Martlet Homes Limited - Hyde Housing Association
Martlet Homes Limited - Hyde Housing Association
Martlet Homes Limited - Hyde Housing Association
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<strong>Martlet</strong> <strong>Homes</strong><br />
<strong>Limited</strong><br />
Report & Financial Statements<br />
31 March 2010<br />
<strong>Hyde</strong> <strong>Housing</strong> <strong>Association</strong> <strong>Limited</strong> | Report & Financial Statements 2010<br />
1
MARTLET HOMES LIMITED<br />
REPORT AND FINANCIAL STATEMENTS<br />
31 MARCH 2010<br />
TENANT SERVICES AUTHORITY REGISTRATION NO. L 4303<br />
INDUSTRIAL AND PROVIDENT SOCIETY REGISTRATION NO. IP 30648R
MARTLET HOMES LIMITED<br />
CONTENTS<br />
BOARD AND ADVISORS 3<br />
REPORT OF THE BOARD AND OPERATING AND FINANCIAL REVIEW 4-10<br />
STATEMENT OF GROUP CORPORATE GOVERNANCE 11<br />
STATEMENT OF INTERNAL CONTROLS 12<br />
STATEMENT OF THE BOARD'S REPONSIBILITIES 13<br />
INDEPENDENT AUDITOR'S REPORT 14<br />
INCOME AND EXPENDITURE STATEMENT 15<br />
STATEMENT OF TOTAL RECOGNISED SURPLUSES AND DEFICITS 15<br />
BALANCE SHEET 16<br />
CASH FLOW STATEMENT 17<br />
NOTES TO THE CASH FLOW STATEMENT 18<br />
NOTES TO THE ACCOUNTS 19-40<br />
2
MARTLET HOMES LIMITED<br />
BOARD AND ADVISORS<br />
BOARD<br />
Bob Warner Chair (appointed as Chair 3 November 2009)<br />
Prodaman Sarwal Chair (resigned and from the Board 3 November 2009)<br />
Alan Chaplin<br />
David Eastgate (appointed 2 April 2009)<br />
Andrew Moncreiff<br />
Patricia Smith<br />
Claire Holloway<br />
Michael Jones<br />
Frank Hickson<br />
Margaret Temmé<br />
Jonathan Prichard<br />
Jackie Puddifoot<br />
Paul Featherstone (appointed 11 March 2010)<br />
MANAGING DIRECTOR<br />
Steve Wilson (to 26 January 2010)<br />
Paul Featherstone (from 26 January 2010)<br />
SECRETARY<br />
John Edwards<br />
REGISTERED OFFICE<br />
<strong>Martlet</strong> House<br />
Southern Gate<br />
Chichester<br />
West Sussex<br />
PO19 8SG<br />
BANKERS<br />
National Westminster Bank Plc<br />
143 High Street<br />
Bromley<br />
Kent<br />
BR1 1JH<br />
SOLICITORS<br />
Coffin Mew Trowers and Hamlins Devonshires<br />
Kings Park House Sceptre Court Salisbury House<br />
23 Kings Park Road 40 Tower Hill London Wall<br />
Southampton London London<br />
SO15 2UF EC3N 4DX EC2M 5QY<br />
AUDITORS<br />
PricewaterhouseCoopers LLP<br />
80 Strand<br />
London<br />
WC2R 0AF<br />
3
MARTLET HOMES LIMITED<br />
REPORT OF THE BOARD AND OPERATING AND FINANCIAL REVIEW<br />
The Board presents its report and the audited financial statements of <strong>Martlet</strong> <strong>Homes</strong> <strong>Limited</strong> for the year<br />
ended 31 March 2010.<br />
Managing Director<br />
The Managing Director is Paul Featherstone effective from 26 January 2010. Previous to this the Managing<br />
Director was Steve Wilson.<br />
Overview of the business<br />
<strong>Martlet</strong> <strong>Homes</strong> <strong>Limited</strong> (the “<strong>Association</strong>”) is a Registered Provider of Social <strong>Housing</strong> administered by a Non-<br />
Executive Board, which joined the <strong>Hyde</strong> Group (the “Group”) on 14 December 2007. The <strong>Association</strong>, in<br />
addition to managing its own stock, took over the management of the <strong>Hyde</strong> stock located within Surrey,<br />
Sussex and Hampshire under the name of <strong>Hyde</strong><strong>Martlet</strong> from 1 January 2008. On 1 April 2009, <strong>Martlet</strong> <strong>Homes</strong><br />
converted to an Industrial and Provident Society with exempt charitable status. <strong>Martlet</strong> has a charitable<br />
subsidiary, Matrix Charitable Foundation <strong>Limited</strong>.<br />
Activities<br />
<strong>Martlet</strong> <strong>Homes</strong> <strong>Limited</strong> is part of the <strong>Hyde</strong> Group and is a leading provider of affordable homes in the<br />
counties of Surrey, Sussex and Hampshire. The <strong>Association</strong> provides housing and related services to over<br />
11,500 properties in its operating region (of which, more than 5,800 are owned by the <strong>Association</strong>). In<br />
addition <strong>Martlet</strong> <strong>Homes</strong> has its own maintenance organisation, <strong>Martlet</strong> Build, which provides a<br />
comprehensive repair service on all its owned and managed properties.<br />
The <strong>Association</strong>’s principal activities are the management, maintenance, improvement and development<br />
of social housing.<br />
<strong>Martlet</strong> <strong>Homes</strong> operates in the following key business streams:<br />
• general needs housing for rent, primarily by families who are unable to rent or buy at open market<br />
rates<br />
• supported housing for people who need additional housing related support<br />
• low-cost home ownership (primarily shared ownership) whereby residents purchase a share in the<br />
equity of their homes and pay rent to the <strong>Association</strong> on the remainder.<br />
Objectives and strategy<br />
The <strong>Association</strong>’s vision and purpose is:<br />
• To develop homes, places and communities where people can prosper<br />
• To provide opportunities and encourage people to achieve their aspirations.<br />
Taking the <strong>Association</strong>’s vision and purpose together captures the social purpose of the <strong>Association</strong>. It is<br />
this social purpose that lies at the heart of everything we do and which drives the <strong>Association</strong>’s strategy.<br />
The objectives and strategy of the <strong>Association</strong> are set out in a business plan that is reviewed annually and<br />
approved by the Board. The <strong>Association</strong>’s main objectives and strategies for the coming year are<br />
summarised below.<br />
• To build a strong reputation for partnership working with resident groups.<br />
• To engage and maintain the support of our staff to continue service improvements during a period<br />
of significant change.<br />
• To engage positively with external stakeholders and deliver a steady, consistent programme of<br />
growth.<br />
• To actively shape customer service transformation initiatives.<br />
• To deliver consistent service improvements, prioritising our repairs service and enhancing <strong>Martlet</strong><br />
Build’s competitiveness.<br />
• To demonstrate equality of service access and shaping to need.<br />
The year under review<br />
For the latter part of the year we focused on reviewing the outcomes of the Short Notice Inspection<br />
conducted by the Audit Commission. This concentrated on the Gas Servicing and Repairs aspect, but also<br />
covered the cross cutting themes of Diversity, Customer Access and Value for Money. Which has resulted<br />
in a comprehensive action plan devised after consultations with Residents and Board Members. The other<br />
major project in the year was the Client/Contractor split within <strong>Martlet</strong> Build which was fully implemented<br />
on 1 April 2010. We are expecting this to deliver an improved repairs and maintenance service with greater<br />
commercial awareness to deliver better value for money for our residents.<br />
4
MARTLET HOMES LIMITED<br />
REPORT OF THE BOARD AND OPERATING AND FINANCIAL REVIEW (CONTINUED)<br />
Stock movement<br />
As at 31 March 2010 the <strong>Association</strong> owned 5,866 homes (31 March 2009: 5,712 homes). The <strong>Association</strong><br />
has continued to deliver a progressive development plan in 2009/10. 112 new homes were completed<br />
during the financial year, including 14 new homes as part of the Chichester City Centre development at St<br />
James Square and schemes in Tangmere and Westhampnett. The first phase of a new development at<br />
Whippingham on Isle of Wight was also handed over into management and a Code for Sustainable <strong>Homes</strong><br />
Level 4 Rural <strong>Housing</strong> scheme was completed in the village of Westbourne. Progress was made with<br />
development plans for a new build scheme at Hay Road on the Whyke Estate and the proposed<br />
redevelopment of the Heritage Site which has been decanted this year. It is planned to start on site with<br />
both schemes in 2010/11.<br />
Financial Performance<br />
The <strong>Association</strong> has achieved a steady year on year growth in both turnover and operating surplus over<br />
the past five years and aims to continue this trend into 2010/11. The <strong>Association</strong> has maintained adequate<br />
cash reserves and there is a commitment to invest in new properties which are funded by the existing loan<br />
facility. Joining the <strong>Hyde</strong> Group has enabled the <strong>Association</strong> to share in the economies of being part of a<br />
large group and conversion to a charitable status on 1 April 2009 has mitigated any future tax costs.<br />
Fig 1.1 Income and expenditure - Highlights<br />
2006 2007 2008 2009 2010<br />
Income and Expenditure account<br />
(£'m)<br />
Total turnover 17.8 19.2 21.6 31.5 36.9<br />
Income from lettings 17.3 18.7 20.1 21.5 23.0<br />
Operating surplus 3.0 4.5 7.1 9.8 12.5<br />
Surplus on sale of housing properties (0.7) 0.1 0.1 0.2 0.1<br />
Surplus for the year transferred to<br />
reserves<br />
(2.3) (0.6) (1.3) 1.2 7.9<br />
Fig 1.2 Balance Sheet - Highlights<br />
2006 2007 2008 2009 2010<br />
Balance Sheet (£'m)<br />
<strong>Housing</strong> Properties net of 96.9 101.8 121.1 139.5 149.8<br />
SHG and other capital grants (5.6) (7.8) (12.7) (17.7) (25.0)<br />
<strong>Housing</strong> properties net of 91.3 94.0 108.4 121.8 124.8<br />
Other fixed assets 3.3 3.2 3.1 3.0 2.9<br />
Fixed assets net of depreciation and 94.6 97.2 111.5 124.8 127.7<br />
Net current assets (3.8) (1.7) (1.0) (0.5) 4.1<br />
Total assets less current liabilities 90.8 95.5 110.5 124.3 131.8<br />
Loans due over one year 92.4 97.5 113.4 126.9 126.8<br />
Provisions for liabilities and charges 0 0.2 0.9 0.0 0.0<br />
Other long term liabilities 2.8 1.6 0 2.3 8.6<br />
Reserves (4.4) (3.8) (3.8) (4.9) (3.6)<br />
Total capital and reserves 90.8 95.5 110.5 124.3 131.8<br />
Fig 1.3 Number of units<br />
2006 2007 2008 2009 2010<br />
Accommodation figures<br />
Total housing stock owned 5,080 5,151 5,584 5,712 5,866<br />
5
MARTLET HOMES LIMITED<br />
REPORT OF THE BOARD AND OPERATING AND FINANCIAL REVIEW (CONTINUED)<br />
Treasury review<br />
As a subsidiary of one of the UK’s largest providers of social housing there are a number of important<br />
aspects to the <strong>Association</strong>’s financial outturn; not least the various treasury aspects such as the capital<br />
structure, its treasury policy and its sources of liquidity.<br />
Capital structure and treasury policy<br />
The objectives of the <strong>Association</strong>’s treasury and debt strategy are to maintain sufficient cash and<br />
committed available credit facilities to fund the investment programmes in the short to medium term. This is<br />
achieved through the centrally managed Treasury department which operates at a Group level.<br />
These strategies are reviewed and approved annually by the Group Board to ensure they underpin the<br />
financial budget, operational targets and five year plan of the Group.<br />
At 31 March 2010 the <strong>Association</strong> had committed facilities of £180m, of which £126.8m had been drawn.<br />
The <strong>Association</strong> monitors the maturity and duration of its borrowings to ensure an orderly repayment profile,<br />
thereby reducing refinancing and liquidity risk. The maturity profile is shown below:<br />
Fig 1.4 <strong>Association</strong> loan facilities drawn<br />
2010 2009<br />
£’m<br />
£’m<br />
2-5 years 5.2 -<br />
More than 5 years 121.7 126.9<br />
Total 126.9 126.9<br />
The <strong>Association</strong>’s interest rate risk management policy sets minimum and maximum thresholds for it’s fixed<br />
to floating rate debt ratio within the annual treasury strategy review. The current range for the Group’s fixed<br />
rate debt is 75%-90%. The mix for the <strong>Association</strong> is shown below:<br />
Fig 1.5 <strong>Association</strong> borrowing<br />
2010 2010 2009 2009<br />
% Total<br />
% Total<br />
£’m debt £’m debt<br />
Fixed Rate 80.0 63% 80.0 63%<br />
Variable Rate 46.8 37% 46.9 37%<br />
Total drawn down 126.8 126.9<br />
Loan facility security<br />
The extension of the <strong>Association</strong>’s loan facility in September 2007 was structured so that only those<br />
properties initially purchased from Chichester District Council have a charge registered. Therefore there is<br />
additional capacity within the <strong>Association</strong> of £34.1m in April 2010 which could be used at a future date.<br />
Cash<br />
Cash and bank balances at the year-end were £4.3m. Net current assets were £4.2m. The <strong>Association</strong> has<br />
facilities and security in place to borrow a further £53.2m.<br />
6
MARTLET HOMES LIMITED<br />
REPORT OF THE BOARD AND OPERATING AND FINANCIAL REVIEW (CONTINUED)<br />
Measures<br />
The <strong>Association</strong>’s Senior Management Team (SMT) and Board monitor the <strong>Association</strong>’s performance<br />
against its objectives through a number of performance indicators. The table below lists some of the key<br />
indicators used by the SMT and the Board to monitor achievement of these objectives.<br />
DIRECTORATE PERFORMANCE INDICATORS TARGET PERFORMANCE<br />
MEASURE<br />
Operations • Rent arrears<br />
• Void turnaround time<br />
• Emergency maintenance on time<br />
• Tenant satisfaction<br />
• Complaints response<br />
• Decent <strong>Homes</strong> Standard measures<br />
Finance • Operating margins<br />
• Margin before asset sales<br />
• Interest cover<br />
• Cash management and liquidity<br />
People • Staff turnover<br />
• Sickness absence<br />
3.0%<br />
3.9 weeks<br />
98%<br />
76.0% (80% by 2012)<br />
10 days<br />
100%<br />
30.0%<br />
10.0%<br />
1.10 x EBITDA<br />
1.00 x cash interest<br />
cover<br />
13.0%<br />
8 days<br />
ACTUAL PERFORMANCE<br />
MEASURE<br />
1.7%<br />
4.1 weeks<br />
97.1%<br />
76.0%<br />
8.4 days<br />
95.0%<br />
33.9%<br />
21.1%<br />
2.72 x EBITDA<br />
3.64 x cash interest<br />
cover<br />
9.9%<br />
7.8 days<br />
The objectives and measures discussed above are key for us in our efforts to deliver a first class customer<br />
experience. We pursue those objectives ever mindful of the risks (both internal and external) which the<br />
<strong>Association</strong> faces.<br />
7
MARTLET HOMES LIMITED<br />
REPORT OF THE BOARD AND OPERATING AND FINANCIAL REVIEW (CONTINUED)<br />
Dynamics of the Social Landlord: External factors and risks<br />
The main risks faced by the <strong>Association</strong> are reviewed on an ongoing basis by SMT, and reported to Board<br />
on a quarterly basis. The definition of risk for this purpose is an event that could prevent the business plan<br />
from being achieved if it were to crystallise. Risks are recorded in a risk register which also records key<br />
controls to manage each risk, who is responsible for the control and how the control effectiveness is<br />
monitored. Risks are analysed according to their impact and probability (i.e. high, medium and low) given<br />
the current environment within which the <strong>Association</strong> operates. <strong>Martlet</strong> <strong>Homes</strong> <strong>Limited</strong> has identified the<br />
key risks within its own area of operation and the table below identifies the key risks (as at the 31 March<br />
2010) that could have an impact on future performance. The <strong>Hyde</strong> Group risk strategy requires regular<br />
review of key risks by the Group Board and the Board of <strong>Martlet</strong> <strong>Homes</strong> <strong>Limited</strong>.<br />
RISK CONSEQUENCES EXISTING CONTROLS/ACTIONS<br />
Failure to achieve the<br />
Short Notice Inspection<br />
action plan.<br />
Non-integration of<br />
<strong>Hyde</strong><strong>Martlet</strong> staff into<br />
effective operating<br />
business units.<br />
Failure to provide<br />
effective customer<br />
service centre resulting<br />
in poor customer<br />
experience.<br />
Failure to comply with<br />
legal & regulatory<br />
requirements in respect<br />
of health and safety of<br />
residents, including gas<br />
safety.<br />
Failure to meet loan<br />
covenants.<br />
Cost of future pension<br />
contributions for the<br />
West Sussex pension<br />
scheme greater than<br />
planned.<br />
Failure to meet<br />
identified procurement<br />
savings.<br />
Prospects for improvement rating by<br />
the Audit Commission will be judged<br />
on the performance against the<br />
action plan. A bad result could<br />
impact future business plans.<br />
Inconsistent service across the OBU;<br />
local and Group policies not always<br />
aligned; increase in silo working, all<br />
of which can have an effect on<br />
staff morale and customer service.<br />
High level of abandoned calls and<br />
increased waiting time for<br />
customers. High level of customer<br />
dissatisfaction with the service.<br />
Damage to <strong>Hyde</strong><strong>Martlet</strong>’s<br />
reputation, effecting future business<br />
plans.<br />
Failure to maintain 100%<br />
compliance on gas safety checks;<br />
putting residents at risk.<br />
Potential re-negotiation and<br />
reduction of current facility at less<br />
favourable rates.<br />
Higher employer contributions<br />
following tri-annual review by<br />
actuary.<br />
If savings not made then will need<br />
to reduce other costs to meet<br />
overall budget surplus target.<br />
• Each area of the plan has a SMT<br />
sponsor and the extended team<br />
includes colleagues from the Group.<br />
• Plan agreed and submitted to TSA.<br />
• <strong>Hyde</strong><strong>Martlet</strong> Staff Conference<br />
• Review of governance<br />
arrangements to bring into line with<br />
Group.<br />
• Implementation of client/contractor<br />
split of <strong>Martlet</strong> Build.<br />
• <strong>Hyde</strong><strong>Martlet</strong> values and<br />
expectations act as a team target<br />
across the three offices.<br />
• Flexible staff arrangements in place<br />
to manage peak periods.<br />
• Manager post has been split<br />
between customer service and<br />
lettings to enable greater focus.<br />
• Project team set up to manage<br />
programme, additional resources<br />
used to gain access to properties<br />
and monitor dates.<br />
• Moved to <strong>Hyde</strong> Group policy on gas<br />
safety inspections.<br />
• Quarterly returns provided to funders<br />
• Regular contact and annual<br />
meetings with funders.<br />
• Financial covenants reported to the<br />
Board in the Financial Performance<br />
report.<br />
• Defined benefits scheme has been<br />
closed so number of employees<br />
gradually declining.<br />
• Defined contribution scheme for new<br />
employees.<br />
• Monthly budget meetings and<br />
information provided to managers.<br />
• Increase awareness of Value for<br />
Money and efficiency amongst all<br />
staff.<br />
• Ensure that appropriate controls on<br />
spending are being followed.<br />
8
MARTLET HOMES LIMITED<br />
REPORT OF THE BOARD AND OPERATING AND FINANCIAL REVIEW (CONTINUED)<br />
Future Developments<br />
The <strong>Association</strong> intends to continue with its current principal activities.<br />
Statements of compliance<br />
The Board confirms that this Operating and Financial Review has been prepared in accordance with the<br />
principles set out in paragraphs 33 and 34 of the 2008 SORP for Registered Providers of Social <strong>Housing</strong>.<br />
<strong>Housing</strong> property assets<br />
Details of changes to the <strong>Association</strong>’s housing fixed assets are shown in Note 13 to the financial<br />
statements.<br />
Reserves<br />
Details of changes to reserves are shown in Note 22 of the financial statements.<br />
Dividends<br />
No dividends were payable.<br />
Political and charitable contributions<br />
During the year the <strong>Association</strong> made no political contributions (2009 – nil) and no charitable contributions<br />
(2009 - £2.9m).<br />
Post balance sheet events<br />
The <strong>Association</strong> considers there have been no events since the year end that have had a significant effect<br />
on its financial position.<br />
Employees and equal opportunities<br />
The strength of the <strong>Association</strong> lies in the quality of all its employees. In particular, its ability to meet the<br />
objectives and commitments to customers in an efficient and effective manner depends upon their<br />
contribution.<br />
Employees participate in a performance-related pay scheme where exceptional performance is<br />
rewarded. There is no employee share scheme in place.<br />
The <strong>Association</strong> shares information on its objectives, progress and activities through regular team and<br />
departmental meetings involving Board members, the <strong>Association</strong>’s Management Team and staff. In<br />
addition there are regular staff newsletters and the <strong>Association</strong> consults with staff and Union representatives<br />
on matters affecting staff.<br />
The <strong>Association</strong> recognises legal and social obligations with regard to the employment of disabled persons<br />
and those from black, Asian and minority ethnic communities. Applications for employment by disabled<br />
persons are given full consideration, taking account of aptitude and ability. The <strong>Association</strong> recognises its<br />
responsibility to support staff who become disabled during the course of their employment. As with all<br />
employees, general training and promotion are available to disabled employees and those from black,<br />
Asian and minority ethnic communities.<br />
Health and safety<br />
The Board is aware of its responsibilities on all matters relating to health and safety. The <strong>Association</strong> has<br />
prepared detailed health and safety policies and provides staff training and education on health and<br />
safety matters.<br />
Board members and executive directors<br />
The present Board members and the Managing Director of the <strong>Association</strong> are set out on page 3. The<br />
Board members are drawn from a wide background bringing together professional, commercial and local<br />
experience. In recognition of the challenges facing the Board, and the time and effort that they put in the<br />
<strong>Association</strong> remunerates some Board members and the amounts are disclosed in Note 12 to the audited<br />
financial statements.<br />
The Managing Director does not hold any interest in the <strong>Association</strong>’s shares and acts as an executive<br />
within the authority delegated by the Board.<br />
9
MARTLET HOMES LIMITED<br />
REPORT OF THE BOARD AND OPERATING AND FINANCIAL REVIEW (CONTINUED)<br />
Pensions<br />
Those employees of the <strong>Association</strong> who are on <strong>Martlet</strong> <strong>Homes</strong> contracts had the opportunity to join the<br />
West Sussex County Council defined benefit final salary pension scheme prior to merger with <strong>Hyde</strong> <strong>Housing</strong><br />
<strong>Association</strong> <strong>Limited</strong> (“<strong>Hyde</strong>”). The scheme was closed to new members following the merger with <strong>Hyde</strong><br />
and an alternative pension scheme is provided for new employees throughout the Group. The <strong>Association</strong><br />
contributes to either scheme on behalf of its employees. Further details on pensions are provided in Note 30<br />
to the financial statements.<br />
NHF code of governance<br />
A code of governance Excellence in Governance was published by the National <strong>Housing</strong> Federation in<br />
February 2009. It is intended for the guidance of <strong>Housing</strong> <strong>Association</strong>s so that they can continue to follow<br />
the highest standards of governance, accountability and probity whilst responding to an environment of<br />
change and risk. The <strong>Association</strong> has adopted the Code and complies with it in all material respects.<br />
Customer involvement<br />
The <strong>Association</strong> actively encourages customers’ involvement in decision making by promoting a broad<br />
range of mechanisms of involvement and the approach is outlined in the <strong>Association</strong>’s resident<br />
involvement strategy. The Board includes resident members and as such ensures that residents’ views are<br />
reflected in all major decisions. A copy of the resident involvement strategy can be obtained from the<br />
Company Secretary at the <strong>Association</strong>’s Registered Office.<br />
Going Concern<br />
The Board has a reasonable expectation that the <strong>Association</strong> has adequate resources to continue in<br />
operational existence for the foreseeable future. These financial statements are prepared on a going<br />
concern basis.<br />
Internal controls assurance<br />
The Board’s responsibility for establishing and maintaining the system of internal control and for reviewing its<br />
effectiveness is set out in the Statement of Internal Controls on page 12.<br />
Executive members’ liability insurance<br />
The <strong>Association</strong> is covered under the National <strong>Housing</strong> Federation’s Directors and Officers Liability policy as<br />
a benefit of its membership. The <strong>Association</strong> also has additional independent top-up cover to indemnify<br />
directors and officers against legal liability arising from claims made against them as a result of any<br />
wrongful act in their capacity as director or officer of the <strong>Association</strong>.<br />
Auditors<br />
A resolution to reappoint PricewaterhouseCoopers LLP (PwC) was passed at the 2009 AGM. A resolution to<br />
re-appoint them as auditors will be proposed at the forthcoming annual general meeting.<br />
______________<br />
Bob Warner<br />
Chair<br />
24 June 2010<br />
10
MARTLET HOMES LIMITED<br />
STATEMENT OF GROUP CORPORATE GOVERNANCE<br />
The <strong>Association</strong> falls under the wider corporate governance framework of The <strong>Hyde</strong> Group. The Group<br />
Board is thus ultimately responsible for corporate governance of all subsidiaries within the Group. The<br />
governance of the Group and its subsidiaries is carried out as set out in the Governance Manual and is<br />
summarised in the following paragraphs. A copy of the Governance Manual can be obtained from the<br />
Company Secretary at the Group’s Registered Office.<br />
The Group Board<br />
The Group Board is the ultimate governing body of the <strong>Hyde</strong> Group. It comprises eleven non-executive<br />
directors and two executive directors and meets ten times per year. Members receive remuneration to<br />
compensate them for the time and effort they offer and to attract the skills which the Group requires.<br />
Members are drawn from a wide range of backgrounds so that there is an optimum mix of skills and<br />
expertise to fulfil the function of the Group Board.<br />
Delegation<br />
The Group Board delegates some of its responsibilities to functional committees. Each of these committees<br />
has clear terms of reference and delegated authority. They report back to the Group Board after each<br />
meeting, where their recommendations are fully considered and approved where appropriate. Each of<br />
these committees is chaired by a member of the Group Board. The functional committees have a Group<br />
wide remit.<br />
Functional committees<br />
There are three main functional committees within the Group; The <strong>Hyde</strong>wide Residents Eye (HRE); the<br />
Remuneration and Appointments Committee and the Group Audit Committee.<br />
The <strong>Hyde</strong>wide Residents Eye (HRE) committee sits within the Group’s formal governance structure. Made<br />
up of equal numbers of residents and independent members, the HRE committee was set up to ensure the<br />
quality of services to residents and aims to put residents’ views at the heart of service delivery. The HRE<br />
regularly checks that <strong>Hyde</strong> is meeting its published service standards. The HRE involves residents in<br />
inspections and publishes an annual report on performance.<br />
The Remuneration and Appointments Committee (the Remuneration Committee) is responsible for setting<br />
the remuneration of Board members and of the Executive management team. In addition the<br />
Remuneration Committee oversees the process for Group Board member appraisal and reviews the<br />
process for Group Board member appointment.<br />
The Group Audit Committee’s role is to oversee the work of both the internal and external audit function<br />
and to oversee the risk management framework and internal control framework for the Group. The<br />
Committee reviews the audited financial statements for all parts of the Group and recommends them to<br />
the relevant Boards for approval. It is also responsible for recommending to the Group and subsidiary<br />
Boards the appointment of external and internal auditors and investigating any activity it thinks fit, or as<br />
may be referred to it. It submits an annual report to the Group Board. Through the reports it receives the<br />
Audit Committee gains comfort that the Group has systems in place to allow the Board to review the<br />
effectiveness of the systems of internal control and to comply with the Tenant Services Authority’s<br />
expectations in this area.<br />
The Subsidiary Framework<br />
The <strong>Association</strong>’s board of management at <strong>Martlet</strong> <strong>Homes</strong> <strong>Limited</strong> comprises of 11 non-executive directors<br />
and 2 executive directors bringing together professional skills and support from the Group. The Board is<br />
responsible for the overall strategy and policy of the <strong>Association</strong> and meets formally 6 times a year to<br />
consider and monitor performance. Day to day performance management is delegated to the Managing<br />
Director.<br />
11
MARTLET HOMES LIMITED<br />
STATEMENT OF INTERNAL CONTROLS<br />
The Group Board is ultimately responsible for ensuring the <strong>Association</strong> establishes and maintains<br />
a system of internal control appropriate to the various business environments in which it<br />
operates. Such a system is designed to manage rather than eliminate the risk of failure to<br />
achieve business objects and can only provide reasonable and not absolute assurance against<br />
material misstatement or loss.<br />
The key elements in exercising control include:<br />
1. Corporate governance arrangements as outlined in the Statement of Group Corporate<br />
Governance above.<br />
2. Written policies and procedures including standing orders setting out delegated<br />
authorities.<br />
3. The employment of suitably qualified and experienced staff to take responsibility for key<br />
areas of the business. This is supported by a formal appraisal system and the achievement<br />
of Investors in People accreditation.<br />
4. The preparation of forecasts and budgets which allow the committees and the executive<br />
officers to monitor the key business risks and financial objectives and identify variances<br />
arising during the monthly reporting cycle.<br />
5. All investment projects being subject to formal authorisation procedures. Significant<br />
initiatives are also reviewed at committee level.<br />
6. The review by the Group Audit Committee of reports from management, the internal<br />
auditors and external auditors including reports on follow-up action to correct weaknesses<br />
identified. The Group Audit Committee makes regular reports to the Group Board.<br />
7. The Group has an established process for identifying, evaluating and managing the<br />
significant risks facing it. The Group Board regularly reviews the Group’s Risks Map which<br />
includes relevant risks of the <strong>Association</strong>. The process is continuous and has been in place<br />
for the year up to the date of approval of the annual report and accounts.<br />
The Group Board confirms that it has a strategy and policy on fraud and the Anti Fraud and<br />
Corruption Policy was reviewed and re-issued in the year.<br />
The system of internal controls has been in place for the year to 31 March 2010 and up to the<br />
date of approval of the annual report and accounts.<br />
The Group Board recognises its responsibility for the system of internal control and for reviewing<br />
its effectiveness.<br />
The Group produces an annual review of internal controls. This provides assurances in external<br />
audit, internal control, internal audit, whistle blowing, risk management and performance<br />
monitoring.<br />
The Group Board reviews annually the effectiveness of the system of internal controls in<br />
existence in the <strong>Association</strong>. This review includes a review of the fraud register. The <strong>Association</strong><br />
Board confirms that all necessary actions are taken to remedy any significant failings or<br />
weaknesses which may have been identified during the review.<br />
The Group Board confirms no weaknesses were found in the internal controls for the year ended<br />
31 March 2010 which might otherwise have resulted in material losses, contingencies or<br />
uncertainties which require disclosure in the financial statements.<br />
12
MARTLET HOMES LIMITED<br />
STATEMENT OF THE BOARD’S RESPONSIBILITIES<br />
The <strong>Association</strong> falls under the wider corporate governance framework of The <strong>Hyde</strong> Group. The<br />
Group Board is ultimately responsible for corporate governance of all subsidiaries within the<br />
Group. The <strong>Association</strong>’s Board responsibilities, in conjunction with the Group Board, are set out<br />
below.<br />
The Industrial and Provident Societies Acts 1965 to 2002 and Registered Provider of Social<br />
<strong>Housing</strong> (RPSH) regulations require the Board to prepare financial statements for each financial<br />
year which give a true and fair view of the state of affairs of the <strong>Association</strong> and of its surplus or<br />
deficit for that period. In preparing those financial statements, the Board is required to:<br />
• select suitable accounting policies and then apply them consistently;<br />
• make judgements and estimates that are reasonable and prudent;<br />
• state whether applicable accounting standards have been followed;<br />
• prepare the financial statements on the going concern basis unless it is inappropriate to<br />
presume that the <strong>Association</strong> will continue in business;<br />
• ensure that so far as each Board member is aware, there is no relevant audit information of<br />
which the <strong>Association</strong>'s auditors are unaware; and<br />
• ensure that each Board member has taken all the steps that they ought to have taken as a<br />
Board member in order to make themselves aware of any relevant audit information and to<br />
establish that the <strong>Association</strong>'s auditors are aware of that information.<br />
The Board is responsible for keeping proper accounting records which disclose with reasonable<br />
accuracy at any time the financial position of the <strong>Association</strong> and to enable it to ensure that the<br />
financial statements comply with the Industrial and Provident Societies Acts 1965 to 2002, the<br />
Industrial and Provident Societies Regulations 1969 and the Accounting Requirements for<br />
Registered Providers of Social <strong>Housing</strong> General Determination 2006. The Board is responsible for<br />
instituting adequate systems of internal control and safeguarding the assets of the <strong>Association</strong><br />
and hence for taking reasonable steps for the prevention and detection of fraud and other<br />
irregularities. The Board relies on the systems provided by the Group and overseen by the Group<br />
Board and Group Audit Committee, in these respects.<br />
______________<br />
Bob Warner<br />
Chair<br />
24 June 2010<br />
13
MARTLET HOMES LIMITED<br />
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF MARTLET HOMES LIMITED<br />
We have audited the financial statements of <strong>Martlet</strong> <strong>Homes</strong> <strong>Limited</strong> for the year ended 31 March 2010<br />
which comprise the Income and Expenditure Account, the Balance Sheet, the Cash Flow Statement, the<br />
Statement of Total Recognised Surpluses and Deficits and the related notes. These financial statements<br />
have been prepared under the accounting policies set out therein.<br />
Respective responsibilities of the board and auditors<br />
The Board’s responsibilities for preparing the financial statements in accordance with applicable law and<br />
United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) are set<br />
out in the Statement of Board’s Responsibilities.<br />
Our responsibility is to audit the financial statements in accordance with applicable law and regulatory<br />
requirements and International Standards on Auditing (UK and Ireland). Those standards require us to<br />
comply with the Auditing Practices Board’s Ethical Standards for Auditors. This report, including the opinion,<br />
has been prepared for and only for the <strong>Association</strong>’s members as a body in accordance with Section 9 (1)<br />
of the Friendly and Industrial and Provident Societies Act 1968 and for no other purpose. We do not, in<br />
giving this opinion, accept or assume responsibility for any other purpose or to any other person to whom<br />
this report is shown or into whose hands it may come save where expressly agreed by our prior consent in<br />
writing.<br />
We report to you our opinion as to whether the financial statements give a true and fair view and are<br />
properly prepared in accordance with the Industrial and Provident Societies Acts 1965 to 2002, Schedule 1<br />
to the <strong>Housing</strong> Act 1996 and The Accounting Requirements for Registered Social Landlords General<br />
Determination 2006.<br />
In addition we report to you if, in our opinion, a satisfactory system of control over transactions has not<br />
been maintained, if the association has not kept proper accounting records, if we have not received all<br />
the information and explanations we require for our audit, or if information specified by law regarding<br />
directors’ remuneration and other transactions is not disclosed.<br />
We read the Report of the Board, the Operating and Financial Review, and Statement of Internal Controls.<br />
We are not required to consider whether the Board’s statement on internal control fairly represents the<br />
<strong>Association</strong>’s system of internal control, or to form an opinion on the effectiveness of the <strong>Association</strong>’s<br />
system of internal controls. We consider the implications for our report if we become aware of any<br />
apparent misstatements or material inconsistencies with the financial statements.<br />
Basis of opinion<br />
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued<br />
by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the<br />
amounts and disclosures in the financial statements. It also includes an assessment of the significant<br />
estimates and judgements made by the Board in the preparation of the financial statements, and of<br />
whether the accounting policies are appropriate to the association’s circumstances, consistently applied<br />
and adequately disclosed.<br />
We planned and performed our audit so as to obtain all the information and explanations which we<br />
considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the<br />
financial statements are free from material misstatement, whether caused by fraud or other irregularity or<br />
error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in<br />
the financial statements.<br />
Opinion<br />
In our opinion the financial statements:<br />
• give a true and fair view in accordance with United Kingdom Generally Accepted Accounting<br />
Practice of the state of the <strong>Association</strong>’s affairs as at 31 March 2010 and of its surplus and cash<br />
flows for the year then ended; and<br />
• have been properly prepared in accordance with the Industrial and Provident Societies Acts 1965<br />
to 2002, Schedule 1 to the <strong>Housing</strong> Act 1996 and The Accounting Requirements for Registered<br />
Social Landlords General Determination 2006.<br />
PricewaterhouseCoopers LLP<br />
Chartered Accountants and Registered Auditors<br />
London<br />
1 July 2010<br />
14
MARTLET HOMES LIMITED<br />
INCOME AND EXPENDITURE STATEMENT YEAR ENDED 31 MARCH 2010<br />
Note 2010 2009<br />
£’000 £’000<br />
Turnover 2 36,868 31,533<br />
Operating costs 2 (24,380) (21,694)<br />
Operating surplus 2, 5 12,488 9,839<br />
Surplus on sale of housing properties 6 146 225<br />
Interest receivable and similar income 7 55 58<br />
Interest payable and similar charges 8 (4,576) (5,792)<br />
Other finance (costs)/income 30 (206) 62<br />
Surplus for the year before taxation 7,907 4,392<br />
Gift Aid 9 - (2,900)<br />
Taxation 10 - (298)<br />
Surplus for the year after taxation 7,907 1,194<br />
Revenue reserve brought forward 22 (5,811) (4,100)<br />
Reserve movements 22 (6,753) (2,905)<br />
Revenue reserve carried forward 22 (4,657) (5,811)<br />
The turnover and surplus for the current and previous year relate to continuing activities.<br />
There is no difference between the surplus on ordinary activities and the retained surplus for<br />
the year and their respective historical cost equivalents.<br />
STATEMENT OF TOTAL RECOGNISED SURPLUSES AND DEFICITS YEAR ENDED 31<br />
MARCH 2010<br />
2010 2009<br />
£’000 £’000<br />
Surplus for the year 7,907 1,194<br />
Actuarial loss on pension schemes (6,609) (2,756)<br />
Total recognised surplus/(deficit) for the year 1,298 (1,562)<br />
15
MARTLET HOMES LIMITED<br />
BALANCE SHEET AS AT 31 MARCH 2010<br />
Note<br />
2010 2009<br />
£’000 £’000<br />
Fixed assets<br />
<strong>Housing</strong> properties at cost 13 155,368 143,974<br />
Social housing and other capital<br />
grants<br />
13<br />
(24,987) (17,716)<br />
Depreciation 13 (5,606) (4,476)<br />
124,775 121,782<br />
Other fixed assets 14 2,895 2,976<br />
127,670 124,758<br />
Current assets<br />
Stock 15 1,504 2,135<br />
Debtors due within one year 16 3,314 629<br />
Cash at bank and in hand 17 4,286 80<br />
9,104 2,844<br />
Creditors: amounts falling due within<br />
one year 18 (4,936) (3,352)<br />
Net current assets<br />
4,168 (508)<br />
Total Assets less Current liabilities 131,838 124,250<br />
Creditors: amounts falling due after<br />
more than one year<br />
Loans and other creditors 19 126,881 126,921<br />
Capital grant recycling fund 20 15 -<br />
126,896 126,921<br />
Pension liabilities 30 8,573 2,258<br />
Capital and reserves<br />
Called up share capital 21 - -<br />
Restricted reserve 22 1,026 882<br />
Revenue reserve 22 (4,657) (5,811)<br />
(3,631) (4,929)<br />
Total capital and reserves 131,838 124,250<br />
These financial statements were approved by the Board on 24 June 2010. The notes on pages 18<br />
to 40 form part of the financial statements.<br />
Bob Warner Andrew Moncreiff John Edwards<br />
Chair Director Secretary<br />
16
MARTLET HOMES LIMITED<br />
CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2010<br />
2010 2009<br />
£’000 £’000<br />
Net cash flow from operating activities 15,610 9,420<br />
Returns on investments and servicing of<br />
finance<br />
Interest received 55 120<br />
Interest paid (4,344) (6,239)<br />
Net cash outflow from returns on investment<br />
and servicing of finance (4,289) (6,119)<br />
Taxation<br />
Taxation - (644)<br />
Capital expenditure<br />
Acquisition and construction of housing<br />
properties (15,868) (20,432)<br />
Social <strong>Housing</strong> and other grants received 7,340 4,968<br />
Purchase of other fixed assets (65) (112)<br />
Sale of housing properties 1,478 1,187<br />
Net cash outflow from capital expenditure (7,115) (14,389)<br />
Management of liquid resources<br />
Gift aid - (2,900)<br />
Net cash inflow/(outflow) before use of liquid<br />
resources and financing 4,206 (14,632)<br />
Financing<br />
Loans received - 13,400<br />
- 13,400<br />
Increase/(decrease) in cash 4,206 (1,232)<br />
17
MARTLET HOMES LIMITED<br />
NOTES TO THE CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2010<br />
2010 2009<br />
£’000 £’000<br />
A. Reconciliation of operating surplus to net<br />
cash inflow from operating activities<br />
Operating surplus 12,488 9,839<br />
Depreciation 925 1,300<br />
Impairment 370 -<br />
Decrease in stocks 3,806 1,431<br />
(Increase)/decrease in debtors (3,220) 289<br />
Increase/(decrease) in creditors 1,741 (3,114)<br />
Increase/(decrease) in provisions - (346)<br />
(Decrease)/increase in pension provisions (500) 21<br />
15,610 9,420<br />
B. Reconciliation of net cash flow to<br />
movement in net debt<br />
2010 2009<br />
£’000 £’000<br />
Increase/(decrease) in cash in the year 4,206 (1,232)<br />
Other non cash changes 34 -<br />
Cash inflow from increase in loans - 13,400<br />
4,240 12,168<br />
Net debt at 1 April (126,807) (138,975)<br />
Net debt at 31 March (122,567) (126,807)<br />
C. Reconciliation of net debt to related items<br />
on the balance sheet<br />
Other<br />
1 April Cash flow<br />
non<br />
cash<br />
31 March<br />
2010<br />
2009<br />
changes<br />
£’000 £’000 £’000 £’000<br />
Cash balances 80 4,206 - 4,286<br />
Debt falling due after one year (126,887) - 34 (126,853)<br />
Net debt (126,807) 4,206 34 (122,567)<br />
18
MARTLET HOMES LIMITED<br />
NOTES TO THE ACCOUNTS<br />
YEAR ENDED 31 MARCH 2010<br />
1. ACCOUNTING POLICIES<br />
Introduction and accounting basis<br />
The accounts have been prepared in accordance with applicable UK GAAP financial<br />
reporting standards, the Accounting Requirements for Registered Social Landlord General<br />
Determination 2006 (“the Determination”), and the Statement of Recommended Practice:<br />
accounting by Registered Provider of Social <strong>Housing</strong> 2008 published in April 2008 (“the<br />
2008 SORP”) and comply with the Industrial and Provident Societies (Group Accounts)<br />
Regulations 1969 to 2002. The <strong>Association</strong> accounts have been prepared under the<br />
historical cost convention. The following accounting policies have been applied<br />
consistently in dealing with items which are considered to be material in relation to the<br />
accounts of <strong>Martlet</strong> <strong>Homes</strong> <strong>Limited</strong>.<br />
As the <strong>Association</strong> is a wholly owned subsidiary of <strong>Hyde</strong> <strong>Housing</strong> <strong>Association</strong> <strong>Limited</strong>, the<br />
<strong>Association</strong> has taken advantage of the exemption contained in Financial Reporting<br />
Standard 8 – ‘Related Party Disclosures’ (FRS8), and has therefore not disclosed<br />
transactions or balances with entities which form part of the <strong>Hyde</strong> Group.<br />
Turnover<br />
Turnover comprises rents and service charges, income from property sales, fees, other<br />
services included at the invoiced value (excluding VAT) of goods and services supplied in<br />
the year and revenue based grants receivable from local authorities and the Tenant<br />
Services Authority. It also includes sales proceeds from first tranche shared ownership sales<br />
and the management and maintenance of <strong>Hyde</strong> Stock. All income is recognised on a<br />
receivable basis and sales of property are recognised at completion.<br />
<strong>Housing</strong> properties<br />
The cost of housing properties comprises their purchase price, together with directly<br />
attributable costs in bringing them into working condition for their intended use. The<br />
directly attributable costs are the labour costs of our own employees arising directly from<br />
the construction or acquisition of the property and the incremental costs that would have<br />
been avoided only if individual properties had not been constructed or acquired. Interest<br />
is capitalised on a fair proportion of the borrowings of the <strong>Association</strong> as a whole,<br />
calculated on the costs incurred during the period of development, less Social <strong>Housing</strong><br />
Grant (SHG) received. Improvements are capitalised only when they result in an increase<br />
in the net rental income, such as a direct increase in rental income, a reduction in future<br />
maintenance costs, or in a significant extension of the useful economic life of the property.<br />
All other improvement expenditure is charged to the Income and Expenditure account<br />
when incurred.<br />
Supported housing<br />
Social housing capital grants are claimed by the <strong>Association</strong> as developer and owner of<br />
the property and included in the balance sheet of the <strong>Association</strong>. The treatment of other<br />
income and expenditure in respect of supported housing projects depends on the nature<br />
of the partnership arrangements between the <strong>Association</strong> and its managing agents and<br />
on whether the <strong>Association</strong> carries the financial risk. Where the <strong>Association</strong> holds the<br />
support contract with the Supporting People Administering Authority and carries the<br />
financial risk, all the project's income and expenditure is included in the <strong>Association</strong>’s<br />
income and expenditure account. Where the agency holds the support contract with the<br />
Supporting People Administering Authority and carries the financial risk, the income and<br />
expenditure account includes only that income and expenditure which relates solely to<br />
the <strong>Association</strong>.<br />
19
MARTLET HOMES LIMITED<br />
NOTES TO THE ACCOUNTS<br />
YEAR ENDED 31 MARCH 2010<br />
1. ACCOUNTING POLICIES (CONTINUED)<br />
Impairment<br />
Impairment reviews are carried out in accordance with Financial Reporting Standard 11 -<br />
“Impairment of Fixed Assets and Goodwill” (FRS 11). The <strong>Association</strong>'s Tangible Fixed Assets<br />
held for letting are depreciated over 100 years and are therefore subject to an annual<br />
impairment review. An impairment review is carried out on completed housing schemes,<br />
work in progress and land held for future development. Other assets are reviewed for<br />
impairment if there is an indication that impairment may have occurred.<br />
Where there is evidence of impairment, fixed assets are written down to their recoverable<br />
amount. Any such write down is charged to operating profit.<br />
Calculations for each housing scheme were performed by comparing either present value<br />
of expected future cash flows or current market value against the carrying values. If the<br />
carrying value is greater than the present value of future cash flows of the market value,<br />
an impairment provisions has been provided.<br />
The Directors’ assessment of impairment notes that the net book value does not materially<br />
differ from the carrying amount per the accounts.<br />
Social <strong>Housing</strong> Grant (SHG) and other capital grants<br />
Where developments are financed wholly or partly by SHG, the cost of those<br />
developments is reduced by the amount of the grant receivable. Where SHG is received<br />
on elements of repair expenditure that are charged in the Income and Expenditure<br />
account, it is treated as a revenue grant and credited to turnover. At the balance sheet<br />
date if the SHG receivable on any development project is greater than gross cost, the<br />
difference is included in creditors falling due within one year and shown as SHG in<br />
advance. SHG may be repayable in certain circumstances, such as where the<br />
development of a property is not completed. Certain developments are funded by other<br />
capital grants. These grants are dealt with in a similar manner to SHG.<br />
Other grants<br />
Other grants are receivable from local authorities and other organisations. Grants in<br />
respect of revenue expenditure are credited to the income and expenditure account in<br />
the same period as the expenditure to which they relate.<br />
Shared ownership<br />
First tranche sales are included within turnover and the related portion of the cost of the<br />
asset recognised as operating costs. The costs relating to expected future first tranche<br />
sales in respect of shared ownership properties are transferred from housing properties<br />
under construction in fixed assets to housing properties current assets (included within<br />
stock). The remaining element of shared ownership schemes are included in fixed assets,<br />
net of SHG. Lessees have the right to acquire further tranches and any surplus or deficit on<br />
such subsequent tranches is recognised in the income and expenditure account as a part<br />
disposal of a fixed asset.<br />
20
MARTLET HOMES LIMITED<br />
NOTES TO THE ACCOUNTS<br />
YEAR ENDED 31 MARCH 2010<br />
1. ACCOUNTING POLICIES (CONTINUED)<br />
Depreciation of housing properties<br />
Depreciation of freehold housing properties is charged so as to write down their cost (net<br />
of Social <strong>Housing</strong> Grant) to their residual value on a straight line basis over their expected<br />
useful economic lives for the <strong>Association</strong> on the following basis:<br />
<strong>Housing</strong> properties held for letting, Typically 100 years on a straight line basis<br />
completed shared ownership properties<br />
and freehold shops and offices<br />
Improvement expenditure on housing Typically 25 years on a straight line basis<br />
property.<br />
Freehold land is not depreciated.<br />
Depreciation of other fixed assets<br />
Other fixed assets are depreciated on the following basis:<br />
Freehold premises<br />
2% on a straight line basis<br />
Leasehold premises<br />
Over the life of the lease on a straight line<br />
basis<br />
Furniture and equipment<br />
15% on reducing balance<br />
Computer hardware<br />
2 years on a straight line basis<br />
Motor vehicles<br />
25% on reducing balance<br />
Assets are depreciated per month from the purchase date.<br />
Stock<br />
Stock of first tranche shared ownership units and building materials are held in the balance<br />
sheet at the lower of cost and net realisable value.<br />
Bad and doubtful debts<br />
The <strong>Association</strong> provides for bad and doubtful debts based on 50% of current arrears, 10%<br />
of supported tenant arrears and 100% of all former tenant arrears.<br />
Treasury Management/Derivatives<br />
The <strong>Association</strong>’s funding, liquidity and exposure to interest rate risks are managed by the<br />
Group Board. Treasury operations are conducted on a Group basis within a framework of<br />
policies and guidelines authorised by the Group Board. To manage interest rate risk the<br />
Group manages its proportion of fixed to variable rate borrowings within approved limits<br />
and where appropriate utilises interest rate swap agreements. Amounts payable or<br />
receivable in respect of these agreements are recognised as adjustments to interest<br />
expense over the period of the agreement.<br />
Taxation<br />
The <strong>Association</strong> has charitable status and therefore is not subject to Corporation Tax on<br />
the surplus arising from charitable activities. Provision is made for the tax liabilities which<br />
may arise when property is developed for commercial outright sale.<br />
VAT<br />
The <strong>Association</strong>’s VAT affairs are dealt with under a group registration in the name of <strong>Hyde</strong><br />
<strong>Housing</strong> <strong>Association</strong> <strong>Limited</strong>. The <strong>Association</strong> recovers only a small proportion of input VAT.<br />
Expenditure is therefore shown inclusive of VAT, to the extent that it is not recoverable, with<br />
non-attributable input tax recovered being credited against management expenses.<br />
21
MARTLET HOMES LIMITED<br />
NOTES TO THE ACCOUNTS<br />
YEAR ENDED 31 MARCH 2010<br />
1. ACCOUNTING POLICIES (CONTINUED)<br />
Service Charges<br />
The <strong>Association</strong> operates both fixed and variable service charges on a scheme by<br />
scheme basis in full consultation with residents. Where variable service charges are used<br />
the budget will include an allowance for the surplus or deficit from prior years, with a<br />
surplus being returned to residents in the form of a reduced charge for the year and a<br />
deficit being recovered via a higher service charge or by alternative methods if the<br />
contract allows. Until these surpluses are returned they are held on the balance sheet as a<br />
creditor, due within one year and a deficit is held as a debtor due within one year.<br />
Pension schemes<br />
The <strong>Association</strong> operates two retirement benefit schemes; the <strong>Hyde</strong> <strong>Housing</strong> <strong>Association</strong><br />
<strong>Limited</strong> Defined Contribution Pension Scheme and the West Sussex Defined Benefit Pension<br />
Scheme.<br />
The West Sussex Pension Scheme is a defined benefit scheme and is not open to new<br />
entrants.<br />
Accounting for <strong>Hyde</strong> group employees’ pensions is in accordance with generally<br />
accepted practice, as defined by Financial Reporting Standard 17 – “Retirement Benefits”<br />
(FRS17).<br />
West Sussex Pension Scheme<br />
• In accordance with the requirements of FRS17, costs are accounted for when<br />
committed, regardless of when the benefits are deliverable. The financial statements<br />
reflect, at fair value, the assets and liabilities arising from the <strong>Association</strong>’s retirement<br />
obligations.<br />
• The operating costs of providing retirement benefits to employees are recognised<br />
in the accounting period(s) in which the benefits are earned by the employees, and the<br />
related finance costs and any other changes in value of the assets and liabilities are<br />
recognised in the accounting periods in which they arise.<br />
• The financial statements disclose the cost of providing retirement benefits and<br />
related gains, losses, assets and liabilities. The attributable assets of the schemes are<br />
measured, at their fair value, at the balance sheet date, and are shown net of<br />
attributable scheme liabilities.<br />
Actuarial gains and losses arising from any new valuation, and from updating the latest<br />
actuarial valuation to reflect conditions at the balance sheet date, are recognised in the<br />
Statement of Total Recognised Surpluses and Deficits for the year.<br />
Losses arising on a settlement or curtailment not allowed for in the actuarial assumptions<br />
are measured at the date on which the <strong>Association</strong> becomes demonstrably committed to<br />
the transaction and recognised in the operating costs at that date. Gains arising on a<br />
settlement or curtailment not allowed for in the actuarial assumptions are measured at the<br />
date on which all parties whose consent is required are irrevocably committed to the<br />
transaction and recognised in the operating costs at that date.<br />
<strong>Hyde</strong> <strong>Housing</strong> <strong>Association</strong> Defined Contribution Pension Scheme<br />
Employees have the option to join the <strong>Hyde</strong> Defined Contribution Scheme, to which the<br />
<strong>Association</strong> makes a contribution of up to 10%. The contributions are accounted for as<br />
they become payable.<br />
22
MARTLET HOMES LIMITED<br />
NOTES TO THE ACCOUNTS<br />
YEAR ENDED 31 MARCH 2010<br />
1. ACCOUNTING POLICIES (CONTINUED)<br />
Pension schemes (continued)<br />
For all pension schemes current service costs are included within the Income and<br />
Expenditure Account, within operating costs.<br />
Restricted Reserve<br />
The restricted reserve is built up from sales of non Right to Buy properties and is used to<br />
fund future social housing schemes.<br />
Consolidation<br />
The <strong>Association</strong> has one subsidiary, Matrix Charitable Foundation. The <strong>Association</strong> is<br />
exempt from preparing consolidated accounts as it meets the conditions as set out within<br />
Financial Reporting Standard – “Accounting for subsidiary undertakings” (FRS2). Both<br />
entities are included within the consolidation of the <strong>Association</strong>’s parent.<br />
2. PARTICULARS OF TURNOVER, OPERATING COSTS AND OPERATING SURPLUS<br />
Turnover Operating<br />
costs<br />
Operating<br />
surplus<br />
Operating<br />
surplus<br />
2010 2010 2010 2009<br />
£’000 £’000 £’000 £’000<br />
Social housing lettings (see note<br />
3): 32,525 (20,419) 12,106 9,220<br />
Other social housing activities:<br />
Development - - - (33)<br />
Other 679 (1,122) (443) 310<br />
Shared ownership first tranche<br />
sales 3,112 (2,566) 546 340<br />
Non social housing activities:<br />
Outright sale 352 (245) 107 2<br />
Agency 200 (28) 172 -<br />
36,868 (24,380) 12,488 9,839<br />
23
MARTLET HOMES LIMITED<br />
NOTES TO THE ACCOUNTS<br />
YEAR ENDED 31 MARCH 2010<br />
3. PARTICULARS OF INCOME AND EXPENDITURE FROM SOCIAL HOUSING LETTINGS<br />
General<br />
needs<br />
Supported<br />
housing<br />
Shared<br />
ownership Total 2010 Total 2009<br />
£’000 £’000 £’000 £’000 £’000<br />
Rent receivable net of service charges 20,731 1,365 254 22,350 20,769<br />
Service charges receivable 179 373 63 615 689<br />
Net rental income 20,910 1,738 317 22,965 21,458<br />
Management fees 9,511 37 - 9,548 -<br />
Revenue grants from local authorities and other bodies 12 - - 12 -<br />
Turnover from social housing lettings 30,433 1,775 317 32,525 21,458<br />
Services (538) (457) (36) (1,031) (1,074)<br />
Management (2,760) (218) (98) (3,076) (547)<br />
Routine maintenance (11,348) (278) (7) (11,633) (4,482)<br />
Rent losses from bad debts (57) (1) 7 (51) (69)<br />
Major repairs expenditure (2,652) (94) (1) (2,747) (2,933)<br />
Property lease charges (20) - - (20) -<br />
Depreciation & impairment – housing properties (1,017) (63) (69) (1,149) (1,022)<br />
Other costs (including information technology) (712) - - (712) (2,111)<br />
Operating costs on social housing lettings (19,104) (1,111) (204) (20,419) (12,238)<br />
Operating surplus on social housing lettings 11,329 664 113 12,106 9,220<br />
Rent losses from voids (115) (87) - (202) (198<br />
24
MARTLET HOMES LIMITED<br />
NOTES TO THE ACCOUNTS<br />
YEAR ENDED 31 MARCH 2010<br />
4. HOUSING UNITS<br />
Genera<br />
l needs<br />
Supporte<br />
d<br />
housing<br />
Shared<br />
ownershi<br />
p<br />
Marke<br />
t Rent<br />
Lease<br />
-<br />
holder<br />
s<br />
Other<br />
Market<br />
Activitie<br />
s<br />
Total<br />
<strong>Housing</strong><br />
accommodation<br />
Units in ownership<br />
2010 4,842 478 142 40 350 14 5,866<br />
Units in ownership<br />
2009 4,778 468 88 16 351 11 5,712<br />
5. OPERATING SURPLUS<br />
2010 2009<br />
£’000 £’000<br />
Operating surplus is stated after charging/(crediting):<br />
Depreciation:<br />
Other fixed assets 146 278<br />
<strong>Housing</strong> properties 779 1,022<br />
Impairment 370 -<br />
Operating lease charges 755 470<br />
Auditor’s remuneration (including VAT and expenses):<br />
As auditors of the financial statements 22 19<br />
Impairment charges have arisen as a result in falling values of housing properties under<br />
construction and stock held for sale.<br />
25
MARTLET HOMES LIMITED<br />
NOTES TO THE ACCOUNTS<br />
YEAR ENDED 31 MARCH 2010<br />
6. PROPERTY SALES<br />
2010 2009<br />
£’000 £’000<br />
Right to Buy and Acquire<br />
Proceeds 446 142<br />
Cost of sales (400) (127)<br />
Total surplus 46 15<br />
Staircasing<br />
Proceeds 212 63<br />
Cost of sales (228) (62)<br />
Total surplus (16) 1<br />
Other disposals<br />
Proceeds 980 1,570<br />
Cost of sales (864) (1,361)<br />
Total surplus 116 209<br />
Total surplus on property sales 146 225<br />
7. INTEREST RECEIVABLE AND SIMILAR INCOME<br />
2010 2009<br />
£’000 £’000<br />
Interest receivable from other sources 55 58<br />
55 58<br />
8. INTEREST PAYABLE AND SIMILAR CHARGES<br />
2010 2009<br />
£’000 £’000<br />
On bank loans and overdrafts 4,840 6,228<br />
On other loans 11 11<br />
4,851 6,239<br />
Less interest capitalised (275) (447)<br />
4,576 5,792<br />
9. GIFT AID<br />
2010 2009<br />
£’000 £’000<br />
Gift Aid - 2,900<br />
Gift aid payments were made to Matrix Charitable Foundation <strong>Limited</strong>, a wholly owned<br />
subsidiary of <strong>Martlet</strong> <strong>Homes</strong> <strong>Limited</strong>. No payments were made in 2010.<br />
26
MARTLET HOMES LIMITED<br />
NOTES TO THE ACCOUNTS<br />
YEAR ENDED 31 MARCH 2010<br />
10. TAX ON SURPLUS ON ORDINARY ACTIVITIES<br />
2010 2009<br />
£’000 £’000<br />
Deferred tax - 346<br />
Current tax charge for the year - (611)<br />
Adjustment in respect of prior period - (33)<br />
- (298)<br />
The differences between the current tax charge and the notional tax charge based on<br />
the current corporation tax rate is explained as follows:<br />
2010 2009<br />
£’000 £’000<br />
Surplus for the year before tax 7,907 4,392<br />
Tax at 28% thereon: (2009: 28%) 2,214 1,230<br />
Effects of:<br />
Charitable income not chargeable to tax (2,214) -<br />
Expenses not deductible for tax purposes - 7<br />
Capital allowances in excess of depreciation - 6<br />
Non deductible depreciation/amortisation - 281<br />
Other short term timing differences - 23<br />
Capital items in revenue - 6<br />
Surplus/(deficit) on disposal of fixed asset - (157)<br />
Chargeable gain - 155<br />
Permanent timing differences - (4)<br />
Rolled over capital gains - 1<br />
Charges on income (gift aid) - (812)<br />
Capitalised interest - (125)<br />
Current tax charge for the year - 611<br />
Factors affecting tax charge for the year:<br />
<strong>Martlet</strong> <strong>Homes</strong> <strong>Limited</strong> obtained charitable status on 1 April 2009.<br />
27
MARTLET HOMES LIMITED<br />
NOTES TO THE ACCOUNTS<br />
YEAR ENDED 31 MARCH 2010<br />
11. EMPLOYEE INFORMATION AND COSTS<br />
The average number of persons employed (including Managing Directors but excluding<br />
the Board) expressed as Full Time Equivalents during the year was:<br />
2010 2009<br />
Office staff 73 59<br />
<strong>Housing</strong> management staff 268 247<br />
341 306<br />
2010 2009<br />
£’000 £’000<br />
Staff costs<br />
Wages and salaries 9,220 8,337<br />
Social security costs 770 696<br />
Pension costs 753 853<br />
10,743 9,886<br />
12. DIRECTORS’ EMOLUMENTS<br />
The remuneration paid to the directors (who for the purpose of this note include the<br />
members of the Board and the Managing Director ) is as follows:<br />
Gross salary excluding pension and national insurance<br />
contributions for: 2010 2009<br />
£’000 £’000<br />
Members of the Board:<br />
Bob Warner 5 3<br />
Alan Chaplin 4 4<br />
Andrew Moncreiff 4 4<br />
Patricia Smith - -<br />
Claire Holloway - -<br />
Michael Jones 4 4<br />
Margaret Temmé - -<br />
Jonathan Prichard - -<br />
Jackie Puddifoot - -<br />
Prodaman Sarwal - -<br />
David Eastgate - -<br />
Frank Hickson - -<br />
Managing Director - -<br />
Martin Ward (to 6 March 2009) - 114<br />
Steve Wilson (9 March 2009 to 26 January 2010) 67 6<br />
Paul Featherstone (from 10 March 2010 – including £12k as<br />
a director) 17 -<br />
101 135<br />
Pension contributions 2010 2009<br />
£’000 £’000<br />
Martin Ward - 15<br />
Steve Wilson 6 1<br />
Paul Featherstone 3 -<br />
9 16<br />
Prodaman Sarwal and David Eastgate are paid by the Group Board.<br />
28
MARTLET HOMES LIMITED<br />
NOTES TO THE ACCOUNTS<br />
YEAR ENDED 31 MARCH 2010<br />
13. TANGIBLE FIXED ASSETS – HOUSING PROPERTIES<br />
<strong>Housing</strong> <strong>Housing</strong><br />
properties properties<br />
held for under<br />
letting construction<br />
Completed<br />
shared<br />
ownership<br />
properties<br />
Shared<br />
ownership<br />
under<br />
construction<br />
Total<br />
Cost £’000 £’000 £’000 £’000 £’000<br />
At 1 April 2009 124,911 12,592 3,031 3,440 143,974<br />
Additions 1,697 12,260 - 2,031 15,988<br />
Transfers to current assets - - - (3,176) (3,176)<br />
Disposals (1,237) - (181) - (1,418)<br />
Completed 12,771 (12,771) 1,059 (1,059) -<br />
At 31 March 2010 138,142 12,081 3,909 1,236 155,368<br />
Social <strong>Housing</strong> Grant (SHG)<br />
At 1 April 2009 (14,142) (2,205) (1,369) - (17,716)<br />
Received - (7,158) - (182) (7,340)<br />
Disposals - - 69 - 69<br />
Completed (3,415) 3,415 (60) 60 -<br />
At 31 March 2010 (17,557) (5,948) (1,360) (122) (24,987)<br />
Depreciation/impairment<br />
At 1 April 2009 (4,435) - (25) (16) (4,476)<br />
Impairment - (301) - (69) (370)<br />
Charge for year (753) - (26) - (779)<br />
Disposals 2 - - 17 19<br />
At 31 March 2010 (5,186) (301) (51) (68) (5,606)<br />
Net book value<br />
At 31 March 2010 115,399 5,832 2,498 1,046 124,775<br />
At 31 March 2009 106,334 10,387 1,637 3,424 121,782<br />
Additions to housing properties during the year include capitalised interest of £275,000 (2009:<br />
£447,000) (note 8). The total amount of cumulative interest capitalised in housing properties is<br />
not separately identifiable. Total expenditure on works to existing properties during the year<br />
amounted to £4,444,000 (2009: £3,892,000) of which £1,697,000 (2009: £959,000) was capitalised.<br />
29
MARTLET HOMES LIMITED<br />
NOTES TO THE ACCOUNTS<br />
YEAR ENDED 31 MARCH 2010<br />
14. TANGIBLE FIXED ASSETS – OTHER FIXED ASSETS<br />
Freehold<br />
office and<br />
shops<br />
Furniture,<br />
equipment<br />
and<br />
vehicles<br />
Total other<br />
fixed<br />
assets<br />
£’000 £’000 £’000<br />
Cost<br />
At 1 April 2009 3,032 2,113 5,145<br />
Additions - 65 65<br />
At 31 March 2010 3,032 2,178 5,210<br />
Depreciation<br />
At 1 April 2009 (359) (1,810) (2,169)<br />
Charge for year (44) (102) (146)<br />
At 31 March 2010 (403) (1,912) (2,315)<br />
Net book value<br />
At 31 March 2010 2,629 266 2,895<br />
At 31 March 2009 2,673 303 2,976<br />
No assets were held under finance leases at 31 March 2010 (2009: £nil).<br />
15. STOCK<br />
2010 2009<br />
£’000 £’000<br />
Materials 81 84<br />
Work in Progress 823 1,253<br />
Property held for resale 600 798<br />
1,504 2,135<br />
16. DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR<br />
2010 2009<br />
£’000 £’000<br />
Rental debtors 740 931<br />
Provision for doubtful debts (397) (393)<br />
343 538<br />
Prepayments and accrued income 65 49<br />
Amounts due from group undertakings 2,351 -<br />
Other debtors 555 42<br />
3,314 629<br />
30
MARTLET HOMES LIMITED<br />
NOTES TO THE ACCOUNTS<br />
YEAR ENDED 31 MARCH 2010<br />
17. CASH AT BANK AND IN HAND<br />
2010 2009<br />
£’000 £’000<br />
Cash at Bank 4,286 80<br />
18. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR<br />
2010 2009<br />
£’000 £’000<br />
Rent in advance 363 645<br />
Amounts due to contractors 533 -<br />
Trade creditors 1,273 225<br />
Other taxes and social security costs - 1,563<br />
Amounts due to Group undertakings 41 133<br />
Other creditors and accruals 2,726 786<br />
4,936 3,352<br />
19. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR<br />
2010 2009<br />
£’000 £’000<br />
Loans 126,853 126,887<br />
Other long term creditors - 6<br />
Estate Improvement Sinking Fund 28 28<br />
126,881 126,921<br />
Loan repayments are analysed as follows:<br />
2010 2009<br />
£’000 £’000<br />
Between two and five years 5,236 -<br />
More than five years 121,617 126,887<br />
126,853 126,887<br />
Less than one year 28 34<br />
126,881 126,921<br />
The loans are secured against 4,045 housing property units. The loan interest is payable at an<br />
average rate of 4.81%.<br />
31
MARTLET HOMES LIMITED<br />
NOTES TO THE ACCOUNTS<br />
YEAR ENDED 31 MARCH 2010<br />
20. CAPITAL GRANT RECYCLING FUND<br />
2010 2009<br />
£’000 £’000<br />
Grants Recycled 15 -<br />
At end of year 15 -<br />
21. CALLED UP NON-EQUITY SHARE CAPITAL<br />
2010 2009<br />
£ £<br />
Issued during the year 12 -<br />
Cancelled (1) -<br />
At end of year 11 -<br />
Only Board members of the <strong>Association</strong> can be shareholders . These shares carry no<br />
dividend rights and are cancelled on cessation of membership of the <strong>Association</strong>. Each<br />
member has the right to vote at members meetings. All shares are fully paid up.<br />
22. RESERVES<br />
Revenue Restricted<br />
Reserve Reserve Total<br />
£’000 £’000 £’000<br />
At 1 April 2009 (5,811) 882 (4,929)<br />
Retained surplus for the year 7,907 - 7,907<br />
Actuarial loss (6,609) - (6,609)<br />
Transfers (144) 144 -<br />
At 31 March 2010 (4,657) 1,026 (3,631)<br />
The Restricted Reserve is set up to provide a fund created from the net sales proceeds of<br />
parcels of land or buildings of which, under the transfer agreement, a proportion would<br />
normally be transferred to Chichester District Council. By setting up this Restricted Reserve<br />
<strong>Martlet</strong> <strong>Homes</strong> <strong>Limited</strong> is able to invest this fund in further social housing in the Chichester<br />
District.<br />
2010 2009<br />
£’000 £’000<br />
Revenue reserve excluding defined benefit pension schemes 3,916 (3,553)<br />
Pension reserve (8,573) (2,258)<br />
Revenue reserve (4,657) (5,811)<br />
32
MARTLET HOMES LIMITED<br />
NOTES TO THE ACCOUNTS<br />
YEAR ENDED 31 MARCH 2010<br />
23. CAPITAL COMMITMENTS<br />
2010 2009<br />
£’000 £’000<br />
Capital expenditure contracted for but not provided for<br />
in the financial statements 10,486 6,447<br />
Capital expenditure authorised by the Board but not<br />
contracted for 21,342 26,401<br />
31,828 32,848<br />
These commitments will be funded by property sales, loans and grants as well as from<br />
existing resources.<br />
24. OPERATING LEASES<br />
Annual commitments under non-cancellable operating leases for plant and equipment<br />
are as follows:<br />
2010 2009<br />
£’000 £’000<br />
Other leases expiring:<br />
Within one year 99 -<br />
Between two and five years 83 369<br />
182 369<br />
25. CONTINGENT LIABILITIES<br />
There were no contingent liabilities at the balance sheet date.<br />
26. CONTROL<br />
The ultimate parent company and controlling entity, <strong>Hyde</strong> <strong>Housing</strong> <strong>Association</strong> <strong>Limited</strong><br />
(<strong>Hyde</strong>), is a registered housing association incorporated under the Industrial and Provident<br />
Societies Act 1965 which is registered in England and Wales. The composition of the Board<br />
of Directors of the <strong>Association</strong> is determined by <strong>Hyde</strong>.<br />
A copy of <strong>Hyde</strong>’s financial statements can be obtained from 30 Park Street, London SE1<br />
9EQ.<br />
27. RELATED PARTY TRANSACTIONS<br />
As at 31 March 2010, there were two <strong>Martlet</strong> tenant members of the Board and two <strong>Hyde</strong><br />
tenant members of the Board. Their tenancies are on normal commercial terms and they<br />
are not able to use their position to their advantage.<br />
28. LEGISLATIVE PROVISIONS<br />
The <strong>Association</strong> is registered under the Industrial and Provident Societies Act 1965.<br />
29. PAYMENTS TO CREDITORS<br />
The <strong>Association</strong> has a policy of paying suppliers within agreed payment terms. Subject to<br />
resolution of any queries or discrepancies on specific invoices, payment terms within the<br />
year were approximately 30 days.<br />
33
MARTLET HOMES LIMITED<br />
NOTES TO THE ACCOUNTS<br />
YEAR ENDED 31 MARCH 2010<br />
30. PENSION SCHEMES<br />
During the financial year the <strong>Association</strong> participated in two pension schemes. One is a<br />
defined contribution pension scheme; the <strong>Hyde</strong> <strong>Housing</strong> <strong>Association</strong> Defined Contribution<br />
Pension Scheme. The other scheme is a Local Government Pension Scheme.<br />
West Sussex County Council Pension Fund (WSCCPF)<br />
<strong>Martlet</strong> <strong>Homes</strong> <strong>Limited</strong> is an admitted member of the Local Government Pension Scheme.<br />
Contributions are made to the West Sussex County Council Pension Fund which is<br />
administered by West Sussex County Council. On 31 March 2010 164 current employees of<br />
<strong>Martlet</strong> <strong>Homes</strong> <strong>Limited</strong> were members of the West Sussex County Council Pension Fund.<br />
There were also 160 deferred pensioners and 50 active pensioners. It is a defined benefit<br />
pension scheme providing benefits held separately from the assets of the <strong>Association</strong>.<br />
Contributions to the scheme are charged to the Income & Expenditure account of the<br />
<strong>Association</strong>. The pension contribution cost, which includes liability for pension increases, has<br />
been determined in accordance with the advice of professionally qualified consulting<br />
actuaries based on an actuarial valuation made as at 31 March 2010 using the projected<br />
unit method. The contributions are determined on the basis of 31 March 2010 valuations.<br />
Total contributions made by the <strong>Association</strong> to the scheme were £1,000k (2009: £756k).<br />
The majority of the employees who participate in the scheme are employees of the<br />
<strong>Association</strong>. 12 employees of both <strong>Hyde</strong> and In Touch, a fellow subsidiary undertaking, are<br />
in the West Sussex pension scheme. These employees were originally employees of <strong>Martlet</strong><br />
<strong>Homes</strong> <strong>Limited</strong> but their contract has transferred to these entities. The pension liability of<br />
these employees cannot be identified and therefore the scheme is accounted for fully<br />
within the accounts of <strong>Martlet</strong> <strong>Homes</strong> <strong>Limited</strong>.<br />
<strong>Hyde</strong> <strong>Housing</strong> <strong>Association</strong> Defined Contribution Pension Scheme (HHADCPS)<br />
The <strong>Association</strong> has closed the defined benefit scheme to new members. All new<br />
employees can join a defined contribution scheme, the HHADCPS. On 31 March 2010 there<br />
were 56 current employees of the <strong>Association</strong> who were members of the HHADCPS. The<br />
employer contribution rate payable by the <strong>Association</strong> per annum is dependent on the<br />
contribution by the employee as follows:<br />
Employee contributes<br />
Employer contributes<br />
3% 6%<br />
4% 8%<br />
5% 10%<br />
2010 2009<br />
£'000 £'000<br />
Company contributions:<br />
WSCCPF 501 648<br />
HHADCPS 103 65<br />
604 713<br />
Pension costs are recharged to the Parent for staff paid and contracted by the <strong>Association</strong>,<br />
but seconded to the Parent.<br />
There were no contributions outstanding at the year end.<br />
34
MARTLET HOMES LIMITED<br />
NOTES TO THE ACCOUNTS<br />
YEAR ENDED 31 MARCH 2010<br />
30. PENSION SCHEMES (CONTINUED)<br />
A summary of the movement in pension assets and liabilities for the WSCCPF is shown below:<br />
Year to 31 March 2010<br />
Total<br />
£’000<br />
Present value of defined benefit obligation<br />
(28,118)<br />
Fair value of fund assets 19,545<br />
Net liability in the balance sheet (8,573)<br />
Movements in present value of defined benefit<br />
obligation<br />
Opening defined benefit obligation as at 1 April<br />
2009 15,306<br />
Current Service Cost 501<br />
Interest Cost 1,074<br />
Contributions by Members 322<br />
Actuarial losses/(gains) 11,197<br />
Estimated Unfunded Benefit Paid (1)<br />
Estimated Benefit Paid (281)<br />
Closing defined benefit obligation as at 31 March<br />
2010 28,118<br />
Movements in fair value of fund assets<br />
Opening fair value of employer assets as at 1<br />
April 2009 13,048<br />
Expected Return on Assets 868<br />
Contribution by Members 322<br />
Contributions by Employer 1,000<br />
Contributions in Respect of unfunded Benefits 1<br />
Actuarial gains/(losses) 4,588<br />
Unfunded Benefit Paid (1)<br />
Benefit Paid (281)<br />
Closing fair value of employer assets as at 31<br />
March 2010 19,545<br />
35
MARTLET HOMES LIMITED<br />
NOTES TO THE ACCOUNTS<br />
YEAR ENDED 31 MARCH 2010<br />
30. PENSION SCHEMES (CONTINUED)<br />
Year to 31 March 2009<br />
Total<br />
£’000<br />
Present value of defined benefit obligation<br />
(15,306)<br />
Fair value of fund assets 13,048<br />
Net liability in the balance sheet (2,258)<br />
Movements in present value of defined benefit<br />
obligation<br />
Opening defined benefit obligation as at 1 April<br />
2008 14,980<br />
Current Service Cost 648<br />
Interest Cost 1,066<br />
Contributions by Members 344<br />
Actuarial (gains)/losses (1,703)<br />
Past Service cost/(gain) 192<br />
Losses/(gains) on Curtailments and Settlements 8<br />
Estimated Unfunded Benefit Paid (1)<br />
Estimated Benefit Paid (228)<br />
Closing defined benefit obligation as at 31 March<br />
2009 15,306<br />
Movements in fair value of fund assets<br />
Opening fair value of employer assets as at 1 April<br />
2008 15,499<br />
Expected Return on Assets 1,136<br />
Contribution by Members 344<br />
Contributions by Employer 756<br />
Contributions in Respect of unfunded Benefits 1<br />
Actuarial (gains)/losses (4,459)<br />
Unfunded Benefit Paid (1)<br />
Estimated Benefit Paid (228)<br />
Closing fair value of employer assets as at 31<br />
March 2009 13,048<br />
36
MARTLET HOMES LIMITED<br />
NOTES TO THE ACCOUNTS<br />
YEAR ENDED 31 MARCH 2010<br />
30. PENSION SCHEMES (CONTINUED)<br />
Expenses recognised in the income and expenditure account:<br />
WSCCPF<br />
£’000<br />
Year to 31 March 2010<br />
Current Service Cost 501<br />
Interest Cost 1,074<br />
Expected return on employer assets (868)<br />
Total 707<br />
Year to 31 March 2009<br />
Current Service Cost 648<br />
Interest Cost 1,066<br />
Expected return on employer assets (1,136)<br />
Past Service cost/(gain) 192<br />
Curtailment losses/(gains) 8<br />
Total 778<br />
37
MARTLET HOMES LIMITED<br />
NOTES TO THE ACCOUNTS<br />
YEAR ENDED 31 MARCH 2010<br />
30. PENSION SCHEMES (CONTINUED)<br />
History of schemes<br />
2010 2009 2008 2007 2006<br />
£’000 £’000 £’000 £’000 £’000<br />
WSCCPF<br />
Present value of scheme liabilities (28,118) (15,306) (14,980) (14,921) (14,384)<br />
Present value of scheme assets 19,545 13,048 15,499 13,075 11,587<br />
(Deficit)/surplus (8,573) (2,258) 519 (1,846) (2,797)<br />
Experience gains/(losses) on assets<br />
4,588 (4,459) (134) (234) 1,551<br />
Experience gains/(losses) on liabilities - (40) (1,689) (1) 7<br />
Expected return on assets 868 1,136 (972) (821) 640<br />
Actual return on assets 5,461 (3,331) (1,106) (1,056) 2,191<br />
2010 2009<br />
£’000 £’000<br />
WSCCPF<br />
Actuarial gain/(loss) for the year (6,609) (2,756)<br />
Cumulative actuarial gain/(loss) for<br />
the year<br />
(6,365) 244<br />
Actuarial gain/(loss) as a % of scheme<br />
liabilities<br />
(22.64)% 1.59%<br />
38
MARTLET HOMES LIMITED<br />
NOTES TO THE ACCOUNTS<br />
YEAR ENDED 31 MARCH 2010<br />
30. PENSION SCHEMES (CONTINUED)<br />
The fair value of assets and the present value of liabilities in the scheme at each balance<br />
sheet date were:<br />
Total<br />
£’000<br />
As at 31 March 2010<br />
The fair value of the assets:<br />
Equities 14,854<br />
Bonds 2,932<br />
Property 1,173<br />
Cash 586<br />
Total market value of assets 19,545<br />
Actuarial value of liabilities (28,118)<br />
Surplus/(deficit) in <strong>Martlet</strong> Scheme (8,573)<br />
Total<br />
£’000<br />
As at 31 March 2009<br />
The fair value of the assets:<br />
Equities 9,134<br />
Bonds 2,479<br />
Property 1,044<br />
Cash 391<br />
Total market value of assets 13,048<br />
Actuarial value of liabilities (15,306)<br />
Surplus/(deficit) in <strong>Martlet</strong> Scheme (2,258)<br />
39
MARTLET HOMES LIMITED<br />
NOTES TO THE ACCOUNTS<br />
YEAR ENDED 31 MARCH 2010<br />
30. PENSION SCHEMES (CONTINUED)<br />
In compiling the FRS 17 disclosures the actuaries have used the following assumptions:<br />
WSCCPF<br />
As at 31 March 2010<br />
Inflation 3.80%<br />
Salary increases 5.30%<br />
Expected return on assets 7.20%<br />
Discount rate 5.50%<br />
Expected return on equities 7.80%<br />
Expected return on bonds 5.00%<br />
Expected return on cash 4.80%<br />
Expected return on property 5.80%<br />
WSCCPF<br />
As at 31 March 2009<br />
Inflation 3.10%<br />
Salary increases 4.60%<br />
Expected return on assets 6.40%<br />
Discount rate 6.90%<br />
Expected return on equities 7.00%<br />
Expected return on bonds 5.40%<br />
Expected return on cash 4.00%<br />
Expected return on property 4.90%<br />
Mortality assumptions<br />
Life expectancy is based on the PFA92 and PMA92 tables, with improvements from 2007 in<br />
line with the medium cohort and a 1% per annum underpin. Based on these assumptions,<br />
the average future life expectancies at age 65 are summarised below:<br />
Males<br />
Females<br />
Current pensioners 22.70 years 26.10 years<br />
Future pensioners 24.80 years 28.30 years<br />
40