Report and Financial Statements Adactus Housing Group Limited

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Adactus Housing Group Limited 31Report and Financial statements for the year ended 31 March 2013Notes to the financial statementsHousing propertiesHousing properties are principally properties available for rent and are stated at cost less depreciation.Cost includes the cost of acquiring land and buildings, development costs, interest charges incurred duringthe development period and expenditure incurred in respect of improvements.Works to existing properties which replace a component that has been treated separately for depreciationpurposes, along with those works that result in an increase in net rental income over the lives of theproperties, 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 theelement relating to expected first tranche sales. The first tranche proportion is classed as current asset andrelated sales proceeds included in turnover and the remaining element is classed as fixed asset and includedin housing properties at cost, less any provisions needed for depreciation or impairment.Donated landLand donated by local authorities and others is added to the cost at market value of the land at the time ofthe donation. Where the land is not related to a specific development and is donated by a public body andamount equivalent to the increase in value between market value and cost is added to other grants. Wherethe donation is from a non public source, the value of the donation is included as income.Social housing grantSocial Housing Grant (SHG) is receivable from the Homes and Communities Agency (the HCA) andformerly from the Housing Corporation and is utilised to reduce the capital costs of housing properties.SHG due from the HCA or received in advance is included as a current asset or liability. SHG received inrespect of revenue expenditure is credited to the income and expenditure account in the same period asthe expenditure to which it relates.SHG is subordinated to the repayment of loans by agreement with the HCA. SHG released on disposalmay be repayable but is normally available to be recycled and is credited to a Recycled Capital Grant Fundand included in the balance sheet.Other grantsOther grants are receivable from local authorities and other organisations. Capital grants are utilised toreduce the capital costs of housing properties. Grants in respect of revenue expenditure are credited tothe Income and Expenditure Account in the same period as the expenditure to which they relate.Depreciation of housing propertiesThe Group separately identifies the major components which comprise its housing properties, and chargesdepreciation, so as to write-down the cost of each components to its estimated residual value, on a straightline basis, over its useful economic life.Major components are treated as separable assets and depreciated over their expected useful economiclives or the lives of the structure to which they relate, if shorter. The following useful lives have beenapplied to the Group's components:
Adactus Housing Group Limited 32Report and Financial statements for the year ended 31 March 2013Notes to the financial statementsStructureRoofsKitchensDoorsWindowsLiftsBoilersBathrooms100 years80 years20 years30 years30 years25 years25 years30 yearsFreehold land is not depreciated.ImpairmentHousing properties, including those with individual components, which are depreciated over a period inexcess of 50 years are subject to impairment reviews annually. Other assets are reviewed for impairment ifthere is an indication that impairment may have incurred.Where there is evidence of impairment, fixed assets are written down to their recoverable amount beingthe higher of net realisable value or the value in use to the Group. Any such write down is charged to theincome and expenditure account.Other tangible fixed assetsTangible fixed assets are stated at cost less accumulated depreciation. Freehold land is not depreciated.Depreciation is charged on a straight-line basis over the expected useful economic lives of the assets at thefollowing rates: -Land and buildingsFurniture, fixtures and fittingsOffice & computer equipmentMotor vehicles3.33% per annum on cost or the length of the lease4% to 25% per annum on cost25% per annum on cost25% per annum on costInvestment propertiesIn accordance with SSAP19 investment properties held for long term investment are revalued annually atopen market value as at the balance sheet date.The aggregate surplus or deficit arising on revaluation is transferred to the revaluation reserve exceptwhere a deficit is deemed to represent a permanent diminution in value, in which case it is charged to theincome and expenditure account. No depreciation is charged in respect of investment properties.Properties for saleShared ownership first tranche sales, completed properties for outright sale and property underconstruction are valued at the lower of cost and net realisable value. Costs comprise materials, directlabour and direct development overheads. Net realisable value is based on estimated sales price afterallowing for all further costs of completion and disposal.
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Report and Financial Statements Adactus Housing Group Limited

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