. The financial statements are presented in sterling (£).

The financial statements of the Group and Association have been prepared for the period 8 April 2017 to 31 March 2018. This is a period of less than one year as the Group and Association return to its usual financial year end of 31 March. The previous year end of 7 April 2017 was because the Association was created as a new parent entity as part of a group restructure on 7 October 2016 and the shortest period of account permitted is six months. While the comparative amounts in the financial statements are not entirely comparable, the Board is satisfied that there is no material effect.

Basis of consolidationThe Association is required by statute to prepare Group accounts.

The consolidated financial statements incorporate the financial statements of all members of the Group as at 31 March 2018 using merger and acquisition accounting where appropriate.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the Group. All intra-Group balances and transactions, including unrealised profits, have been eliminated on consolidation.

Going concernThe Group’s business activities, its current financial position and factors likely to affect its future development are set out within the strategic report. The Group has in place long-term debt facilities, which provide adequate resources to finance committed reinvestment and development programmes, along with the Group’s day to day operations. The Group also has a long-term business plan which shows that it is able to service these debt facilities while continuing to comply with lenders’ covenants.

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

NOTES TO THE FINANCIAL STATEMENTSGREENSQUARE GROUP LIMITED

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Significant judgements and estimatesPreparation of the financial statements requires management to make significant judgements and estimates. The items in the financial statements where these judgments and estimates have been made include:

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

Housing properties in tangible fixed assets are valued at deemed cost as at 1 April 2014.

The Group and Association has taken advantage of transitional relief set out in FRS102 for deemed costs and treated all grant on transition under the performance model with subsequent grants under the accrual model.

ImpairmentAs part of the Group’s continuous review of the performance of their assets, management identify any homes, or schemes, that have increasing void losses, are impacted by policy changes or where the decision has been made to dispose of the properties. These factors are considering to be an indication of impairment.Where there is evidence of impairment, the fixed assets are written down to the recoverable amount and any impairment losses are charged to operating surpluses.

As a result, we estimated the recoverable amount of its housing properties as follows:

a) determined the level at which recoverable amount is to be assessed (ie the asset level or cash

generating unit (CGU) level). The CGU level was determined to be an individual scheme;b) estimated the recoverable amount of the cash- generating unit;c) calculated the carrying amount of the cash- generating unit; andd) compared the carrying amount to the recoverable amount to determine if an impairment loss has occurred.

Based on this assessment, we calculated the Depreciated Replacement Cost (DRC) of each social housing property scheme, using appropriate construction costs and land prices. Comparing this to the carrying amount of each scheme, we do not consider there to be an impairment charge against social housing assets.

Financial instrumentsThe Group has reviewed its loan agreements and classified all loans as ‘Basic’ financial instruments. We consider any fixed rate debt with two-way early redemption indemnity clauses to be held for the long term as per treasury strategy and be non speculative. In addition the commercial substance of the transaction is neutral to the lender such that should a prepayment event occur the full principal and interest will be due and no economic benefit will accrue to the Association. This satisfies the ‘Basic’ requirements as set out in Paragraph 11.9 of FRS 102. As at 31 March 2018 the value of embedded interest rate hedges with a positive mark to market value was £nil (2017 £nil).

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

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

Supporting People Management judgement is applied in determining the extent to which the risks and benefits are transferred to the association when considering the income to be recognised. £2.4m of Supporting People income was recognised in the year.

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

Useful lives of depreciable assetsManagement reviews its estimate of the useful lives of depreciable assets at each reporting date based on the expected utility of the assets. Uncertainties in these estimates relate to technological obsolescence that may change the utility of certain software and IT equipment, and changes to decent homes standards which may require more frequent replacement of key components. Group accumulated depreciation at 31 March 2018 was £63.1m.

Defined benefit obligation (DBO)Management’s estimate of the DBO is based on a number of critical underlying assumptions such as standard rates of inflation, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses (as analysed in Note 26). The liability at 31 March 2018 was £11.5m.


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Fair value measurementManagement uses valuation techniques to determine the fair value of financial instruments (where active market quotes are not available) including land, properties developed for outright sale, trade debtors and investment properties. This involves developing estimates and assumptions consistent with how market participants would price the instrument or asset. Management bases its assumptions on observable data as far as possible but this is not always available. In that case management uses the best information available. Estimated fair values may vary from the actual prices.

TurnoverTurnover comprises rental and service charge income receivable in the year, income from shared ownership first tranche sales, sales of properties built for sale and other services included at the invoiced value (excluding VAT) of goods and services supplied in the year and revenue grants receivable in the year.

Revenue recognitionRental income is recognised from the point when properties under development reach practical completion or otherwise become available for letting after deducting voids. Income from first tranche sales and sales of properties built for sale is recognised at the point of legal completion of the sale. Revenue grants are receivable when the conditions for receipt of agreed grant funding have been met. Charges for support services funded under Supporting People are recognised as they fall due under the contractual arrangements with administering authorities. Gas servicing income is recognised on the basis of work performed and the relevant company’s reasonable certainty that it is entitled to receive revenues.

Interest payableInterest is capitalised on borrowings to finance developments to the extent that it accrues in respect of the period of development if it represents either:a) interest on borrowings specifically financing the development programme after deduction of interest on social housing grant (SHG) in advance; orb) interest on borrowings of the Group as a whole after deduction of interest on SHG in advance to the extent that they can be deemed to be financing the development programme.

Other interest payable is charged to the income and expenditure account in the year.

TaxationThe Association is accepted as a charity by HM Revenue and Customs (HMRC). Income and capital gains of the Association are generally exempt from tax if applied for charitable purposes.

Deferred taxationDeferred tax is recognised in respect of all timing differences at the reporting date, except as otherwise indicated. Deferred tax assets are only recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

If and when all conditions for retaining tax allowances for the cost of a fixed asset have been met, the deferred tax is reversed.

Deferred tax is recognised when income or expenses from a subsidiary or associate have been recognised, and will be assessed for tax in a future period, except where:

- the Group is able to control the reversal of the timing difference; and- it is probable that the timing difference will not reverse in the foreseeable future. A deferred tax liability or asset is recognised for the additional tax that will be paid or avoided in respect of assets and liabilities that are recognised in a business combination. The amount attributed to goodwill is adjusted by the amount of deferred tax recognised.

Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which timing differences reverse, based on tax rates and laws enacted or substantively enacted at the balance sheet date.

Value added taxThe Group charges VAT on some of its income and is able to recover part of the VAT it incurs on expenditure. The financial statements include VAT to the extent that it is suffered by the Group and is not recoverable from HM Customs and Excise. The balance of VAT payable or recoverable at the year end is included as a current liability or asset.

PensionsThe Group previously participated in two funded multi-employer defined benefit schemes, SHPS and the WCCPF. Both schemes were closed on 31 March 2016 and members transferred to a SHPS defined contribution scheme.

For the SHPS, it has not been possible to identify the share of underlying assets and liabilities belonging to individual participating employers. Therefore, in


53

accordance with FRS 102, the scheme is accounted for as a defined contribution scheme.

The present value of contributions payable from the Association to the SHPS, under the terms of its funding agreement for past deficits, is recognised as a liability in the Association’s financial statements. The resulting expense is recognised in operating costs in the statement of comprehensive income. The unwinding of the discount is recognised as a finance cost.

For the WCCPF, scheme assets are measured at fair values. Scheme liabilities are measured on an actuarial basis using the projected unit credit method and are discounted at appropriate high quality corporate bond rates. The net surplus or deficit is presented separately from other net assets on the statement of financial position. A net surplus is recognised only to the extent that it is recoverable by the Group through reduced contributions or through refunds from the plan.

Lump sum payments are being made to reduce the deficits in schemes closed to new entrants.

Past service costs are recognised in the current reporting period. Interest is calculated on the net defined benefit liability. Re-measurements are reported in other comprehensive income.

Supported housing managed by agenciesSocial housing capital grants are claimed by the Group as developer and owner of the property and included in the balance sheet of the Group. The treatment of other income and expenditure in respect of supported housing projects depends on the nature of the partnership arrangements between the Group and its managing

agents and on whether the Group carries the financial risk.

Where the Group holds the support contract with the Supporting People Administering Authority and carries the financial risk, all the project’s income and expenditure is included in the Group’s income and expenditure account.

Where the agency holds the support contract with the Supporting People Administering Authority and carries the financial risk, the income and expenditure account includes only that income and expenditure which relates solely to the Group.

GoodwillGoodwill being the excess over the fair value of the underlying separable net assets acquired in a business combination and is capitalised as an intangible fixed asset.

Goodwill is amortised to the income and expenditure account on a straight line basis over an expected useful economic life of 10 years.

Housing propertiesHousing properties are properties held for the provision of social housing or to otherwise provide social benefit. Housing properties are principally properties available for rent and are stated at cost less accumulated depreciation and impairment losses. Cost includes the cost of acquiring land and buildings, development costs, interest charges incurred during the development period. Works to existing properties which replace a component that has been treated separately for depreciation purposes, along with those works that result in an

increase in net rental income over the lives of the properties, thereby enhancing the economic benefits of the assets, are capitalised as improvements.

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

Donated landLand donated by local authorities and others is added to cost at the market value of the land at the time of the donation. Where the land is not related to a specific development and is donated by a public body, an amount equivalent to the increase in value between market value and cost is added to other grants. Where the donation is from a non-public source, the value of the donation is included as income.

Government grantsGovernment grants include grants receivable from Homes England (formerly the Homes and Communities Agency or HCA), local authorities, and other government organisations. Government grants received for housing properties are recognised in income over the useful life of the housing property structure under the accruals model.

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


54

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

Deemed cost transitional reliefThe Association has taken advantage of transitional relief for deemed cost and treated all grants received for housing properties on transition under the performance model with subsequent grant under the accrual model.

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

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

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

Depreciation of social housing properties The Group separately identifies the major components which comprise its housing properties, and charges

depreciation, so as to write down the cost of each component to its estimated residual value, on a straight line basis, over its estimated useful economic life.

The Group depreciates the major components of its housing properties at the following annual rates:

Structure 125 yearsRoofs 60 yearsBathroms 30 yearsWindows 25 yearsLifts 25 yearsKitchens 20 yearsWarden call system (inc fire) 20 yearsHeating 15 yearsFacias & guttering 15 yearsDoors 10 years

Freehold land is not depreciated.

Properties held on leases are amortised over the life of the lease or their estimated useful economic lives in the business, if shorter.

ImpairmentAnnually housing properties are assessed for impairment indicators. Where indicators are identified, an assessment for impairment is undertaken comparing the scheme’s carrying amount to its recoverable amount. Where the carrying amount of a scheme is deemed to exceed its recoverable amount, the scheme is written down to its recoverable amount. The resulting impairment loss is recognised as operating expenditure. Where a scheme is currently deemed not to be providing service potential to the association, its recoverable amount is its fair value less costs to sell.

Other tangible fixed assetsDepreciation is provided evenly on the cost of other tangible fixed assets to write them down to their estimated residual values over their expected useful lives. No depreciation is provided on freehold land. The principal annual rates used for other assets are:

Freehold office buildings 50-75 yearsFurniture, fixtures and fittings 5-10 yearsComputers and office equipment 3-5 yearsMotor vehicles 5-7 yearsService charge equipment 5-25 years

Gains or losses arising on the disposal of other tangible fixed assets are determined as the difference between the disposal proceeds and the carrying amount of the assets and are recognised as part of the surplus/deficit for the year.

Investment propertiesInvestment properties consist of commercial properties and other properties not held for the social benefit or for use in the business. Investment properties are measured at cost on initial recognition and subsequently at fair value as at the year end, with changes in fair value recognised in income and expenditure.

Leased assetsWhere the Group enters into a lease or leaseback which entails taking substantially all the risks and rewards of ownership of an asset, the lease is treated as a finance lease. Assets held under finance leases are included in the balance sheet and depreciated in accordance with the Group’s normal accounting policies. The present value of future rentals is shown as a loan liability. The interest element of rental obligations is charged to the


55

income and expenditure account over the period of the lease in proportion to the balance of capital repayments outstanding.

Rentals payable under operating leases are charged to the income and expenditure account on a straight line basis over the lease term.

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

Basic financial instruments are recognised at amortised historical cost.

Non-basic financial instruments are recognised at fair value using a valuation technique with any gains or losses being reported in surplus or deficit. At each year end, the instruments are revalued to fair value, with the movements posted to the income and expenditure (unless hedge accounting is applied).

The Group and Association have not adopted hedge accounting for the financial instruments.

Current asset InvestmentsInvestments are stated at market value. Any revaluation of investments is reflected in the changes in reserves. Diminutions beyond the level of the revaluation reserve for investments are charged to the statement of comprehensive income.

Liquid resourcesLiquid resources are readily disposable current asset investments. They include some money market

deposits, held for more than 24 hours, that can only be withdrawn without penalty on maturity or by giving notice of more than one working day.

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

Long term contractsThe amount of long-term contracts, at costs incurred, net of amounts transferred to cost of sales, after deducting foreseeable losses and payments on account not matched with turnover, is included in work in progress and stock as long-term contract balances. The amount by which recorded turnover is in excess of payments on account is included in debtors as amounts recoverable on long-term contracts. Payments in excess of recorded turnover and long-term contract balances are included in creditors as payments received on account on long-term contracts.

Gift aidThe parent entity only recognises gift aid income within income when a gift aid payment is paid.

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

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

Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value using a pre-tax discount rate. The unwinding of the discount is recognised as a finance cost in profit or loss in the period it arises.

The Group recognises a provision for annual leave accrued by employees as a result of services rendered in the current period, and which employees are entitled to carry forward and use within the next 12 months. The provision is measured at the salary cost payable for the period of absence.

ReservesThe Group establishes restricted reserves for specific purposes where their use is subject to external restrictions and designated reserves where their reserves are earmarked for a particular purpose.

Hunts Close reserveFollowing the transfer of the assets and liabilities from Oxfordshire Charitable Housing Trust, the Group set up a restricted reserve to fund extra repairs, improvements and an element of service charges in relation to properties at Hunts Close.

Revaluation reserveThe difference on transition between the fair value of social housing properties and the historical cost carrying value is credited to the revaluation reserve.


56

Group

2018 2017

Turnover Cost of sales Operating costs

Operating surplus/(deficit)



£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000

Social housing lettings (Note 4) 62,496 – (38,204) 24,292 63,494 – (41,015) 22,479

Other social housing activities

Development services – – – – 31 – – 31

Supporting People contract income 2,429 – (2,160) 269 2,284 – (2,093) 191

Development costs not capitalised – – (873) (873) – – (1,439) (1,439)

First tranche shared ownership sales 4,766 (3,360) – 1,406 4,376 (3,593) – 783

BIG lottery fund –restricted funds 111 – (111) – 45 – (77) (32)

Other 2 – (14) (12) 201 – (5) 196

7,308 (3,360) (3,158) 790 6,937 (3,593) (3,614) (270)

Non social housing activities

Market rent lettings and other commercial initiatives 345 – (220) 125 326 – (131) 195

Student accommodation lettings 140 – (113) 27 128 – (175) (47)

Development for sale 9,531 (8,720) – 811 10,679 (10,174) – 505

Gas servicing 3,565 – (3,638) (73) 3,916 – (4,045) (129)

Other 374 – (478) (104) 358 – (237) 121

13,955 (8,720) (4,449) 786 15,407 (10,174) (4,588) 645

83,759 (12,080) (45,811) 25,868 85,838 (13,767) (49,217) 22,854

3. Turnover, operating costs and operating surplus


57

Association

2018 2017





£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000

Social housing lettings (Note 4) 24,062 – (12,360) 11,702 22,839 – (13,621) 9,218

Other social housing activities

Development services – – – – 31 – – 31

Supporting People contract income 10 – (9) 1 (3) – (27) (30)

Development costs not capitalised – – (275) (275) – – (127) (127)

First tranche shared ownership sales 3,265 (2,356) – 909 3,057 (2,726) – 331

BIG lottery fund –restricted funds 111 – (111) – 44 – (70) (26)

Other – – – – 201 – (5) 196

3,386 (2,356) (395) 635 3,330 (2,726) (229) 375

Non social housing activities

Commercial property lettings 321 – (213) 108 – – –

Intra-group sales (Note 31) 2,748 (2,683) – 65 7,040 (7,040) – –

3,069 (2,683) (213) 173 7,040 (7,040) – –

30,517 (5,039) (12,968) 12,510 33,209 (9,766) (13,850) 9,593

3. Turnover, operating costs and operating surplus cont’d


58

4. Particulars of income and expenditure from social housing lettings

GroupGeneral needs housing Supported housing and

for older peopleLow cost home

ownership Garages 2018 total 2017 total

£’000 £’000 £’000 £’000 £’000 £’000

Rent receivable net of identifiable service charges 48,358 6,143 2,153 557 57,211 56,927

Service charges receivable 1,162 1,616 266 (1) 3,043 3,207

Management fees – – – – – 58

Other income 314 49 7 – 370 343

Net rental income 49,834 7,808 2,426 556 60,624 60,535

Amortisation of grant 115 26 1 – 142 227

Other revenue grants 1,607 123 – – 1,730 2,732

Turnover from social housing lettings 51,556 7,957 2,427 556 62,496 63,494

Services 1,596 1,590 240 6 3,432 2,999

Management 9,287 2,164 551 101 12,103 12,583

Routine maintenance 7,158 1,010 51 51 8,270 8,692

Planned and major repairs expenditure 4,340 459 25 – 4,824 4,524

Rent losses from bad debts 338 102 (3) – 437 361

Depreciation of housing properties 7,763 1,065 310 – 9,138 11,856

Operating costs on social housing lettings 30,482 6,390 1,174 158 38,204 41,015

Operating surplus on social housing lettings 21,074 1,567 1,253 398 24,292 22,479

Void losses 233 177 6 146 562 609


59

4. Particulars of income and expenditure from social housing lettings cont’d

AssociationGeneral needs housing Supported housing and

for older peopleLow cost home

ownership 2018 total 2017 total

£’000 £’000 £’000 £’000 £’000

Rent receivable net of identifiable service charges 14,340 3,837 1,351 19,528 18,417

Service charges receivable 418 875 188 1,481 1,583

Management fees – – – – 58

Other income 120 38 6 164 –

Net rental income 14,878 4,750 1,545 21,173 20,058

Amortisation of grant 7 23 – 30 51

Other revenue grants 2,859 – – 2,859 2,730

Turnover from social housing lettings 17,744 4,773 1,545 24,062 22,839

Services 441 904 172 1,517 1,462

Management 2,600 1,072 313 3,985 4,521

Routine maintenance 1,360 605 24 1,989 2,603

Planned and major repairs expenditure 1,359 320 6 1,685 1,311

Rent losses from bad debts 157 37 – 194 (31)

Depreciation of housing properties 2,132 681 177 2,990 3,755

Operating costs on social housing lettings 8,049 3,619 692 12,360 13,621

Operating surplus on social housing lettings 9,695 1,154 853 11,702 9,218

Void losses 61 43 4 108 97


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5. Accommodation in management and development

The number of units of accommodation in management at the end of the period for each class of accommodation is as follows:

Group Association

2018 No. 2017 No. 2018 No. 2017 No.

Social housing

General needs – social 8,277 8,307 2,171 2,093

General needs – affordable 733 579 259 123

Supported housing and housing for older people 1,013 992 666 652

Intermediate Rent 67 70 53 5

Mortgage Rescue 93 95 62 63

Care homes 2 2 – –

Low cost home ownership 827 790 458 429

Leasehold properties 490 460 151 137

Total owned 11,502 11,295 3,820 3,502

Accommodation managed for others – – 590 602

Total units in management 11,502 11,295 4,410 4,104

Units owned but managed by other agencies 299 297 96 96

Non-social housing

Community buildings 1 1 1 –

Student accommodation 34 34 – –

Market rent lettings 41 58 38 53

Total units owned and managed 11,877 11,685 4,545 4,253

Accommodation in development at the year end 271 210 237 162


61

6. Operating surplus 8. Interest receivable and other income

7. Gain on disposal of fixed assets 9. Interest payable and similar charges

Group Association

This is arrived at after charging/(crediting) 2018£’000

2017£’000

2018£’000

2017£’000

Depreciation of housing properties 9,212 11,863 3,045 3,754

Depreciation of other tangible assets 1,182 1,372 782 941

Amortisation of goodwill – 130 – –

Deficit on disposal of fixed assets (3,130) (3,531) (505) (740)

Operating lease rentals land and buildings – 55 – 55

Auditor’s remuneration (excluding VAT)

– for audit services 48 46 17 15

– for non-audit services including taxation 43 14 20 13

Group Association

2018£’000

2017£’000

2018£’000

2017£’000

Proceeds 6,495 7,639 1,123 1,546

Council clawback (420) (353) – –

Carrying value of fixed assets (2,739) (3,322) (469) (682)

3,336 3,964 654 864

Capital grant recycled (206) (433) (149) (124)

Disposal proceeds fund – – – –

3,130 3,531 505 740

Group Association

2018£’000

2017£’000

2018£’000

2017£’000

Interest from listed investments 98 20 98 20

Interest from other investments 193 150 56 103

291 170 154 123

Group Association

2018£’000

2017£’000

2018£’000

2017£’000

Loans and bank overdrafts 12,755 12,279 5,797 5,227

Unwinding of discount factor on NPV 134 196 77 112

Finance leases 3,112 3,037 – –

Other charges 774 147 682 119

16,775 15,659 6,556 5,458

Interest payable capitalised on housing properties under construction (611) (426) (506) (292)

16,164 15,233 6,050 5,166

Average capitalisation rate used to determine the amount of finance costs capitalised during the period

3.35% 3.46% 2.90% 3.45%


62

10. Employees

Average monthly number of employees (37 hours full time equivalent)

Group Association

2018 No. 2017 No. 2018 No. 2017 No.

Administration 113 112 113 112

Development 57 71 13 18

Housing, support and care 351 336 65 52

521 519 191 182

Staff costs

Wages and salaries 15,951 14,832 7,077 6,654

Social security costs 1,467 1,374 648 634

Other pension costs 1,855 2,082 705 818

19,273 18,288 8,430 8,106

The Group’s employees are members of SHPS.

The SHPS final salary and Career Average Related Earnings (CARE) schemes and WCCPF final salary scheme were closed to all members on the 31 March 2016. Membership and auto enrolment for all employees is now only available in the SHPS defined contribution scheme.

Further information on each scheme is given in note 26 and in the individual subsidiary financial statements.


63

The current Chairman of the Board received remuneration of £11,136 (2017: £nil) during the year. The previous Chairman of the Board received remuneration of £5,420 (2017: £13,593).

Expenses paid during the year to Board members amounted to £7,530 (2017: £12,084).

A Willis also received £1,275 (2017: £2,389) for being an independent member of the Group Audit & Risk Committee prior to becoming a Board member.

None of the Board members are current members of the Social Housing Pension Scheme or the Wiltshire Pension Scheme.

Total remuneration paid to Board members in respect of the year was:

2017 Total £

2016 Total £

R Bailey (Chair from 26 July 2017) 11,136 -

C Victory Rowe 7,750 7,750

P McLaughlin 6,650 6,650

D Swann 4,608 4,608

P Starkey (Customer Services Chair) 6,650 5,993

J Tibbitts (Development Chair) 6,650 3,325

A Willis (Audit & Risk Chair from 26 July 2017) 3,982 -

M Clarke (from 25 July 2017) 4,007 -

H Gardner (Chair to 26 July 2017) 5,420 13,593

D Cash (to 26 July 2017) 1,837 5,800

P Lowe (Audit & Risk Chair to 26 July 2017) 2,651 6,650

L Mitchell (to 31 January 2017) - 3,840

S Palmer (to 31 January 2017) - 3,840

K Roach (to 26 July 2016) - 2,123

61,341 64,172

11. Board members and executive directors


64

11. Board members and executive directors cont’d

The emoluments of the highest paid director, the Managing Director Development, excluding pension contributions, were £171,926 (2017: £92,403). Total aggregate remuneration paid to the executive directors was:

* Comparative includes £134,524 relating to contractual redundancy and payment in lieu of notice.

The emoluments of the executive directors were:

Salary£’000

Benefits£’000

Pension£’000

2018Total£’000

2017Total£’000

Chief ExecutiveH Toplis 123 13 8 144 143

Operations Director A Campbell-Smith 92 10 10 112 108

Finance DirectorS Murray 92 10 6 108 52

OD and Corporate Services DirectorA Reilly 77 9 7 93 45

Managing Director – DevelopmentB Wood 162 10 8 180 98

Resources and Finance DirectorK Humberstone – – – – 119*

Commercial DirectorT Pritchard – – – – 119*

546 52 39 637 684

The Chief Executive is an ordinary member of the pension scheme and no enhanced or special terms apply. The Association does not make any further contribution to an individual pension arrangement for the Chief Executive.

The Chief Executive, OD and Corporate Services Director, Operations Director, Managing Director Development and Finance Director are members of the Social Housing Pension Scheme. The Group operates an approved salary sacrifice scheme for all employee pension contributions and the table above includes these deductions.

2018No.

2017No.

£60,001 to £70,000 5 3

£70,001 to £80,000 4 4

£80,001 to £90,000 3 2

£90,001 to £100,000 - 1

£100,001 to £110,000 2 1

£110,001 to £120,000 - 2

£130,001 to £140,000 1 1

£170,00 to £180,000 1 -

2018£’000

2017£’000

Emoluments (including benefits in kind, redundancy and compensation for loss of ffice) 598 653

Pension contributions 39 31

637 684


65

12. Tax on surplus on ordinary activities for the period

Group Association

(a) Analysis of tax charge in period 2018£‘000

2017£‘000

2018£‘000

2017£‘000

Current tax

UK corporation tax on surpluses for the period 121 367 – –

Adjustments in respect of prior periods – – – –

121 367 – –

Deferred tax

Charge for the year – 6 – –

Tax charge on surplus on ordinary activities 121 373 – –

(b) Factors affecting the tax charge for the periodThe tax assessed for the period differs to the standard rate of corporation tax in the UK, as explained below:

Group Association

2018£‘000

2017£‘000

2018£‘000

2017£‘000

Surplus for the year before tax 12,921 11,188 7,119 4,532

Theoretical tax of 20% (2017: 20%) 2,455 2,237 1,353 906

Effects of:

Surpluses not liable to tax 2,334 (1,870) (1,353) (906)

Adjustments in respect of prior periods – – – –

Current tax charge for the period 121 367 – –


66

13. Tangible fixed asset properties

Group

Social housing properties held

for lettingLettings leasehold

Social housing properties under

construction

Shared ownership properties held for

letting

Shared ownership properties under

constructionTotal

£’000 £’000 £’000 £’000 £’000 £’000

Cost

At 8 April 2017 659,393 5,168 14,373 46,891 3,165 728,990

Additions 81 - 28,854 - 11,569 40,504

Works to existing properties 6,427 13 - 262 - 6,702

Interest capitalised – - 408 - 155 563

Transfers 193 1,241 (2,806) 41 (5,992) (7,323)

Schemes completed 25,517 - (25,029) 4,108 (4,596) -

Disposals (9,542) (6) - (897) - (10,445)

At 31 March 2018 682,069 6,416 15,800 50,405 4,301 758,991

Depreciation and impairment

At 8 April 2017 58,417 814 - 918 - 60,149

Charged in year 8,812 100 - 300 - 9,212

Transfers 1 - - - - 1

Disposals (6,272) (6) - (26) - (6,304)

At 31 March 2018 60,958 908 1,192 63,058

Net book value

At 31 March 2018 621,111 5,508 15,800 49,213 4,301 695,933

At 7 April 2017 600,976 4,354 14,373 45,973 3,165 668,841


67

13. Tangible fixed asset properties cont’d

Association

Social housingproperties

held for letting

Social housingproperties

under construction

Shared ownershipproperties held for

letting

Shared ownershipproperties under

constructionTotal

£’000 £’000 £’000 £’000 £’000

Cost

At 8 April 2017 226,452 10,444 27,215 2,829 266,940

Additions - 27,126 - 9,864 36,990

Works to existing properties 1,689 - 262 - 1,951

Transfers 6,158 (2,763) 41 (5,097) (1,661)

Interest capitalised - 329 - 130 459

Schemes completed 20,667 (20,179) 3,030 (3,518) -

Disposals (917) - (474) - (1,391)

At 31 March 2018 254,049 14,957 30,074 4,208 303,288

Depreciation and impairment

At 8 April 2017 17,016 - 555 - 17,571

Charged in year 2,868 - 177 - 3,045

Disposals (905) - (14) - (919)

Transfers 225 - - - 225

At 31 March 2018 19,204 - 718 - 19,922

Net book value

At 31 March 2018 234,845 14,957 29,356 4,208 283,366

At 7 April 2017 209,436 10,444 26,660 2,829 249,369


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13. Tangible fixed asset properties cont’d

The Group has taken advantage of deemed cost transitional relief.

Social housing assistanceGroup Association

2018£’000

2017£’000

2018£’000

2017£’000

Total accumulated SHG receivable at 31 March was:

Recognised in the Statement of Comprehensive Income 142 212 30 36

Held as deferred income (note 25) 19,883 18,446 5,565 4,541

Subsumed within reserves 184,942 184,734 103,741 103,709

204,967 203,392 109,336 108,286

Expenditure on works to existing propertiesGroup Association

2018£’000

2017£’000

2018£’000

2017£’000

Components capitalised 6,702 6,210 1,951 1,295

Amounts charged to income and expenditure account 4,824 4,524 1,685 1,311

11,526 10,734 3,636 2,606

Housing properties book value, net of depreciation comprises

Group Association

2018£’000

2017£’000

2018£’000

2017£’000

Freehold land and buildings 685,148 659,747 278,089 244,344

Long leasehold land and buildings 10,333 8,638 4,825 4,569

Short leasehold land and buildings 452 456 452 456

695,933 668,841 283,366 249,369

Included in the Group housing properties are assets held under finance leases with a net book value of £52.4m (2017: £52.9m).

ImpairmentThe Group considers individual schemes to be separate Cash Generating Units (CGU’s) when assessing for impairment, in accordance with the requirements of FRS102 and SORP 2014.


69

14. Investment properties non-social housing held for letting

Group Association

2018£’000

2017£’000

2018£’000

2017£’000

At 8 April 6,923 5,191 6,923 –

Additions – (5) – 6,923

Transfers to housing properties (1,471) – (1,471) –

Increase in value – 1,737 – –

At 31 March 2018 5,452 6,923 5,452 6,923

GreenSquare Group Limited, owns 42 market-rental properties, which have been valued by Savills LLP, Chartered Surveyors, on a market value – subject to tenancy basis at 26 January 2017. The valuation was undertaken in accordance with the appraisal and valuation manual of the Royal Institute of Chartered Surveyors.


70

15. Tangible fixed assets – other

GroupFreehold

offices

Office equipment

and fittings ComputersMotor

vehicles Total

£’000 £’000 £’000 £’000 £’000

Cost

At 8 April 2017 5,858 4,186 5,836 1,760 17,640

Additions 62 225 388 19 694

Disposals (29) - - (64) (93)

At 31 March 2018 5,891 4,411 6,224 1,715 18,241

Depreciation

At 8 April 2017 1,788 2,329 4,542 1,158 9,817

Charged in year 132 237 567 246 1,182

Disposals - - - (49) (49)

At 31 March 2018 1,920 2,566 5,109 1,355 10,950

Net book value

At 31 March 2018 3,971 1,845 1,115 360 7,291

At 7 April 2017 4,070 1,857 1,294 602 7,823

AssociationFreehold

offices

Office equipment

and fittings ComputersMotor

vehicles Total

£’000 £’000 £’000 £’000 £’000

Cost

At 8 April 2017 1,933 2,750 3,509 289 8,481

Additions – 51 388 – 439

Disposals – – – – –

At 31 March 2018 1,933 2,801 3,897 289 8,920

Depreciation

At 8 April 2017 952 1,202 2,226 145 4,525

Charged in year 27 155 559 41 782

Disposals – – – – –

At 31 March 2018 979 1,357 2,785 186 5,307

Net book value

At 31 March 2018 954 1,444 1,112 103 3,613

At 7 April 2017 981 1,548 1,283 144 3,956


71

16. Fixed asset investments

The Association owns issued share capital of the following companies incorporated and registered in England:

Company Type of share % held Principal activityWestlea Housing Association Ltd Ordinary £1 100% Registered housing

provider (1)GreenSquare Community Housing Ordinary £1 100% Registered housing

provider (1)GreenSquare Homes Limited Ordinary £1 87.5% (a) Commercial letting (2)GreenSquare Homes Limited Preference £1 60.2% (b) Commercial letting (2)GreenSquare Construction Limited Ordinary £1 100% (c) Housing construction (2)GS Energy Services Limited Ordinary £1 100% (d) Gas servicing (2)GreenSquare Estates Limited Ordinary £1 100% (e) Grounds maintenance (2)

(1) Registered in England under the Co-operative and Community Benefit Societies Act 2014

(2) Limited liability company incorporated in England under the Companies Act 2006

(a) The remaining 12.5% is held by Westlea Housing Association(b) The remaining 39.8% is held by Westlea Housing Association(c) Shares held by Westlea Housing Association(d) Shares held by GreenSquare Homes Limited(e) Shares held by GreenSquare Homes Limited

GreenSquare Group Limited is the ultimate parent undertaking.

During the year the Association made the following recharges and allocations with GreenSquare Homes Ltd, GreenSquare Construction Ltd, GS Energy Services Ltd and GreenSquare Estates Ltd non regulated entities:

2018£’000

2017£’000

Allocation basis

GreenSquare Homes Ltd Management services 585 302 Fixed

GreenSquare Construction Ltd Management services – – Fixed

GS Energy Services Ltd Management services 58 57 Fixed

GreenSquare Estates Ltd Management services – 6 Fixed

2018£

2017£

Shares in Group undertakings at 31 March 16 16


72

17. Stock and property held for sale 18. Trade and other debtors

19. Current asset investments

Group Association

2018£’000

2017£’000

2018£’000

2017£’000

Raw materials and consumables 149 290 8 30

Properties being developed for sale 11,184 9,766 183 4,537

Shared ownership properties:

Properties under construction 2,232 1,002 2,218 898

Completed properties 569 671 569 671

14,134 11,729 2,978 6,136

Group Association

2018£’000

2017£’000

2018£’000

2017£’000

Investments listed on a recognised stock exchange 523 537 523 537

523 537 523 537

Group Association

2018£’000

2017£’000

2018£’000

2017£’000

Due within one year

Rent and service charges receivable 2,915 3,486 878 1,252

Less: provision for bad and doubtful debts (1,760) (1,684) (508) (501)

1,155 1,802 370 751

Due from subsidiary undertakings – – 780 163

Other debtors 3,191 2,908 1,067 699

Prepayments and accrued income 1,130 827 458 378

5,476 5,537 2,675 1,991Stocks recognised as an expense in the year were Group: £12,080k (2017: £13,767k), Association:£5,039k (2017: £9,766k).

The listed investments are held at market value. The historical cost of these investments at 31 March 2018 was £470,876 (2017: £472,761).


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20. Creditors: amounts falling due within one year 21. Creditors: amounts falling due after more than one year

Group Association

2018£’000

Restated2017

£’000

2018£’000

Restated2017

£’000

Debt (note 22) 9,256 9,115 1,782 1,901

Bank overdraft – 482 – –

Trade creditors 2,150 2,514 872 930

Amount due to subsidiary undertakings – - 4,625 307

Rent and service charges received in advance 1,058 1,230 432 515

Recycled capital grant fund (note 23) 452 498 – –

Corporation tax 142 – – –

Other taxation and social security 417 101 213 35

Past service contributions payable under SHPS (note 26) 850 817 464 446

Other creditors 1,910 4,330 1,208 3,085

Accruals and deferred income 7,905 4,173 4,837 –

24,140 23,260 14,433 7,219

Group Association

2018£’000

2017£’000

2018£’000

2017£’000

Debt (note 22) 392,328 365,844 162,959 130,364

Deferred capital grant (note 25) 19,883 18,446 5,565 4,541

Recycled capital grant fund (note 23) 1,004 1,044 1,004 1,044

Disposal proceeds fund (note 24) 171 171 171 171

Sinking funds for leasehold schemes 1,485 1,256 763 626

Loan stock 7 7 7 7

Past service deficit contributions payable under SHPS (note 26) 4,050 4,783 2,374 2,771

Other long term creditors 39 544 – 545

418,967 392,095 172,843 140,069

Loans are stated after the deduction of £1,503,000 (2017: £1,002,000) of issue costs which are amortised over the expected life of the loan.

Major repairs sinking funds are maintained for several leasehold estates to provide for repairs of a long-term nature. Residents contribute through the service charge.

Housing loans from Orchardbrook Ltd (former Housing Corporation loans), building societies and banks are secured by floating charges over the assets of the Group, and by fixed charges on individual properties and are repayable at varying rates of interest in instalments due as detailed overleaf:

The SHPS pension obligations are referred to in note 26(b). The creditor is based on the net present value of payments agreed at year end. The creditor will be adjusted following the triennial valuations in the pension scheme, either increasing or decreasing the provision with the opposite entry being shown as operating costs within income and expenditure. The unwinding of the discount is shown as a finance cost.


74

22. Debt analysis

Group 2018£’000

2017£’000

Due within one year

Bank overdraft – 482

Bank loans 9,256 9,115

9,256 9,597

Due after more than one year

Bank loans 395,188 366,846

Less: issue costs (2,860) (1,002)

392,328 365,844

Total debt 401,584 375,441

Association 2018£’000

2017£’000

Due within one year

Bank loans 1,782 1,901

1,782 1,901

Due after more than one year

Bank loans 164,351 131,154

Less: issue costs (1,392) (790)

162,959 130,364

Total debt 164,741 132,265

SecurityThe bank loans are secured by fixed charges on individual properties.

Terms of repayment and interest ratesThe bank loans are repayable by instalments, with the final instalments due to be paid in the period to 2048. At the year end, the Association had approximately 48% of its debt fixed with an average interest rate of 3.8%, with the remaining floating debt at an average interest rate of 2.1%, giving an average of 2.9%.

At 31 March 2018, the Group had undrawn loan facilities of £75m (2017: £nil). The Association completed a private placement for £110m in January 2018 which provides funding for developing new homes for the next 2-3 years. Of this, £35m was drawn in the year with £75m being deferred.

In April 2018, the Association raised further new finance of £75m through a private placement to refinance some of its existing funders.

Based on the lender’s earliest repayment date, borrowings are repayable as follows:

Group Assocation

2018£’000

2017£’000

2018£’000

2017£’000

Within one year 9,256 9,115 1,782 1,901

Between one and two years 11,108 9,005 3,890 1,792

Between two and five years 45,897 33,494 24,242 11,853

After five years 335,323 323,345 134,827 116,719

401,584 374,959 164,741 132,265


75

23. Recycled capital grant fund

24. Disposal proceeds fund

25. Deferred capital grant

Group Association

2018£’000

2017£’000

2018£’000

2017£’000

At 8 April 1,542 1,109 1,044 920

Grants recycled 220 433 149 124

Withdrawals (315) – (195) –

Interest accrued 9 – 6 –

Balance at 31 March 2018 1,456 1,542 1,004 1,044

Group Association

2018£’000

2017£’000

2018£’000

2017£’000

At 8 April 18,446 17,815 4,541 4,592

Grants received in the year 3,149 3,558 2,624 2,700

Released to income in year (1,712) (2,927) (1,600) (2,751)

Balance at 31 March 2018 19,883 18,446 5,565 4,541

Group and Association 2018£’000

2017£’000

At 8 April 171 171

Grants recycled – –

Balance at 31 March 2018 171 171


76

26. Pensions

The Group’s employees are members of Social Housing Pension Scheme (SHPS). One subsidiary also participated in the Wiltshire County Council Pension Fund (WCCPF) and the Pension Trust’s Growth Plan (PTGP) but has no active members and withdrew from the plan and settled any liability as from 2 September 2016. Further information on each scheme is given below and in the individual subsidiary financial statements.

(a) Wiltshire County Council Pension Fund – scheme closed by employer

One of the Group’s subsidiaries, Westlea Housing Association, participated in the WCCPF, a multi-employer scheme with more than one participating employer.The scheme closed on 31 March 2016 and members transferred to the SHPS defined contribution scheme.

The Wiltshire County Council Pension Fund is a defined benefit scheme, part of the local government Superannuation Regulation 1986 (as amended) and the calculations have been made by an independent qualified actuary. Triennial actuarial valuations have been made by a qualified actuary using the projected unit method. The most recent formal actuarial valuation was completed as at 31 March 2016 and rolled forward, allowing for the different financial assumptions required under FRS 102, to 31 March 2018 by a qualified independent actuary.

The income and expenditure charge for pension costs, the accounting policies and the disclosures are given on the basis of FRS 102.

Financial assumptionsThe major assumptions used by the actuary in assessing the scheme liabilities on a FRS 102 basis were:

31 March 2018% Per Annum

31 March 2017% Per Annum

Inflation (CPI) 2.4 2.4

Salary increases 2.4 2.4

Pension increases 2.4 2.4

Discount rate 2.6 2.5

RPI Increases 3.4 3.4

MortalityLife expectancy is based on the Fund’s Vita Curves with improvements in line with the CMI 2013 model assuming the current rate of improvements has peaked and will converge to a long term rate of 1.25% p.a., improvements will decline for the over-90s. Based on these assumptions, the average future life expectancies from age 65 are summarised below:

Males Females

Current pensioners 22.5 years 24.9 years

Future pensioners 24.1 years 26.7 years

ContributionsThe contributions to the Wiltshire County Council Pension Fund by the Association for the year ended 31 March 2018 are shown below.

2018£’000

2017£’000

Employer contributions 509 512

At 31 March 2018, no current employees are active members of the scheme (2017: nil). The employers contribution rate for 2017/18 was £509,000, the past deficit annual monetary amount and is expected to be £513,000 for 2018/19. The member’s contribution rate was nil.

Amounts recognised in surplus or deficit:

2018£’000

2017£’000

Current service costs – –

Past service cost – –

Amounts charged to operating costs – –

2018£’000

2017£’000

Interest income on plan assets 450 532

Interest cost on defined benefit obligation (654) (758)

Amounts charged to other finance costs (204) (226)

Re-measurements recognised in other comprehensive income

2018£’000

2017£’000

Return on fund assets in excess of interest 1,073 2,416

Other actuarial gains/(losses) on assets – (344)

Changes in financial assumptions 405 (4,155)

Changes in demographic assumptions – 305

1,478 (1,778)


77

Fair value of employer assets 2018£’000

2017£’000

Equities 13,382 13,068

Bonds 2,868 2,577

Property 2,485 2,393

Cash 382 368

Total 19,117 18,406

Net pension liability 2018£’000

2017£’000

Fair value of employer assets 19,117 18,406

Present value of the defined benefit obligation (25,744) (26,816)

Net liability (6,627) (8,410)

Reconciliation of opening & closing balances of the present value of the defined benefit obligation

2018£’000

2017£’000

Opening scheme liabilities 26,816 22,756

Current and past service costs – –

Interest cost 654 758

Contributions by members – –

Estimated benefits paid (1,321) (892)

Re-measurements (405) 4,194

Closing scheme liabilities 25,744 26,816

Reconciliation of opening & closing balances of the fair value of plan assets

2018£’000

2017£’000

Opening fair value of scheme assets 18,406 15,838

Interest income on plan assets 450 532

Contributions by members - -

Contributions by employers 509 512

Benefits paid (1,321) (892)

Return on assets less interest 1,073 2,416

Closing fair value of scheme assets 19,117 18,406

Change in assumptions at 31 March 2018

Approximate increase to

employer liability

%

Approximatemonetary

amount£’000

0.5% decrease in Real Discount Rate 8% 2,093

1 year increase in member life expectancy 3-5% –

0.5% increase in the Salary Increase Rate 0% 2

0.5% increase in the Pension Increase Rate 8% 2,084

Sensitivity analysisThe sensitivities regarding the principal assumptions used to measure the scheme liabilities are set out below:


78

26. Pensions cont’d

(b) Social Housing Pension Scheme (SHPS)

The Group participates in the Social Housing Pension Scheme, a multi-employer scheme which provides benefits to some 500 non-associated employers. The scheme is a defined benefit scheme in the UK. It is not possible for the Group to obtain sufficient information to enable it to account for the scheme as a defined benefit scheme. Therefore it accounts for the scheme as a defined contribution scheme.

The scheme is subject to the funding legislation outlined in the Pensions Act 2004 which came into force on 30 December 2005. This, together with documents issued by the Pensions Regulator and Technical Actuarial Standards issued by the Financial Reporting Council, set out the framework for funding defined benefit occupational pension schemes in the UK.

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

A full actuarial valuation for the scheme was carried out with an effective date of 30 September 2014. This actuarial valuation was certified on 23 November 2015 and showed assets of £3,123m, liabilities of £4,446m and a deficit of £1,323m. To eliminate this funding

shortfall, the trustees and the participating employers have agreed that additional contributions will be paid, in combination from all employers, to the scheme as follows:

Deficit contributions

Tier 1 £40.6m per annum

From 1 April 2016 to 30 September 2020

(payable monthly and increasing by 4.7% each year on 1 April)










Note that the scheme’s previous valuation was carried out with an effective date of 30 September 2011; this valuation was certified on 17 December 2012 and showed assets of £2,062m, liabilities of £3,097m and a deficit of £1,035m. To eliminate this funding shortfall, payments consisted of the Tier 1, 2 & 3 deficit contributions.

Where the scheme is in deficit and where the Group has agreed to a deficit funding arrangement, the Group recognises a liability for this obligation. The amount recognised is the net present value of the deficit reduction contributions payable under the agreement that relates to the deficit. The present value is calculated using the discount rate detailed in these disclosures. The unwinding of the discount rate is recognised as a finance cost.

Present values of provision 2018£,000

2017£‘000

2016£‘000

Group

Present value of provision 4,900 5,600 6,007

Association

Present value of provision 2.838 3,217 3,426


79


Reconciliation of opening and closing provisions

Group 2018£’000

2017£’000

Provision at start of period 5,600 6,007

Unwinding of the discount factor 134 196

Deficit contribution paid (817) (787)

Remeasurements – assumption/amendments to the contribution schedule (17) 184

4,900 5,600


2017£’000

Provision at start of period 3,217 3,426

Unwinding of the discount factor 77 112

Deficit contribution paid (446) (431)


2,838 3,217

Income and expenditure impact

Group 2018£’000

2017£’000

Interest expense 134 196



2017£’000

Interest expense 77 112


Assumptions

Group and Association 2018 2017 2016

Rate of discount 2.7% 2.6% 3.50%

The discount rates shown above are the equivalent single discount rates which, when used to discount the future recovery plan contributions due, would give the same results as using a full AA corporate bond yield curve to discount the same recovery plan contributions.


80


Deficit contributions scheduleThe following schedule details the deficit contributions agreed between the Group and the scheme at each year end period:

Year ending 2018£’000

2017£’000

2016£’000

Year 1 850 817 785

Year 2 883 850 817

Year 3 758 883 850

Year 4 622 758 884

Year 5 645 622 757

Year 6 538 645 622

Year 7 423 538 644

Year 8 436 423 539

Year 9 225 436 422

Year 10 – 225 436

Year 11 – – 225

The Group must recognise a liability measured as the present value of the contributions payable that arise from the deficit recovery agreement and the resulting expense in the income and expenditure account i.e. the unwinding of the discount rate as a finance cost in the period in which it arises.

It is these contributions that have been used to derive the Group’s balance sheet liability.

The Group has been notified by the Pensions Trust of the estimated employer debt on withdrawal from the Social Housing Pension Scheme based on the financial position of the Scheme as at 30 September 2016. As of this date the estimated employer debt for the Group was £56.9m and for the Association was £34.4m.

(c) Pension Trust’s Growth Plan – scheme closed by employer

One of the Group’s subsidiaries, Westlea Housing Association, previously participated in the Pensions Trust’s Growth Plan, a multi-employer scheme which provides benefits to some 1,300 non-associated participating employers. The scheme is a defined benefit scheme in the UK. It is not possible for the company to obtain sufficient information to enable it to account for the scheme as a defined benefit scheme. Therefore it accounted for the scheme as a defined contribution scheme.

The scheme is subject to the funding legislation outlined in the Pensions Act 2004 which came into force on 30 December 2005. This, together with documents issued by the Pensions Regulator and Technical Actuarial Standards issued by the Financial Reporting Council, set out the framework for funding defined benefit occupational pension schemes in the UK.

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

Westlea Housing Association does not have any active members in the Pensions Trust’s Growth Plan (the Plan) and withdrew from the Plan and is no longer a participating employer as from 2 September 2016.

In compliance with section 75 of the Pensions Act 1995 the scheme actuary calculated the employer debt on withdrawal and in accordance with The Occupational Pension Schemes (Employer Debt) Regulations 2005 (as amended) and Statutory Instrument 2008/731 full settlement of the £45,365 employer debt was made in September 2016..


81


Present values of provision

2018£

2017£

2016£

Present values of provision – – 8,824

Reconciliation of opening and closing provisions

2018£

2017£

Provision at start of period – 8,824

Unwinding of the discount factor – –

Remeasurements – amendments to the contribution schedule – 36,541

Deficit contribution paid – (45,365)

– –

Income and expenditure impact

2018£

2017£

Interest expense – –

Remeasurements – amendments to the contribution schedule – –

Assumptions

2018£

2017£

2016£

Rate of discount – 2.60% 3.50%

The discount rates shown above are the equivalent single discount rates which, when used to discount the future recovery plan contributions due, would give the same results as using a full AA corporate bond yield curve to discount the same recovery plan contributions.

Deficit contributions scheduleThe following schedule details the deficit contributions agreed between the company and the scheme at each year end period:

Year ending 2018£

2017£

2016£

Year 1 – – 963

Year 2 – – 992

Year 3 – – 1,021

Year 4 – – 1,052

Year 5 – – 1,084

Year 6 – – 1,116

Year 7 – – 1,150

Year 8 – – 1,184

Year 9 – – 1,220

Year 10 – – 628

The company must recognise a liability measured as the present value of the contributions payable that arise from the deficit recovery agreement and the resulting expense in the income and expenditure account ie the unwinding of the discount rate as a finance cost in the period in which it arises.

It is these contributions that have been used to derive the company’s balance sheet liability.


82

27. Provisions for liabilities 28. Non-equity share capital

Group and Association 2018£

2017£

Shares of £1 each issued and fully paid

At 8 April 77 151

Shares issued/(redeemed) during the year 2 (74)

At 31 March 79 77

The shares provide members with the right to vote at general meetings, but do not provide any rights to dividends or distributions on a winding up.

GroupLeave Pay Deferred

Taxation Dilapidations Total

£’000 £’000 £’000 £’000

At 8 April 2017 152 12 1 165

Additions 52 – 198 250

Released in the year (38) – – (38)

At 31 March 2018 166 12 199 377

The deferred tax liability relates to the timing differences associated with previous post year end Gift Aid payments.

AssociationLeave Pay Total

£’000 £’000

At 8 April 2017 (restated) 71 71

Provided in the year 51 51

Released in the year (38) (38)

At 31 March 2018 84 84

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


83

29. Financial commitments

GroupCapital expenditure commitments are as follows:

2018£’000

2017£’000

Expenditure contracted for but not provided in the accounts 33,482 34,979

Expenditure authorised by the Board, but not contracted 17,570 24,003

51,052 58,982

The above commitments will be financed primarily through borrowings and new funding arrangements, social housing grant, property sales and internal cash balances.

Operating leasesThe annual payments which the Group is committed to make in the next year under operating leases are as follows:

Temporary housing and office equipment leases expiring: 2018£’000

2017£’000

One to five years – 55

– 55

Obligations under finance leasesSome housing assets are held under finance lease arrangements. As of 31 March 2018, the net carrying amount of the facility is £56.2m and this is disclosed within loans due after more than one year in note 22. Leases are stated net of issue costs which are amortised on a straight line basis over the term of the agreement.

Finance lease liabilities are secured by the related assets held under basic financial instruments.

Future minimum lease financing payments at the end of each reporting period under review were as follows:

2018£’000

2017£’000

Due within one year 3,170 3,112

Between one and five years 13,187 12,968

Due after five years 117,625 120,739

133,982 136,819


84

30. Cash flow from operating activities 31. Related parties

There were no tenant members of the Group Board during the year. Any tenant board members are on normal commercial terms and are not able to use their position to their advantage.

Transactions/balances with GreenSquare Homes LimitedGreenSquare Group Limited (GreenSquare) owns 87.5% of the ordinary share capital of GreenSquare Homes Limited (GreenSquare Homes).

During the year GreenSquare purchased goods and services from GreenSquare Homes with a value of £32,321 (2017: £6,315,000) and sold goods and services to GreenSquare Homes with a value of £2,682,490 (2017: £671,093). At 31 March 2018 there were sums outstanding to GreenSquare Homes of £124,856 (2017: £2,258), and these amounts are disclosed in note 18 as appropriate.

The Association has taken advantage of the exemptions conferred by FRS102 in not disclosing transactions with wholly owned members of the GreenSquare Group.

Disclosures in relation to key management personnel are included in note 11.

32. Goodwill on acquisition

Movement on goodwill:

2018£’000

2017£’000

Positive goodwill – 130

Amortisation for the year – (130)

Positive goodwill at end of year – –

Group 2018£’000

2017£’000

Surplus for the year 12,800 10,815

Adjustments for non-cash items:

Depreciation and impairment of tangible fixed assets 10,339 13,244

Amortisation of intangible assets (3,058) (2,927)

Decrease/(increase) in stock (2,405) 3,369

Decrease/(increase) in debtors (518) 3,683

Increase/(decrease) in creditors (2,171) 684

Increase/(decrease) in provisions 233 (439)

Gift Aid provision – (1,250)

Goodwill amortised – 130

Pensions costs less contributions payable (987) (665)

Movement in fair value of financial instruments - 92

Carrying amount of property disposals 4,742 3,544

18,975 30,280

Adjustments for investing or financing activities

Proceeds from sale of tangible fixed assets (6,586) (7,640)

Taxation (91) 34

Gift Aid receivable – 400

Interest payable 16,164 15,599

Interest received (291) (170)

Net cash inflow from operating activities 28,171 38,503


85

33. Financial assets and liabilities

The Board policy on financial instruments is explained in the Board Report as are references to financial risks.

Categories of financial assets and financial liabilities

Group 2018£’000

2017£’000

Financial assets

Financial assets that are debt instruments measured at amortised cost 97,470 80,056

Financial liabilities

Financial liabilities measured at amortised cost 447,437 414,972


2017£’000

Financial assets

Financial assets that are debt instruments measured at amortised cost 57,832 39,811

Financial liabilities

Financial liabilities measured at amortised cost 186,631 146,738

Financial assets that are debt instruments measured at amortised cost consist of cash at bank, rent and service charges receivable, other debtors, and amounts owed from Group undertakings. Financial liabilities measured at amortised cost consist of bank overdrafts, loans, trade creditors, amounts due to Group undertakings, recycled capital grant fund, other creditors, past service deficit contributions payable under SHPS, accruals, sinking funds and deferred capital grant.

Financial liabilities excluding trade creditors – interest rate risk profileThe Association’s financial liabilities are sterling denominated. The interest rate profile at 31 March was:

2018£’000

2017£’000

Fixed rate 272,843 270,591

Variable rate 131,601 106,782

The Group’s fixed rate financial liabilities have a weighted average interest rate of 4.5% (2017: 4.4%) and the weighted average period for which it is fixed is approximately 24 years (2017: 16 years)

The Group’s variable rate financial liabilities have a weighted average interest rate of 2.3% (2017: 2.1%).

The debt maturity profile is shown in note 22.

Borrowing facilitiesThe Association has undrawn committed borrowing facilities. The facilities available at 31 March in respect of which all conditions precedent had been met were as follows

2017£’000

2016£’000

Expiring in one year or less 75,000 –

Total 75,000 –


GreenSquare Group LimitedA registered society with exempt charitable status no. 7418

Registered office: Methuen Park, Chippenham SN14 0GUgreensquaregroup.com

annual report & financial statements 2017/18...3 board chair r bailey (from 8 may 2017, chair...

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