Trustees Annual Report 20
191 | About JRHT
The Joseph Rowntree Housing Trust (JRHT) is a registered housing association and care provider in York and north-east England. It is working with the Joseph Rowntree Foundation (JRF) to inspire social change. JRHT provides homes across a range of tenures for residents with varying levels of housing and support needs and care: 2,500c. homes
The Folk Hall – the hub of the community in New Earswick where a major refurbishment project began in 2017. 2schools shops 13 A Super Sustainable Centre at Derwenthorpe
Explore Library care Multi-use homes Post games 4 1Office area and 9 over 55s sheltered and extra care schemes Allotments | 2 JOSEPH ROWNTREE HOUSING TRUST / TRUSTEES ANNUAL REPOST 2019
Contents
01 - REPORT OF THE BOARD 4 Structure, governance and management 8 Introduction - Chair’s statement 11 Governing document in 2019 15 Objectives and activities 18 Achievements and performance 37 Value for money 46 Risk 50 Internal controls assurance 53 Financial summary 57 Plans for the future 60 Trustees’ statement of responsibility 60 Approval 02 - FINANCIAL STATEMENTS Independent auditors report to JRHT Statement of financial position Statement of comprehensive income Statement of changes in reserves Statement of cash flows Notes to the accounts
3 | Structure, governance and management
Trustees
Gillian Saphié Steven Deborah
Ashmore Ashtiany Burkeman Cadman OBE (until 8 October, 2019)
Helen Will Paul Maureen Evans Haire CB Jenkins Loffill (Chair)
David Graham Professor Carol Professor Dianne Lunts Millar Tannahill Willcocks CBE DL (Deputy Chair)
| 4 JRHT Board members
Deborah Fran Helen Bill Cadman Charnock Evans Hodson (until Q2 2019) (Chair) (until Q2 2019)
Angela Maureen David Neil Lockwood Loffill Lunts McKechnie (from Q3 2019) (until Q4 2019)
Graham Adrian Tracy Millar Snarr Allison (until Q4 2019) (from Q4 2019)
5 | Executive Directors
Campbell Chris Claire Robb Simpson Ainsley Chief Executive, JRHT Executive JRF Executive JRF and JRHT Director Director (until May 2019) (from March 2019)
Claire Tracey Townson Preece Director of Director of Finance Corporate Services
To note: in the absence of a chief executive, while recruitment took place, the Chair, Will Haire, assumed a non-remunerated Executive Chair role.
| 6 Reference and administration information
HEAD OFFICE DWF LLP Joseph Rowntree Foundation 2nd Floor The Homestead Central Square South 40 Water End Orchard Street Clifton Newcastle upon Tyne York NE1 3AZ YO30 6WP BANKERS Joseph Rowntree Housing Trust HSBC The Garth Unit 18, Manor Court White Rose Avenue Manor Garth New Earswick Eastfield York Scarborough Y032 4TZ YO11 3TU
SOLICITORS INTERNAL AUDITORS Eversheds Sutherland PricewaterhouseCoopers LLP Central Square South Central Square Orchard Street 29 Wellington Street Newcastle upon Tyne Leeds NE1 3XX LS1 4DL
EXTERNAL AUDITORS Grant Thornton UK LLP No 1 Whitehall Riverside Leeds LS1 4BN
7 | Introduction
During the year, like many other care providers and housing associations, we have experienced a variety of challenges which have impacted on our progress as we strive to deliver our outcomes. This included the ongoing struggle to recruit and maintain care staff within York, the need to address the outcomes of CQC inspections at some of our care homes, and ongoing challenges to balance finances. Nevertheless in 2019 we began to bring improvement WILL HAIRE in all these areas. Chair of trustees I am also pleased to say that the Joseph Rowntree Housing Trust also In 2019 so much has been achieved took the final steps towards formally despite significant challenges along incorporating as a community benefit the way. society. In doing so, we have updated One of the most notable and strengthened our governance achievements has been the arrangements. I am delighted that completion of the first phase of New Helen Evans agreed to chair the Lodge, situated within the garden housing trust, and I wish her well as village of New Earswick in York. This she now leads the trust forward. included the opening of the state-of- On a personal note, I have been the-art residential care home and 57 particularly impressed by the apartments for the over 55s, as well as continued dedication and commitment the successful transfer of existing Red of our people to drive improvements Lodge residents into their new homes. and change across the organisation. We have also embarked on our This is really starting to make a Development Strategy of building 100 difference to the delivery of our homes a year, 1000 in total over next services. 10 years. We anticipated a new set of challenges Throughout 2019, we have also for 2020 for which as an organisation continued to invest in our properties we were actively preparing. These with the major focus being on included changes resulting from our improving energy efficiency. We departure from the European Union, have successfully completed the the removal of the National Policy for programme to install new windows Rent, the replacement of deprivation and doors across our properties within of liberty legalisation and further New Earswick, which will bring money changes to social security and benefits savings for our residents. caps. These preparations were swiftly
| 8 disrupted by the instability brought of the next decade and we know that about by the impact of the rapid Paul will build on this and help lead us spread of coronavirus on our health, forward. society and economy. Everyone across the country and much of the world is being affected in one way or another. For people trapped in poverty already or for those swept into poverty, the impact is especially challenging; and people’s ability to respond is shaped by their pre-existing resources, security of income, and their family circumstances. In addition the social housing sector and its tenants and residents are facing a number of challenges for which we are ready to play our part in addressing. This rapidly-changing context will be foremost in our minds as we continue to aim to deliver our organisational mission to build and develop strong empowered communities without poverty or isolation Our residents and staff continue to be at the heart of this, with their health and well-being being paramount. I would like to thank them for their continued support and commitment. At the time of writing we are looking forward to the arrival of Paul Kissack who is taking up the role of Group Chief Executive from the beginning of September. Paul is replacing Campbell Robb who served as JRF and JRHT’s Chief Executive from January 2017 to June 2019. During his tenure, Campbell led the organisations to their outcomes focus, so that both organisations can achieve greater impact and value. We thank him for his service; the organisations are in a strong position to meet the challenges
9 | HELEN EVANS Chair of the board Will has identified and articulated the 2020 will bring many challenges, and many improvements and successes inevitably and rightly changes to our JRHT’s people and partners have planned activity. Unchanged will be delivered through 2019 and I would our focus on the health and wellbeing like to add my appreciation and of our residents, communities and gratitude to his. This year’s annual colleagues while we as an organisation report sets out the range and depth and the wider housing sector adjust to of service and achievements across the new operating environment. all JRHT teams. These services are central to ensuring residents in our homes remain independent and well and have a real opportunity to shape the community they live in. The effect of the COVID-19 pandemic has been far reaching. Our people, whether working on the frontline or offering support from the back office have demonstrated unwavering commitment to our values and to the communities in which we work.
| 10 Governing document in 2019
The Joseph Rowntree Housing Trust vision was not only to provide a care (JRHT) shares the same trustees and offer and new homes fit for our ageing governing document as the Joseph society in general, but to provide Rowntree Foundation (JRF). JRF was this within a fully integrated lifelong formed by a deed of foundation dated neighbourhood context where the 13 December 1904, originally under existing community assets, both the name of the Joseph Rowntree physical and human, are optimised. Village Trust. The name was changed Another approach has been the to the Joseph Rowntree Foundation in European settlements demonstrating 1990. new approaches to low-energy homes JRHT was established as a separate as part of an EU funded project. In entity in 1967 under a Charity 2019 we completed the construction Commission scheme. During of three case study homes, building on 2019, JRHT was not incorporated, the high fabric-insulation standards although the trustees as a body were and enhancing these with photovoltaic incorporated under section 251 of panels and battery storage as an the Charities Act 2011. All staff and energy demand offset. The project directors were employed by JRF in continues to monitor the performance 2019. of the homes until autumn 2020. JRHT provides affordable housing Trustees set the strategic and policy for rent and shared ownership, care direction; the JRHT board has homes, retirement and supported responsibility for providing operational housing, and demonstrates new scrutiny and oversight; directors have approaches in these areas. A good operational responsibility. example of this is New Lodge; the
INCORPORATION As part of the drive to modernise and JRHT to fully deal with conflicts of JRF and JRHT’s governance interest that existed by virtue of JRF arrangements, trustees took the and JRHT having the same trustees. decision in December 2018 that Joseph Rowntree Housing Trust both organisations should formally incorporated as a community benefit incorporate. society (CBS) on 24 September 2019. In addition to having a more modern The CBS remained dormant until 1 legal form, the change would January 2020, when the assets and introduce limited liability for trustees. liabilities of the unincorporated charity Changes to the composition of the were transferred to it under a Charity trustee bodies would also enable JRF Commission scheme and order.
11 | Six of the trustees of the statements will be prepared as a CBS. unincorporated charity became board JRF has one share in the community members of the new incorporated benefit society. JRHT CBS and recruitment As part of incorporation, JRHT took commenced for a further six. the opportunity to directly employ Helen Evans, already Chair of the colleagues who were previously unincorporated JRHT, was appointed employed by JRF but subject to a Chair of the new incorporated entity. 100% recharge. This change also took The unincorporated charity no longer place on 1 January 2020. exists and the next set of annual
RECRUITMENT AND APPOINTMENT OF TRUSTEES The deed of foundation (1904), which is for three years, with a three-year applied until the end of 2019, required extension. that JRF and JRHT share the same Trustee induction and personal trustees. development arrangements are In accordance with the deed of regularly reviewed and there is a foundation, trustee appointments specific budget for this purpose. There were made by the continuing JRF and were no specific training requirements JRHT trustees. in 2019, but trustees attended a The appointment period for the non- selection of events run by both JRF trustee members of the JRHT board and JRHT and external providers.
ORGANISATIONAL STRUCTURE IN 2019 JRHT trustees were responsible for During 2019, there were four trustee the statutory duties, including being meetings, a trustee away-day, and four accountable to the Regulator of Social meetings of the JRHT board. Housing and Care Quality Commission. There continue to be three sub- However, in accordance with powers committees that support both JRF and set out in the deed of foundation, JRHT. All committees are chaired by a JRHT trustees delegated strategic trustee and legal responsibility for the matters to JRF trustees (who are work done by the committees remains the same individuals) and operational with the trustees. scrutiny and oversight to the JRHT board. In practical terms, this meant • Audit and Risk Committee (ARC). that there was one trustee meeting This committee is responsible for each quarter that covered JRF, JRHT ensuring that there is a robust and and shared / corporate matters, and independent control framework across one JRHT board meeting. JRF and JRHT. It ensures compliance with the risk management strategy The JRHT board consisted of an equal and that there is best practice in the number of trustees and independent approach to internal audit. In 2019, members who have been recruited the committee consisted of three for their expertise in housing, care, trustees and three independent development and finance. The role members. of the JRHT board was extended in 2018 to be a decision-making rather • Resources Committee. This plays a than advisory body, including having number of roles but specifically for responsibility for oversight of JRHT’s JRHT has responsibility for oversight finances. of corporate activities that straddle
| 12 both JRHT and JRF, such as HR and 2019 that report directly to JRHT workforce matters, IT and technology. trustees alone. These are the Care The committee consists of three Sub-committee and Development trustees and three independent Sub-committee, each of which are members. a combination of JRHT trustees and • Nominations Committee. This independent members. The chairs became the Nominations and of the sub-committees are JRHT Governance Committee and is trustees. responsible for ensuring that best There is a skills assessment matrix to practice in governance is adopted ensure that each committee and sub- across JRF and JRHT. It is also committee contains members with the responsible for recommending the appropriate skills and experience. This appointment of all members (trustees matrix was subject to independent and independent members) to review in 2019, and further changes trustees. There are up to five members will be made in response to this review of the Nominations Committee, all of in 2020. whom are trustees. The chair of the JRHT board holds In addition to the sub-committees annual member appraisals for all that are shared with JRF, two further trustees / JRHT board members. committees were established in
GOVERNANCE The Joseph Rowntree Housing Trust The trust undertakes a formal annual has adopted the 2015 National review of compliance with the Housing Federation (NHF) Code of governance and viability standard. This Governance. takes the form of a self-assessment As required, registered providers with the most recent review are expected to explain any non- completed in May 2019. compliance with the code of This was discussed by the JRHT board governance. JRHT is non-compliant at two of their quarterly meetings on provision D2 regarding the where it was confirmed that the maximum tenure of all non- review did not highlight any other executives. material issues that relate to non- There is no limit to JRHT trustees’ compliance and that were notifiable to term of office set within the charity’s the regulator. deed of foundation, but trustees have agreed that terms should not normally exceed 10 years. In the case of our chair or deputy chair, the maximum is 15 years. During 2019, therefore, JRHT was non-compliant with part D2 of the NHF code. As we moved to incorporation in 2019, there was a change to the terms of office to a maximum of nine years bringing them into line with the NHF Code of Governance that applies to JRHT.
13 | FUNDRAISING POLICY Although fundraising is not routinely • to ensure compliance with statutory undertaken, JRHT has a policy in rules and regulations place, the objectives of which are: • To ensure that, if necessary, prior • to ensure proper accounting for approval is obtained for fundraising all fundraising and compliance with activities. policies and procedures
RESERVES POLICY Through its long-term planning and board ensure that covenants within annual budgeting, JRHT ensures loan agreements which are designed that it maintains sufficient reserves to assess the financial strength of the to meet expected fluctuations in organisation are adhered to. The two income and costs and fund future primary covenants in loan agreements projects. In particular, the 30-year are interest cover (a measure of plan, which is produced on an annual annual performance) and debt cover basis, shows the expected income (a measure of balance sheet strength). and expenditure and balance sheet At the end of 2019, JRHT had income positions over the long-term. This and expenditure reserves of £46 ensures that sufficient reserves million, a restricted reserves of £1 and other funding are available to million and a revaluation reserve of meet the organisation’s long-term £10 million. During 2019, all of its objectives. As part of this long-term banking covenants were met. planning, stress tests are undertaken, including some that are extreme, to ensure that funds are always available to meet expected and unexpected challenges. The trustees and JRHT board set the strategy and the latter is actively involved in developing and approving long-term plans and stress tests. JRHT also has a treasury strategy and policy which includes how treasury risk is managed. Monitoring by management and oversight by the
| 14 Objectives and activities
JRHT continues to work together with Joseph Rowntree Foundation (JRF) to achieve a joint vision for a prosperous UK without poverty. JRF/JRHT share a set of values which are core to the way the organisations work and are at the heart of everything that they do. They show what we care about, help us make decisions and show us how to behave together. Our values support us to deliver our mission of building and developing strong empowered communities without poverty or isolation. As well as values, JRF/JRHT also share two common outcomes which are: • Everyone has a decent home in a good place. • Everyone has good living standards and prospects. Each year, JRHT focuses on delivering activities which will have the biggest impact and are linked to the following outcomes;
More people are More people are independent and well. shaping our communities.
More people can More people live in a improve their prospects. decent, affordable home.
We explain more about our achievements on page 18 and how these relate to our outcomes.
15 | THE EXTERNAL ENVIRONMENT JRHT is faced with a variety of external challenges which impact our progress as we strive to attain our outcomes. A new deal for social housing The Social Housing Green Paper, ‘A new deal for social housing’ was published on 14 August 2018 and proposed reforms including ‘league’ tables for customers to compare their landlords, and more regulatory powers around service delivery, with a focus on social housing providing a decent and safe home. The sector awaits further government action in taking forward the principles outlined in the Green Paper, and we need to be ready for emerging policy. Building safety JRHT is proactively working to tighten its monitoring and approach to compliance, to comply with the Independent Review of Building Regulations and Fire Safety (Hackett Review) published in May 2018. Progress on these areas are outlined later in this report. Care services In 2019, and moving into 2020, a key challenge JRHT care services have faced is the recruitment of a strong workforce (including nurses) against a backdrop of reducing nurses in the health sector. We are part of the social care pilot for Nursing and Midwifery Council nursing associate roles starting from the end of March 2020. This programme enables care to offer a career path and professional qualification for individuals via the apprenticeship route, as well as developing our approach to growing our own workforce. Care is a highly regulated sector and the replacement of the deprivation of liberty legislation is expected in October 2020, which will affect a significant number of residents living with dementia in our care facilities. COVID-19 In March 2020, the impact of the rapid onset of COVID-19 became apparent across the UK as well as globally, including on JRHT and the lives of our staff and those living and working in our communities. There are a significant number of challenges in responding to the crisis, with potential financial and regulatory consequences and impact on the lives, health and wellbeing of our staff, care residents and tenants. Like most housing and care providers, particular areas of challenge are our ability to maintain essential services to tenants and residents while managing the impact of reduced staffing, as well as procurement and cost of personal protective equipment (PPE). Brexit The UK left the European Union on the 31 January 2020 and the prospect of a ‘no deal’ at the end of the transition period is still possible. We are seeing a negative impact on costs to some services and supplies as a result of Brexit, including an increase in cost of some medicines and medical equipment.
| 16 A new Government A change of Government offers both opportunity and uncertainty regarding the policy landscape which surrounds social housing. 2020 will mark the end of national policy from the Welfare Reform and Work Act 2016, which enforced rent reductions, however it’s longer term impacts will continue to be felt at a time when we are looking to increase our income and maintain independent financial viability. Changes which undermine the adequacy of the social security system for our customers, such as benefit caps, as well as the continuing roll-out of Universal Credit - with the real probability of causing further poverty with delays in payments and online applications - will probably impact upon rent payments. The Government announced a Renters Reform Bill in the Queen’s Speech on the 19 December 2019. While this Bill is principally focussed on the private rented sector, a number of the reforms may have impacts for social landlords, such as potential reforms to Ground 8 and the process for evicting tenants who have fallen into rent arrears. We wait for further clarity on the contents of this Bill and a timeline for bringing it forward. It is clear JRHT faces many challenges, and we are working hard to ensure our policies and procedures are robust and stand up to those challenges.
HOW OUR ACTIVITIES DELIVER PUBLIC BENEFIT JRHT’s objectives (above) and activities (below) are all intended to provide a public benefit. This is achieved through services such as; • provision of affordable housing, care and support • development projects that provide evidence for replication by other developers and service providers • collaboration with JRF to progress shared outcomes of everyone having a decent home in a good place, and everyone having a good standard of living and prospects. Trustees have had due regard to guidance on public benefit produced by the Charity Commission. They are of the opinion that undertaking these activities fully meets the requirements of section 17 of the Charities Act 2011 to deliver public benefit.
17 | Achievements and performance
INTRODUCTION JRHT wants to make the biggest contribution possible to the people and places that mean the most to us with clarity and focus, with every member of staff able to see how they contribute to our vision, mission and outcomes. We want to make progress that can be tracked each year, so that we can increase our impact. This is why our outcomes are a vital part of our strategy.
MORE PEOPLE ARE INDEPENDENT AND WELL We are committed to providing services which maximise the opportunities for residents and tenants to be independent and well. Not surprisingly, this is a primary focus for our care services whether it is resident involvement with our dedicated activities co-ordinators across care sites, or delivering care directly into people’s homes. We work proactively across the organisation and together with partners to achieve this outcome and maximise our impact. In 2019 25 local not-for-profit organisations were awarded funding for projects which reduce social isolation and poverty across six of the most deprived areas in York. More than 5,700 people within York benefited as a direct result of the funding. JRHT oversees and manage the operational activity of the York Committee in consultation with JRF and all grants are funded by JRF.
“Great. Wonderful. The standard of the building is superb, it’s like staying at a hotel. Any little niggles are dealt with quickly. The staff are all so friendly and helpful. Highly satisfied.” (Red Lodge to New Lodge residents)
| 18 A CLOSER LOOK AT NEW LODGE During 2019, we were delighted to home-cooked meals for people living complete phase one of the New Lodge within the residential care suites. The development which included a 45-bed new eatery at the Folk Hall is also residential care home as well as 57 providing residents within the New one- and two-bedroom apartments Lodge apartments a homely place to for people aged over 55. eat and socialise as an alternative to The new development has been cooking in their own apartments. built to include many features which Activities within the new site reflect promote independence and well- the excellent opportunities on offer being, as demonstrated through its across all our care homes. Alongside fully accessible and dementia-friendly the popular regular activities of music design throughout. sessions and resident-led group word In October 2019, we welcomed searches, since opening New Lodge existing residents from Red Lodge has launched a number of well- into their new home within New received new activities. These include Lodge. The move involved meticulous a gardening club which extends to logistical planning and detailed the wider community, ‘Life Stories’ a communications with residents and programme delivered by University of family to ensure a smooth transition York students, and a highly successful and minimal disruption. weekly visit from the local infant school for arts and crafts sessions or Following the opening of New Lodge, singing with residents and the team. the Folk Hall catering team has been preparing nutritious and balanced
19 | MORE PEOPLE ARE SHAPING OUR COMMUNITIES We listen to and work closely with our residents and tenants to build inclusive communities where people can live well together in a supportive environment. We contribute to this outcome both in the landlord role and working directly with our residents and tenants in communities in which we have properties, services and in the wider community through our community development teams.
| 20 “…Our house windows let in a lot of wind and cold and I feel I’ve been using a lot of warmth and a lot of money. So after speaking with one of you at the Food and Fuel Fair I decided to ring the housing association who I rent my house off… I mentioned that I’d been to see you at the Action Lab… he has just come back and said your Christmas has come early – we’ll put in all new windows… so I’d just like to thank you for being here.” (Resident)
A CLOSER LOOK AT HARTLEPOOL ACTION LAB (HAL) We are one of the partners within care leavers took up tenancies within the Hartlepool Action Lab (HAL), the homes they had created; a second which strives to reduce the impacts of property has now been purchased with poverty within the town. refurbishment planned for 2020. In 2019, HAL reach its goal of Our work with Hartlepool Job Centre generating £1 million for local has become stronger during 2019 on people. This fantastic result was what we refer to as ‘advocacy’ and is achieved through a combination of based on a ‘warm handover’ of people savings (including reduced energy in need of support. By referring those costs, water meter switches, and individuals to the Action Lab team of redistribution of waste food) alongside staff and volunteers, these support increased income. The HAL benefits needs (including food, clothing, mental group successfully worked with health support, benefits advice, and residents within the Jutland Road addiction support) can be met by neighbourhood to claim more than the team listening to people and £377,000 of additional income. connecting them to local support and community groups. We have seen this The Stronger Neighbourhoods project was designed to support local support provide potential routes out people in communities to take social of poverty and resulted in some of action to positively change their those supported offering to volunteer neighbourhoods. Oxfest, a street party through the Action Lab. for residents in Oxford Road, attracted To further support the fantastic work more than 75 local people and of HAL, we appointed a volunteering generated interest from a group of and social action leadership worker local people wanting to make changes to create new pathways and support to the area. A regular ‘engagement for volunteers, and a programme of team’ made up of Action Lab staff, support to those with ambitions to partners and volunteers are now lead community action. This role is spending time in the area to build trust already making a clear difference to and plan for small-scale projects aimed recruiting and engaging volunteers at making quick and visible wins. and has resulted in two individuals identified as social action leaders who The Housing Heroes project works with young care leavers and other are starting to plan mini-projects partnerships to design and create their within their local communities. own sustainable homes by refurbishing Funding has now been secured to empty properties. In 2019, four young continue the leadership worker post until 2025.
21 | MORE PEOPLE CAN IMPROVE THEIR PROSPECTS We help our residents and tenants In Hartlepool we continue to work to reduce their outgoings, increase closely with the Catcote Academy their income and provide support and which provides learning and training advice to ensure that they benefit opportunities for a wide range of from the services and grants available, students with learning difficulties or much of which is demonstrated by the disabilities. Within care services, we excellent work of HAL (above). continue to explore ways in which we We work with organisations across can grow and develop our staff. In the Yorkshire and the north-east to later part of 2019, we worked with enable residents and people living NHS Health England on a pilot trainee within our communities to improve nursing associate programme which their prospects through education, began in spring 2020. training, volunteering and employment opportunities.
“Lovely Easter activities for the children. They really enjoyed it. Was a really nice idea making pasta for the children also. Great place to visit” Guardian feedback from the 2019 Easter activity session
| 22 A CLOSER LOOK AT THE FOLK HALL We continue to work alongside the prospects, and there are many success local community within New Earswick stories. to further establish the Folk Hall as More than 20 community groups now a community hub for all ages. During use the Folk Hall on a regular basis 2019, more than 165,000 people including NELLI (New Earswick Less visited the Folk Hall to attend a variety Loneliness Initiative), dance groups, of events and activities as well as health and recovery groups, and accessing the other facilities including afternoon dance and tea events. Film the library, Post Office and café. at the Folk Hall is a community cinema The creation of the Discovery Room group and presents monthly film provides a much-needed space for showings. In 2019 it had more than young people and is now home to a 1,000 people attend with an average weekly youth group and after-school of 60 people at each showing. activities with Craft Hackers. Young We have extended our offer of people from the Joseph Rowntree community activities and during the School and the Prince’s Trust have summer we used our new facility helped shape the design of the room - MUGA (Multi User Games Area) and the Discovery Room is now to host a programme of holiday a place for active participation in activities which attracted more than activities as well as a space to ‘chill’. 500 visits from young people; they The activities and groups originally were supported with free lunch and created within the Open Shop have healthy snacks in response to research continued to thrive within the Folk conducted by York Food Poverty Hall. These activities and groups Alliance in relation to holiday hunger. continue to be fundamental to reducing social isolation and improving
23 | MORE PEOPLE LIVE IN A DECENT AFFORDABLE HOME We are a responsible landlord and • 61 properties have been painted ensure that our properties are externally, maintained to a high standard while • 91 new boilers and heating maximising energy efficiency. We are systems have been fitted, helping more people to access their own home by building new properties • 206 properties were fitted with new and providing a range of properties windows and doors (which means with different ownership options that nearly every property in New to accommodate affordability for Earswick now has double glazing). residents. Last year we completed our stock We continue to invest in our condition survey programme and we properties and care settings to ensure now have up-to-date information on they are welcoming and vibrant places the condition of all our properties. We to live. In 2019 our care focus centred have started the process of reviewing on major improvements at Lamel our sheltered housing schemes and Beeches, Bedford Court and Hartrigg chargeable services, which were due to Oaks. The improvement work included be a focus for 2020. However in light new flooring, decoration of communal of the inevitable impact of COVID-19 areas and soft furnishings as well we anticipate some delays, and work as a new coffee shop and updated will continue on these through 2020. reception area at Hartrigg Oaks. DEVELOPMENT Each year, we receive more than We have completed phase one of our 10,000 repair requests from new development New Lodge in New residents and tenants. To support Earswick as outlined on page 19. us in delivering more efficient and 2019 also saw the launch of our responsive repairs services, we have development strategy outlining our launched a new contractor framework ambitions and objectives for the next resulting in inhouse savings and 10 years. improved customer service. By the end of 2019, we had built 482 Our property services team carry out properties within our new community a modernisation programme annually, of Derwenthorpe, of which 41% are and during 2019, we invested more affordable homes. We plan to start than £1 million: building another 40 new homes at • 36 new kitchens and bathrooms Derwenthorpe in 2020. were fitted,
| 24 “Joseph Rowntree Housing Trust supported us to get what we needed... They made the storage room into a bedroom, they did that as there might be a carer staying... Joseph Rowntree Housing Trust got us in as quickly as possible, fitted the lift as quickly as possible to give a better quality of life. I can’t thank them enough for that, what more can you ask?” JRHT resident, Derwenthorpe
A CLOSER LOOK AT DERWENTHORPE Derwenthorpe is an inclusive and All properties are built to Lifetime diverse community of homes which Homes standards, to enable residents have been specially designed for to stay in their homes should they sustainable living. become less mobile or physically We have already successfully created impaired. There is a shortage of a new community in Derwenthorpe adapted properties for people with which is situated approximately three disabilities in York, and a major miles from the city centre of York. The achievement of Derwenthorpe is new community has provided much- being able to allocate and adapt homes needed new decent and affordable for people with disabilities or health homes in the city. It has attractive, conditions. affordable, eco-friendly family homes in a digitally inclusive and mixed- tenure community.
25 | Performance in 2019
Delivering good performance in key services, housing and communities, service areas was a particular focus development and asset management. of the organisation in 2019. JRHT The scorecards mirror our four performance is monitored by external outcomes as well as providing regulators such as the Regulator assurance on regulatory compliance of Social Housing, Homes England, and quality of the services provided. and the Care Quality Commission, Alongside this, we conduct regular throughout the year. internal audits across our business During 2019, we have focused areas which mirror audits by our on developing our approach to external regulators including CQC’s monitoring performance which has Key Lines of Enquiry and RSH seen the introduction of scorecards Standards. for each business area – care
PERFORMANCE WITHIN CARE
CQC overall Last Report rating* inspection published Hartfields Domiciliary Care Good 27 March 31 May 2017 Agency 2017 Independent Living Service Good 13 September 23 October – East Yorkshire 2018 2018 JRHT – Independent Living Good 3 September 13 October Services 2018 2018 Lamel Beeches Requires 28 February 25 September improvement 2019 & 7 2019 March 2019 Olive Lodge Good 13 June 13 August 2019 2019 Plaxton Court Domiciliary Good 5 June 2018 21 July 2018 Care Agency Red Lodge, Requires 15 May 2019 4 July 2019 Note that New Lodge was reg- improvement istered with CQC in December 2019 and the rating transfers from Red Lodge The Oaks Requires 25 April 2019 25 June improvement 2019
*Based on 14 February 2020 data. For the most up-to-date date please visit www.cqc.org.uk.
| 26 Care Quality Commission (CQC) Care settings key performance During 2019, four of our care settings indicators were inspected by the CQC. The During 2019, the newly formed care outcome of all CQC inspections are leadership team created a set of key detailed in the table above. performance indicators (KPI) which In 2019, five of our care settings were feature within the care scorecard. rated as ‘good’, with three being rated The KPI’s are based on CQC lines of as ’requires improvement’. enquiry for healthcare services which The three care settings rated as are: ‘requires improvement’ all have • safe comprehensive action plans in place to • effective address areas of concern raised by the CQC. • caring In 2020, all our care services will • responsive be re-inspected following the re- • well-led. registration of our care services Additionally, JRHT has added a sixth which was required and linked to KPI focusing on financial sustainability incorporation and our change in status which includes occupancy; income; to a community benefit society. staff/agency; costs and arrears. As a result of this change to our An internal audit of KPIs was included Governance arrangements, our in the 2019 programme and the care previous profile has been archived scorecard was reviewed as part of this. on the CQC website. However, these This independent review confirmed ratings continue to be displayed on the that the KPIs identified by the team JRHT web site and CQC inspections are appropriate. Areas of best practice will be completed within 2020 subject including registered managers’ to any COVID-19 restrictions. knowledge of KPIs were noted. Areas Little Rowans, our pre-school, for improvement, including enhancing remained rated as ‘good’ by Ofsted. data validation processes, were also Following a successful management noted and these are part of ongoing agreement with New Earswick Primary work for 2020. The key performance School (NEPS) in 2019, the school indicators are focused on improving was transferred to them in January the services delivered across our 2020. care settings and this has been the key focus for 2019 (with particular focus on the three residential care services which were rated as ‘requires improvement’ in 2019, and areas of the services which have encountered regulatory breaches unrelated to inspections).
27 | During 2019, we have made • Successfully managing sickness and significant progress on embedding performance across our services. This stability, leadership, training and has resulted in a significant reduction governance across our care services in sickness across the organisation by: (from nearly 8% in December 2018 to • Embedding a care leadership 3.59% in December 2019) team and the development of care • Continuing a recruitment drive to strategy, which will be rolled out in ensure we have a healthy and engaged 2020 and will shape and drive further workforce who are able to provide improvements across our services. personalised care and support. • Formation of a care sub committee • Completing a comprehensive to provide assurance to board and exercise to benchmark our residential focuses on regulatory and compliance and nursing fees against other similar issues within services. care providers which has provided us • Introducing permanent registered with the information to implement CQC managers across all our care changes in fees from April 2020. This settings services. will help stabilise our financial position. • Reviewing our current training and • Further establishing the care development. As a direct result, we managers group and governance have devised a leadership in care group which are actively involved in programme, which takes places over approving all care policies. six months and is facilitated by an Other notable achievements are external trainer. In 2019, 23 team the positive transition of residents members began training and in 2020 from Red Lodge to New Lodge, and we expect a further 26 individuals to successful delivery of communicating undertake the course, at which point the changes in residential and nursing all senior leaders in care will have been care fees. through the training. • Implementing the nursing associate pilot. • Successfully delivering comprehensive action plans to address breaches and compliance concerns raised by the CQC, as well as the introduction of the monthly care scorecard, which provides us with valuable insight into delivery of services. • The introduction of a robust care management system ‘Nourish’ which has supported with regulatory compliance.
| 28 HOUSING AND COMMUNITY SERVICES Provision of affordable housing is a Income management core activity for JRHT, and we are As a social landlord it is important that committed to consistently improving we balance our approach to collecting our services around the following income owed while preventing our areas: residents and tenants from being • income management, forced into poverty. We successfully • repairs and maintenance, manage this through a balanced, • managing empty properties, timely and effective scrutiny of rent • providing customer services. and service charges to minimise the accrual of debt and ensure residents Sales and lettings have access to money and benefits We offer a range of tenures which advice to maximise household enables residents and tenants the incomes. In 2019, as the table flexibility to move into a tenure which ‘Current rent arrears 2015–2019’ on is affordable and fits their financial page 31 illustrates, JRHT delivered the circumstances. This flexibility is following headlines on rent collection reflected in the range of tenures and arrears management: offered for the sales and re-lets in • reducing rent arears year on year for 2019: the last five years • 44 rented properties • lowest ever year end rent arrears • one conversion sale to rent • reduction in the number of arrears • four conversation rent to sale cases to half the level recorded four • 25 new properties at Derwenthorpe years ago. • 11 requiring major works • 12 mutual exchanges • 34 sales including 27 shared ownership sales.
29 | Benchmarking
HOUSEMARK BENCHMARK DATA We will continue to use HouseMark as our primary tool for benchmarking our performance with traditional housing associations in northern England and Scotland with stock numbers between 1000–5000 properties. Based on 2018/2019 data we achieved top quartile for performance for two of the key service cost indicators: Top cost per property (CPP) of housing management and total CPP of responsive repairs and void work. See below.
98.8%
*Cost per property
REPAIRS The average number It is positive to see the further reduction of responsive repairs in total CPP of responsive repairs, down per property has also a significant amount to fallen considerably to from £526 £839 taking us very close to the best this reflects the changes made in 2018 performers where top quartile is to the ways we work. 2.7 repairs per property.
VOID MANAGEMENT RENT ARREARS In addition to We continue to make progress, holding a very low moving out of bottom quartile with empty stock level performance on current tenant rent at just 0.2% for arrears as a the year, the re-let time remains well % of rent due of within top quartile at just eight days, where top quartile is 21.1 days. just above Q3 performance of 3.67%.
| 30 CURRENT TENANT ARREARS 2015–2019
Current tenant arrears 2015 2016 2017 2018 2019
Arrears as a % of rent receivable 3.89 3.18 2.93 2.83 2.65
Number of arrears cases 606 436 408 340 325
% of tenancies in arrears 27 19 18 15 14
Repairs The repairs service is provided by our appointments kept and first-time fixes in-house building services team and is are now both above 95%. supported by private contractors. We are also within top quartile for The number of repairs carried out in the average time taken to complete a 2019 was just over 10,000 which is repair, which is 5.5 days. 2,000 fewer than in 2018, reflecting Appointments First time fixes a higher focus on planned works and the modernisation programme. Top Top The improvement in performance quartile quartile across every indicator reflects the 93.74% 80% substantial and continuing impact of the new ways of working affected in 2018. Particular improvement has been seen in the average number JRHT JRHT of days taken to do a repair, which 96.52% 95.61% has fallen from 7 days to 2.75 days;
2019 Repairs indicators 2018 2019 targets Responsive repairs completed on time: 24 97.48% 98% 98.47% hrs (%) Responsive repairs completed on time: 94.40% 98% 96.09% urgent 7 days (%) Responsive repairs completed on time: 94.53% 100% 96.00% routine 31 days (%) Appointments kept – responsive repairs 91.65% 99% 96.52% grades 3, 4 and gas (%) First-time fixes – all responsive repair 90.50% 90% 95.61% grades (%) Average time taken to complete a repair – all responsive repair grades (number of 7 days 5 days 2.75 days days)
31 | Management of empty properties Customer services 2019 The customer service team provides In 2019 we continued to sit within the a single first point of contact for all top quartile of housing associations our services. During 2019, the team for property re-let days, with a received more than 40,000 calls. HouseMark top quartile figure of nine days.
Year 2018 2019 Telephone calls 40,353 40,117 Emails 11,365 11,551 Footfall 9,933 8,444
Complaints JRHT complaints 2019
In 2019, 84% of complaints received 2% were completed within the response timeframe and only seven complaints 6% moved beyond stage one. A comprehensive lessons learnt 27% exercise was completed which identified opportunities and 65% efficiencies to improve the process of how we deal with complaints. As a direct result, we have updated our policy as well as communications sent to residents and tenants. • Housing services • Care services JRHT 2017 2018 2019 • Development and Asset TOTAL 129 138 139 Management • Other
The pie chart above and table outline complaints received in 2019 by business area.
| 32 STAR satisfaction survey HouseMark STAR (Survey of Tenants and Residents) is the housing sector standard for consistently measuring comparable customer satisfaction across housing providers, and the survey is sent to our residents. The table below compares satisfaction from our 2016 STAR survey to that of 2018. Green indicates an improved position and red a worsened position. While it is pleasing to note areas of improvement for leaseholder satisfaction, some indicators remain low and continue to be priorities for further improvement.
Renting Leaseholders
2018 2018 +/- 3% +/- 3% Satisfaction measure 2016 2016 margin margin of error of error
Overall satisfaction with the 87 84 72 65 housing service (%) Overall satisfaction with the 87 83 90 89 quality of the home (%) Satisfied with the neighbourhood 87 85 91 90 as a place to live (%) Satisfaction with opportunities to 69 73 65 59 make views known (%) Satisfaction that rent is value for 85 89 N/A N/A money (%) Satisfaction that JRHT provides an efficient and effective 76 81 57 59 service (%) Satisfaction with how JRHT deals 73 77 56 63 with enquiries (%) Satisfaction with the way JRHT deals with repairs and 81 83 52 61 maintenance (%)
The next survey is planned for 2020 which will incorporate the new framework as outlined by HouseMark.
33 | DEVELOPMENT AND ASSET MANAGEMENT PERFORMANCE 2019 We continue to perform well The board also took the opportunity across our development and asset to establish a development sub- management. committee to ensure oversight of the strategy. Development strategy and targets In 2019 The JRHT board adopted a Within the year JRHT built a total 10 year development strategy which of 140 new properties in 2019 in will see the organisation build up to Derwenthorpe and New Earswick. 1,000 new homes over the next 10 years.
Properties built in 2019 Rental Shared Properties Changes Care properties ownership built for to existing Total suites built built full sale properties
Derwenthorpe 23 10 - 2 - 35
New Lodge 47 10 45 - - 102
Existing - - - - 3 3 properties
TOTAL 70 20 45 2 3 140
We continued to work closely with In July 2019, we secured planning Homes England: during 2019 we were permission from City of York Council awarded £688,729 to support our to build a further 40 family homes at work within Derwenthorpe. Derwenthorpe. The contractor ‘Tolent We successfully delivered phase Living’ was due to begin the work in one of our new development ‘New Spring 2020, however in response Lodge’ within New Earswick which to COVID-19 the Development included 57 one- and two-bedroom Committee has made a decision to apartments as well as a 45-bed pause entering into contract. This residential care home. In 2020, we development will remain under review are continuing to work with our as the external environment changes. contractor Wates to deliver a further During 2019, we completed 11 sales 48 apartments for over 55-year-olds including Stape School and both as well as completion of the car park, Melius homes at Derwenthorpe which landscaping and further community resulted in generating £864,900 of facilities including a children’s play income. area.
| 34 An enabling environment processes, and driven down the cost During 2019, central services within of recruitment through better use JRF/JRHT made significant progress of online advertising platforms. We towards their outcomes of creating are committed to ensuring that all an enabling environment for JRF and our internal services add value to the JRHT, delivering the people strategy organisation. and providing efficient and effective A review of our procurement services central services. during 2019 identified opportunities We migrated our technology to support managers in delivering infrastructure to the cloud which even more value for money, with has provided more efficient access some significant contracts already to systems for staff as well as giving in place. Informed by our users and much greater technical security in stakeholders, 2019 has also seen response to ever increasing cyber significant improvements in our threats. We have also delivered full financial planning and reporting across enterprise mobility, by providing JRF and JRHT and externally, enabling access to email and core systems for decisions to be made promptly, all staff through a web landing page. A business cases for new housing newly created business change team developments to be developed more has led our work to develop a culture accurately, and high-quality financial of continuous improvement through information to be published in a working with teams to deliver change fraction of the time it took in 2018. and embed learnings from our work. Health and safety Our annual people plan has seen us Health and safety remains a priority systematically embed our values and across the organisation and in 2019, behaviours that were launched in the audit programme has continued 2018, making them an integral part to focus on key areas of compliance, of our recruitment processes, staff carrying out new audits and reviewing reward and recognition schemes and previous audits. This work is across performance management framework. all five key areas – gas, electrical, This has been highly successful with asbestos, legionella and lifts. staff reflecting in our staff survey in We achieved 100% completion on our the autumn that they understand and cyclical compliance programmes for align with our values and behaviours. our gas, electrical, lifts and Legionella We have also made significant work. External audits carried out by progress with our equality, diversity Corgi services on our gas work were and inclusion plan. Our campaigns, very positive with 100% compliance such as a focus on Black History on the quality of the technical work Month and International Day of on site and 93% compliance on People with Disabilities have been well paperwork – well above the national received by staff, and in December we average. secured Disability Confident Employer accredited status at the first level. A major piece of work for early 2020 is the replacement of the lift at our There has been ongoing focus on sheltered scheme at Dower Court value for money across our central in York. Inevitably this will cause services during 2019. For example, we significant disruption to residents and have upgraded our invoice processing we are working closely with them and system by introducing document the scheme manager to address access management leading to more efficient issues for the duration of the work.
35 | As part of the overall approach to as Plaxton Court has been completed fire safety compliance at our sites, with Hartfields planned in for mid- there have been significant works 2020 subject to access following the undertaken in the last three years, lifting of the COVID-19 lockdown with the major fire compartmentation restrictions. programme now complete. Work on the property insurance On the 9 June 2019 there was a fire schedule in preparation for the at a non-JRHT property called Garside insurance renewal has now been House in Barking, East London, where completed and this will support the a timber cladding and balcony system re-evaluation of property sizes to (ThermoWood) was investigated and ensure adequate individual insurance found to be the cause in accelerating levels are quoted. and spreading the fire due to its low Weekly operational health and safety level of fire resistance. In July 2019 compliance meetings continue with a the Executive Director for JRHT monthly overview compliance report created a project group including the being produced, and by early 2020 Deputy Director of Development and all managers will have completed Asset Management, Head of Health the IOSH managing safely training and Safety and Head of property to as part of the current strategy investigate whether JRHT had stock around improving compliance. which had any properties with similar Work to implement risk and CoSHH timber cladding or balcony systems assessments via the electronic health which could pose an increased risk in and safety management system terms of fire safety. was completed at the end of 2019, JRHT has undertaken a review and producing increased visibility of risks identified 792 properties (434 single and compliance. dwellings) as having either balconies, The focus of the care services cladding or both. The 434 single partnering agreement has been on dwellings relate to Derwenthorpe, New Lodge in Q4 of 2019 with fire with the vast majority of the others safety and staff training taking priority split across our extra care schemes over other sites. Once fully occupied, at Plaxton Court (69 dwellings) further audit and inspection will be and Hartfields (242 dwellings), with rolled out across the other care sites schemes such as Elm Tree Mews, in partnership with care service quality Dormary Close and Bedford Court and compliance. responsible for the remaining properties that have cladding or All six JRHT catering sites achieved balconies that contain timber cladding. five-star environmental heath audits for the first time in 2019. This is the Through the investigation it was highest score possible. concluded that the majority of the cladding was in low quantities or situated in low-risk areas on the buildings and could be dealt with through a planned approach involving fire-retardant staining/ painting or replacement over the course of our planned maintenance programme. This will be planned in from 2020. Works at the highest risk sites such
| 36 Value for money
We believe that value for money (VfM) is about making our people, money and properties work as well as possible for our residents. Value for money is at the heart of everything we do and is a key area of commitment from the JRHT board as well as a fundamental area that the regulator of social housing is concerned with. EMBEDDING OUR APPROACH TO VFM Throughout 2017 and 2018, the • Effectiveness – delivering a better organisation had a comprehensive service or getting a better return for programme to deliver strategic the same amount of expense, time or change across JRHT, known as effort. Firm Foundations. It was agreed in Strategic direction and leadership on Q1 2019 that this programme of VfM is provided by our board and work would be closed and any new trustees through their involvement in initiatives would be incorporated into approving and monitoring the delivery the JRHT costed business plan. of the business plan and financial Value for money became a key part performance. of the JRF/JRHT strategic plan in Our colleague-led Value for Money 2018. We sought to set standards Group sits across the organisation and targets, embed leadership from alongside a framework which sets out the board and executive and involve how we will deliver value for money. colleagues, tenants and residents in achieving these. Alongside internal measures, the Tenant and Resident Scrutiny Our approach focuses on establishing Panel play a key role in continuing a narrative for value for money that is to monitor costs and performance, based on: providing a clear insight into the • Economy – careful use of resources VfM of an activity from a resident to save expense, time or effort. perspective. The recommendations made by the panel to facilitate the • Efficiency – delivering the required level of service for lower cost, less re-letting of void properties were time or less effort. implemented in 2019 and this is a service area housing and community services continues to achieve a high level of performance in.
FEEDBACK The most recent staff survey (2019) • The STAR survey of our tenants illustrates that 75% of staff are ‘aware (2018) is also encouraging, with of the approach to value for money. 89% of renting residents indicating that they think their rent is value for money.
37 | VFM IMPROVEMENTS DURING 2019 JRHT has significant supplier costs In 2019 the Building Services around care services. In 2019 a tender team moved to compiling job process was completed for a single requests by location to optimise supplier of fresh vegetables across all routes for Scarborough and Leeds, catering sites, and as a result we are demonstrating clear fuel savings. expecting to achieve annual savings of They also updated the Travis Perkins 3% (£20,000) on food costs and at the contract to minimise on cost which same time improve quality of produce, has led to a reduced percentage across variety and service. all third-party procurement. 2019 has also seen the The implementation of a contractor implementation of Nourish which is framework for the provision of supporting us to achieve regulatory repairs and planned maintenance compliance. This system allows us to work ensures that as an organisation digitally record the care that we deliver we have the capacity to fulfil budget in the moment. This system saves requirements and decent homes care staff valuable time and allows us standards. J Mark has been awarded to react and respond immediately, the contract and it is anticipated that ultimately delivering more one-to-one between £400,000 and £700,000 time between carers and residents. of services may be managed through With the closure and plans to the framework. This framework will demolish Red Lodge following the run alongside our membership with transfer of residents to New Lodge, Efficiency North procurement group, an assessment of the furnishings in allowing JRHT to adopt a mixed the empty building was made. There procurement approach for various were many items that were in good elements maximising the appropriate condition including dining tables, arm- contract and value for money. chairs and wall canvasses. These have The health and safety fire manager has now been installed at Lamel Beeches replaced fire extinguishers across all and can be enjoyed by residents in our sites which are lighter and easier for communal areas. staff to use. The new equipment does Before closure Red Lodge had recently not require annual testing resulting installed a new fob entry system, to in a saving of approximately £70,000 ensure full compliance with CQC. The over 10 years. We are working with hardware system was removed once other organisations to rehome our old residents were transferred and will be extinguishers. installed at Lamel Beeches in 2020. The customer services team has This system, along with the furniture, moved to DocMail for large-scale demonstrates a considerable saving to communications to residents; this is Lamel Beeches as well as an excellent incredibly cost effective as it removes example of re-use and recycling. The the need for postage, is time efficient financial savings associated with the and environmentally friendly. The re-use and recycling of furnishings change has become organisation-wide and the fob entry system have been with other departments using the estimated as £25,000. system.
| 38 OPERATIONAL METRICS DURING 2019 Financial performance always As detailed earlier in the report, we needs to be considered against monitor our performance to peers operational metrics – for example, in terms of operational indicators good financial performance is through participation in the not VfM if our services do not meet voluntary HouseMark benchmarking. the expectations of our residents, Our chosen peer group is Northern colleagues and other stakeholders. England and Scotland Traditional Our ability to provide effective Housing associations with between customer service, quickly re-let void 1,000 and 5,000 properties. properties and maintain low levels of arrears helps to have positive and broad impacts. Providing an effective maintenance service both in cost and the time taken to do repairs are key operational indicators linked to VfM.
39 | VFM KEY SECTOR INDICATORS FROM GLOBAL ACCOUNTS 2019 Nine VfM performance indicators Although our individual circumstances have now become the standard for dampen our financial performance, it the sector, with data provided by the has been recognised that there are regulator on an annual basis through opportunities to improve our finances its global accounts report. This focuses without compromising our values and on providers which have more than standards. As such, it was pleasing to 1,000 units. This and other reports see an improvement in a number of acknowledge that there is a wide the metrics in 2019. variety of performance across the Comparing actual performance to VfM sector due to factors like different targets helps illustrate the extent to business models, location and size of which JRHT is achieving its strategy. different providers. Our combination As expected, reinvestment levels and of care and community development the supply of new social housing show as well as housing, while not unique, the delivery of the first phases of does makes it more challenging to find New Lodge which included a 45-bed comparable organisations and identify residential care home and 57 one- a meaningful peer group. and two-bedroom apartments for JRHT’s performance against eight people aged over 55. of the nine VfM metrics is set out in Surplus compared with the level of the table on page 42. The indicator interest payments (EBITDA MRI using for ‘new supply non-social’ is not the Regulatory definitions) increased relevant to JRHT so is not reported significantly compared to 2018 and in the table. The peer group is those was only marginally below the target housing providers from the published for the year. The increase reflects an global accounts data with the following improved operating surplus of £3.1 characteristics: million compared with £1.6 million in • located in North West, North East, 2018 and a reduction in capitalised or Yorkshire and the Humber major repairs of £0.9 million. The • traditional housing providers (i.e. reduction in repairs was anticipated excluding large scale voluntary as was a consequence of a significant transfers) programme of window replacements in 2018. • providers with greater than 5% of properties held for older people. Although only a few specialist providers have a higher cost per This gives a peer group of 23 property than our £8,300 per unit, providers. this was an improvement of £800 While the organisation’s financial per property compared with 2018 performance is weaker than its peer and £200 per property better than group for almost all of the metrics, target. As has been reported in prior this is, in part, as a consequence years, the main contributory factor to of conscious choices based on our our high cost per property is our care mission and values. We are in high- services. The average number of care cost sectors, pay our staff at least the beds in 2019 was 130 and operating higher voluntary Real Living Wage costs were £5.4 million – this equates and have chosen to keep our rents at to more than £40,000 per bed. a level much lower than an affordable rent policy.
| 40 The target of an overall operating margin for 2019 of 7.2% was met, an improvement on the margin achieved in 2018 of 3.8%. Disappointingly, the operating margin (social housing) was below expectations which reflected the costs of embedding stability, leadership, training and governance across our care services. The improvement in return on capital employed (ROCE) reflected the increase in the operating surplus against a broadly similar value of total assets less current liabilities. Part of JRHT’s standard performance management process is to set VfM targets for the following year. For 2020, however, financial performance will inevitably be impacted by the COVID-19 pandemic with income expected to fall and costs expected to rise. At this stage of the pandemic, the economic impact on 2020 is difficult to accurately assess so the decision has been taken not to set VfM targets for this year. While this would normally be a regulatory expectation, the regulator of social housing has recognised that ‘reporting on VFM in line with the regulatory standards could prove challenging in the current circumstances as organisations are having to make rapid decisions about how to reprioritise the use of their resources’. The regulator has further stated that it does ‘not expect providers to spend time reflecting the impact of the current circumstances in their VFM commentary’.
41 | 2018 2019 2019 Latest peer Indicator actual actual target group median
Reinvestment (%) Investment in properties (existing stock as well 10.2 9.8 6.7 4.4 as new supply) as a percentage of the value of total properties held.
New supply social (%) Number of new social housing that have been acquired or 0.4 5.6 5.4 0.7 developed in the year as a proportion of total social housing units owned at period end.
Gearing (%) How much of the adjusted assets are made up of debt and the degree of dependence on debt 38 38 40 36 finance. It is often a key indicator of a registered provider’s appetite for growth.
EBITDA MRI (%) is a key indicator for liquidity and investment capacity. It seeks to measure the level of surplus that a registered 52 132 143 197 provider generates compared to interest payable; the measure avoids any distortions stemming from the depreciation charge.
Headline social housing cost per unit (£000s) assesses the headline 9.1 8.3 8.5 3.7 social housing cost per unit as defined by the regulator.
| 42 2018 2019 2019 Latest peer Indicator actual actual target group median
Operating margin (social housing) (%) demonstrates the profitability before exceptional expenses 1.5 (0.6) 2.5 24.3 are taken into account. Increasing margins are one way to improve the financial efficiency of a business.
Operating margin 3.4 7.2 7.2 23.8 (overall) (%)
Return on capital employed compares the operating surplus to total assets less current liabilities and 0.9 1.6 1.3 3.2 is a common measure in the commercial sector to assess the efficient investment of capital.
Note: there is also an indicator on new supply non-social which is not relevant to JRHT so is not reported here.
43 | VFM IMPROVEMENT PLANS FOR 2020 A key area for VfM work in 2020 residents and customers. The catering focuses on costs within care and team will also focus on developing new several areas are subject to attention income streams particularly in public including: and extra care catering. • Care fees – embedding an annual In 2019 the Government published review of care fees based on market its consultation on the Future Homes testing to ensure that while our care Standard, seeking to improve the fees remain in the lower quartile energy efficiency of new build homes of those charged they are closely and remove the reliance on fossil linked to the costs incurred by the fuels. The aim is that new homes will organisation. not be connected to the gas network • Use of agency staff – to reduce the from 2025. JRHT is already working overall use of agency staff in our care towards this with an ambition to services. look at alternatives to gas heating on any development before 2025 on a • Recruitment – to recruit more scheme by scheme basis. permanent staff. We will approach our existing stock • Care voids – to minimise empty care by continuing to install high efficiency rooms. gas boilers while at the same time • Sales planning – to achieve sales exploring alternatives to gas wherever targets. possible. In addition, heating and hot water systems will be low-carbon • Restructure of our Housing and (low-energy) technologies such as Community Services Management ground-source, or air-source heat Team – this process is aimed pumps that capture heat from the at strengthened management ground or the air. arrangements in the department and in particular enabling the team to be JRHT has a good understanding of more effective in delivering against our cost drivers following detailed JRHT’s strategic plan and stated work during 2019 focussed on outcomes. care services. Work is planned for 2020 to deepen and broaden this Further work on improving food understanding, particularly in relation supplies has begun. A tender process is to cost per unit and how this supports underway for all groceries and frozen our decision-making around the food (and following this a meat tender) services we provide. This work will across all catering services. also build on the significant progress By awarding our business to one made in 2019 on scorecard metrics supplier for each of these areas we and reporting and identify specific would seek to see similar VfM benefits VfM metrics that align with JRHT as delivered by the fresh vegetable outcomes and priorities. supplier change; standardising costs across all sites, offering more variety and value that we can pass on to
| 44 45 | Risk
Trustees own risks and are responsible • Any incident that risks the for setting the risk appetite of the credibility of, and trust in, the organisation and all staff have a organisation. A well-developed responsibility to identify and manage strategy and business plan ensures risk throughout JRHT. The Risk that our activity is strongly aligned Management Strategy is updated and to our vision and outcomes. We have approved by trustees annually. close relationship management with It is the responsibility of the executive our stakeholders by the external to identify the corporate risks, which affairs and media teams with a are reported to the Audit and Risk dedicated JRHT communications Committee, and reviewed at monthly manager now in place. Risks arising directors' meetings. The corporate from JRHT activity are reported to the risks are those which the executive JRHT board by the executive director. collectively monitors. Operational risks • The trustee board may not are monitored by the senior leadership exercise proper challenge and team of JRHT and escalated to the scrutiny of the strategic and corporate risk register as needed. business plans due to inappropriate The new risk register format structures and/or skills and introduced in 2018 was further experience. JRF and JRHT trustees rolled out in 2019 with a specific meet as distinct, separate bodies. JRHT operational risk register being The Audit and Risk Committee meets introduced. These JRHT operational on a regular basis and governance risks were reported quarterly to the is centrally coordinated, including JRHT board during 2019. annual reviews of terms of reference and effectiveness of each committee. Each risk is assessed for its likelihood We have effective and targeted and its impact both before and after recruitment of trustees to bring controls (‘inherent risk’ and ‘residual particular skillsets, as well as ongoing risk’). Controls are identified together development for committee members with responsibility for management of to ensure their knowledge is current. each risk. Where necessary, actions to All trustees have an annual appraisal. improve the management of the risks We have a governance handbook are identified. which is provided to all trustees and JRHT has identified the following independent members, which is a major risks which are categorised guide to their role and responsibilities under Reputation; Compliance and and outlines our expectations of Regulation; Finance; Investment; Social them. We do, however, recognise the Investment; Operational/Service challenges the structure presents, and Delivery; Property Developments; so are becoming incorporated as two Research; Solutions; Other Major distinct legal entities effective from 1 Change Activities; and People and January 2020 to address the issue of Culture, in a corporate risk register unclear structures. shared with JRF.
| 46 • Failure to comply with any and business continuity plans have regulators’ requirements. This risk is been successfully implemented as we mitigated by regular communication continue to deliver frontline services, between the JRHT executive director and our office based staff mobilised to and the head of governance to work from home where possible. advise of serious incidents. There is • JRHT does not deliver the required an operating compliance framework financial performance improvements in place in JRHT. Compliance roles in the JRHT operating surplus. The are now established in care and JRHT board establishes key principles/ property services. Actions arising from expectations for the annual budget- inspections and audits are tracked and setting process including agreement monitored, with progress regularly of a 30-year plan. Overall budget is reported to relevant leadership team tracked monthly by the Executive and committee. Director, Finance Business Partner • Failure to work or behave safely and JRHT leadership team. Triggers that could lead to the death and monitoring are in place for or serious injury, or harm to the key budget actions and targets mental health and wellbeing, of – monitored monthly by JRHT an employee, resident, visitor, leadership team. We have introduced contractor or member of the a projects’ ledger to track spend public or the abuse or neglect of independently of JRHT’s budget lines, a vulnerable resident. The head and a benefit tracker to clearly identify of health, safety and facilities has where we have made savings and oversight of the health and safety growth targets. action plan and procedures, reporting • Failure to comply with GDPR, to the executive monthly and and other UK laws, sector specific escalating sooner if needed. Policies regulations and contracts relating are in place covering safeguarding, to data and technology. We have vulnerability and health and safety. A information governance and security staff training programme also exists policies in place alongside an which includes health and safety information governance framework. matters starting at staff induction. A We have a dedicated Information risk, quality and compliance group is security manager, who works closely in operation across teams which can/ with the sector specific compliance does escalate risks to the corporate managers. Data protection training is risk register as required. mandatory for all staff. • Operations may be disrupted • Lack of departmental readiness by external factors not within (business continuity plans) to our control, (including threat of deal with unplanned outages . A corporate emergency pandemic) and emergencies. A corporate protocol is in place with local disaster emergency protocol is in place with recovery and business continuity local emergency plans in place across plans developed at department and housing and care. Emergency contact operational level. An incident response details for staff are updated in our HR team was established to deal with the system. emergency response to coronavirus
47 | • Increase in the number of staff • JRHT breach of loan covenants. leaving the organisation and Financial and business plans are in difficulty/challenges in recruiting place to mitigate this. Trustees and the due to geographical issues, labour JRHT board have oversight, scrutiny market or skills shortages. Volume of and decision-making responsibilities. turnover and reasons for leaving are We undertake stress testing of monitored monthly by the executive. financial plans to extreme conditions. A recruitment manager is in post, We have regular dialogue with our bringing specialist knowledge to the lenders. We do RAG (red, amber, organisation and with a specific focus green) assessments of unencumbered to manage a recruitment campaign. stock for loan security purposes and External benchmarking is undertaken we keep a schedule of loans in place as required to identify appropriate to track compliance requirements. salary level in line with our reward We maintain a regular dialogue with strategy. lenders. A detailed treasury review was conducted by an independent • Failure to deliver strategic plan expert and shows current treasury and costed business plans due to status as good. We retained treasury work overload, especially stretch management advisory service with and capacity in the executive team. The project management office and Centrus, in place effective from 1 business change team are dedicated September 2019 for a trial one- resources to deliver, report and year period. New loan agreements measure initiatives that support effective 1 January 2020 are in the strategic and business plans. place for all lenders in incorporated We established a joint approach to JRHT, including a consolidated Lloyds business planning process with finance agreement. and projects from the 2018/2019 A specific risk register containing the cycle. We have quarterly director risks relating to the UK’s exit from the reviews of project capacity to ensure EU is in operation and is shared with change and resource levels are at the JRF. It continues to be monitored by desired levels, and a review of the a cross-departmental working group JRHT financial plan has informed the during the transition period, which order of priority of JRHT projects. escalates matters to the executive through the Director of Corporate • Staff do not have the skills and/ Services as needed. or experience to fulfil their roles effectively and to the right quality. A A specific risk register has also been learning and development programme developed to capture risks associated addresses skill gaps. A learning and with the coronavirus threat. This is development section of the ‘My regularly reviewed and updated by Review’ process instigates learning executive directors from JRHT and needs, assessment and subsequent JRF with actions monitored and planning of training. Coaching and completed accordingly. mentoring skills are in place to support The trustees have considered the risks personal development. to which the organisation is exposed and have taken appropriate steps to mitigate these risks, as described above.
| 48 FUTURE TARGETS
Part of our performance management process is to set targets for the key indicators for VfM based on our strategy and financial plans. These targets are shown in the table below with a comparison to this year’s performance.
2019 2019 Targets Indicator Difference actual target for 2020
Reinvestment (%) 6.7
New Supply Social (%) 5.4
New Supply Non Social (%) 0
Gearing (%) 40
EBITDA MRI1 (%) 143
Headline Social Housing cost 8.5 per unit (£000s)_ Operating margin (social 2.5 housing)(%) Operating margin (overall) 7.2 (%)
ROCE 1.3
49 | Internal controls assurance
The trustees recognise that • The introduction of a new JRHT establishing an ethos and culture operational risk register, to be truly at JRHT that values each individual dynamic and enable the escalation and and encourages and supports staff de-escalation of risks throughout the to use their skills and experience to organisation. further JRHT’s mission and outcomes • Close working between the finance is important to support an effective team and JRHT leadership teams system of internal control. to improve forecasting, developing The trustees acknowledge that they a clearer picture of financial risks, are responsible for JRHT’s system opportunities and the impact of these, of internal control and for reviewing as well as a more detailed view of its effectiveness. The Audit and Risk financial performance. Committee, which reports to trustees, • A continued focus on Value for is responsible for examining and Money (VfM) to embed efficiency, reviewing all systems and methods of effectiveness, and economy in our financial and non-financial controls ways of working. and ensuring that JRHT complies with best practice in governance Our internal auditors PwC conducted and the approach to internal audit. a full and comprehensive programme Trustees recognise that the system of internal audit during 2019. The of internal control is designed to programme was based on a robust manage rather than eliminate risk and risk assessment and was agreed by can only provide reasonable and not both management and the Audit and complete assurance against material Risk Committee. High risk findings mis-statement or loss. The Audit relate to medicines management at and Risk Committee has received some of our care sites: this was also the executive’s annual review of the identified during CQC inspections. In effectiveness of internal control for response to this we have increased JRHT and the annual report of the capacity within our Care Quality and internal auditors. Highlights of 2019 Compliance team, introduced a new include: medicine management policy, and have specific improvement plans in • An increased programme of internal place where required. Medication audit with the risk level of findings management has also been escalated on a downward trajectory from the as a key and enduring risk with previous year. additional resource being planned for • A review of the full spectrum of 2020 to facilitate the introduction health and safety and other high-risk of an electronic medication areas such as information governance administration record system (eMARs). and IT.
| 50 A thematic issue that arose across • Our use of a care management all internal audits was a consistent system across all care sites allowing focus on training requirements and us to record and monitor care plans completion. We will be prioritising and risk assessments, providing a more addressing this in 2020. structured and organised level of care Areas of good practice were also across the organisation. noted which include: We recognise that we have areas of • Voids being actively managed on a high risk that we need to prioritise regular basis and monitoring progress during 2020, however we are of these. confident that these are isolated in specific processes and are not • A low risk report for risk systemic weaknesses across the management, the findings of which organisation. were then shared in a learning zone for housing and community services The principal elements of the internal staff to share learning and good controls framework are as follows: practice. • Annual reports on internal controls • Having clear procedures in place and the control environment are to ensure repair work is raised and presented to the Audit and Risk allocated correctly and on a timely Committee by the co-ordinating basis. director.
51 | • A programme of internal audit, • Detailed annual budgets are undertaken by a fully outsourced reviewed by the JRHT board and independent firm of auditors, is agreed formally approved by JRHT’s trustees. by the Audit and Risk Committee Performance against budgets and which considers all reports. any revised forecasts is reviewed at Management action is agreed and each JRHT board meeting. In line with is monitored by the Audit and Risk regulatory requirements, a 30-year Committee. financial projection is prepared and • A risk management strategy and approved by the trustees including a framework is established. detailed ‘stress test’ of the impact of a number of adverse events taking place • The assets and liabilities register is both individually and concurrently. updated annually and received by the Key performance indicators (KPIs) are Audit and Risk Committee and then identified and reported to the JRHT provided to the JRHT board. board on a quarterly basis, including • An anti-fraud policy is in place comparative performance against that establishes responsibility for other registered social landlords. Falls preventing fraud, and steps to be in performance are highlighted along taken in the event of a fraud or alleged with mitigating proposals. fraud being committed. • Written procedures, including • The Audit and Risk Committee delegated authority for the receives a report at each meeting commitment, approval and payment on any alleged or actual fraudulent of expenditure, have been established activity, including the fraud register. covering financial and non-financial matters. • Policies are established to deal with code of conduct by trustees, • The 30-year plan highlights any committee members and staff, future loan requirements. The trustees disciplinary and grievance procedures, receive reports on funding options anti-bribery and whistleblowing. and approve the terms and conditions of loan finance. Financial updates to • Reports from regulatory and other the JRHT board include performance bodies, including internal auditors, against loan covenants agreed with external auditors, the Regulator for lenders. Social Housing, the Care Quality Commission and Ofsted are • Complaints and compliments are considered by the relevant committee. recorded and reported to the JRHT board on a quarterly basis, with overall • Staff appointments are made on the levels, exceptions, trend analysis, basis of skills and experience required actions and lessons learned reported. for the post. Annual staff reviews are carried out.
| 52 Financial summary
2019 ACCOUNTS SUMMARY
Statement of comprehensive income 2019 2018 £000 £000 Turnover 28,809 26,840 Operating costs (21,804) (21,780) Operating surplus 7,005 5,060 Finance costs, net (1,821) (1,810) Taxation (27) - Surplus 5,157 3,250
Statement of financial position 2019 2018 £000 £000 Housing land and buildings, net book value 135,817 127,593 Hartrigg Oaks 35,943 33,252 Other fixed assets 18,728 16,949 190,488 177,794 Net current assets 1,809 4,181 Creditors due after one year (135,507) (130,342) 56,790 51,633
Income and expenditure reserve 46,106 40,888 Restricted reserve 1,080 1,072 Revaluation reserve 9,604 9,673 56,790 51,633
FINANCIAL PERFORMANCE JRHT’s overall financial performance JRHT also benefitted from greater in 2019 was significantly better than than expected property receipts: both expectations and the previous • Hartrigg Oaks sales contributed £2.5 year. The performance was, however, million to the surplus (£1.6 million in positively impacted by the revaluation 2018). of farmland and associated properties which contributed £2.1 million to • First-tranche shared ownership sales the surplus. Without this, the surplus contributed £0.7 million (£0.2 million would have been £3.1 million. in 2018).
53 | • Other property sales contributed Excluding the revenue and capital £1.2million (£0.8 million in 2018) grants from JRF and the revaluation of Conversely, the level of revenue the farms and associated buildings, the support grant provided to JRHT by surplus would have been £0.9 million. JRF in 2019 fell by £0.6 million from The equivalent for 2018 was a loss of £2.4 million to £1.8 million and capital £0.4 million. grants from JRF fell from £1.2 million to £0.4 million
TREASURY MANAGEMENT Oversight of treasury arrangements is of a small number of former Housing provided by the JRHT board and the Corporation loans, have a fixed rate of trustees with regular reviews of the less than 5%. Although rates have been market, future funding requirements lower than this for some time and are and existing loan arrangements not expected to rise significantly in the undertaken by specialist third parties. short-term, the fixed rates do provide The overall aim is to ensure that there certainty of interest costs. is sufficient loan finance to meet All of JRHT’s fixed-rate borrowing is foreseeable needs. within the loan documentation with No new loan arrangements were put the primary lender. JRHT does not use in place during 2019 as, based on stand-alone derivatives to fix rates of the current long-term financial plan, interest on loans. sufficient funding is in place until 2023. JRHT continues to comfortably meet All long-term debt, with the exception all of its loan covenants.
FINANCIAL REVIEW Like all providers of social housing, the once complete and occupied and an legal requirement to cut rents for four ambitious housebuilding programme years up to 2020 has been challenging over the next decade. particularly as costs have continued to Before the development of the rise. For JRHT, which has historically latest iteration of the long-term had a relatively high cost base and financial plan, the early impacts of generated more modest surpluses, the the COVID-19 pandemic started impact of the rent cuts has inevitably to emerge. The Regulator of Social been more significant. Housing has also written to chief The VfM section of the report executives of registered providers provides more detail in respect of announcing a number of measures to the progress being made to improve relieve the regulatory burden during financial performance. The impact these particularly challenging times. of actions already taken alongside It has delayed the requirement for future initiatives to improve financial the submission of long-term plans performance were embedded (forecast financial return) until later in within the long-term financial plan the year given the current uncertainty. approved by trustees in June 2019. It confirmed that it will keep the This plan incorporated the positive situation under review but does not contribution that New Lodge will make expect to be requesting that forecast
| 54 financial returns be submitted before Each individual stress test was the autumn. modelled before combinations were Although the 2019 long-term plan did chosen to show the impact of multiple not identify a pandemic as a possible stresses occurring concurrently. An scenario that should be modelled, all-encompassing ‘perfect storm’ more comprehensive stress testing stress test was also created. than in previous years was undertaken. The output of the modelling and This included the following stress stress testing was shared with tests: trustees who were asked to consider the actions that could be taken if 1. Economic stress test – base interest rates at 4.0%, CPI inflation any of the scenarios arose. A wide peaking at 4.5% and house price shock range of mitigating actions were of a fall of 33%. documented including curtailing the planned development of new homes, 2. Rent controls reintroduced after additional property sales, pay freezes, five years (limited to CPI). introducing affordable rents on new 3. Rent losses increase significantly, for properties and using contingency example as a result of the roll-out of funding within budgets. Universal Credit. 4. Significant additional staffing costs in care. 5. New Lodge development delayed by six months. 6. Development plan delayed by two years. 7. Development plan only delivers 500 homes. 8. Land costs are double the assumption within the plan. 9. Development costs (labour and materials) are 25% higher than expected. 10. Planned property sales significantly delayed / sales at a lower value. 11. Funding for heritage assets from JRF is not available. 12. Homes England does not offer grants for planned new developments. 13. 50% of planned shared ownership properties become rentals.
55 | GOING CONCERN The financial statements show that: • Property sales would be lower as a • At the end of 2019, the charity had consequence of the ‘closure’ of the reserves of £56.8 million of which housing market. only £1.1 million was restricted. • Property voids may rise. • Annual expenditure in 2019 was • Rental bad debts may increase. £23.7 million. Given these additional uncertainties, • Cash balances of £4.1 million were three scenarios were developed to held. test the point at which: • There are unused borrowing facilities • cash would run out; and / or of £22 million. £15 million of the • covenants with banks would be total unused facilities relates to a loan broken. facility with JRF and this is detailed in the related party transactions note The ‘central’ scenario reflected to the accounts. Separately, the debt management’s best estimate of the analysis note within the accounts sets impact of the pandemic over the out that, at the year-end, revolving period to the end of 2021. The other credit facilities of £23 million were scenarios reflected significantly more available with Handelsbanken of which stressed positions including one which £16 million had been utilised. could be considered a worst case. • No borrowing facilities are due to Although not expected to be utilised, expire within the next 12 months. the Joseph Rowntree Foundation (JRF) has committed to provide grant In December 2019, JRHT’s board support to JRHT if the operating formally approved the charity’s environment seen during the budget for 2020 as well as reviewing second quarter of 2020 significantly indicative budgets for 2021 and 2022. deteriorates. The level of support Separately, a cash flow forecast was agreed is sufficient to ensure JRHT prepared covering the period to the can continue to meet its banking end of 2021. This is routinely used to covenants even in situations beyond ensure that cash balances together the most pessimistic scenarios that with undrawn borrowing facilities are have been modelled. sufficient to meet planned expenditure which includes capital projects. The results of this work have been shared with the Audit and Risk During the first quarter of 2020, Committee which, particularly given the potential financial impact of the formal support of JRF, has COVID-19 started to emerge with recommended to the trustees that the the board assessing that the factors going concern basis is appropriate for affecting JRHT would include some or the 2019 financial statements. The all of the following: accounting policy note also sets out • Care home occupancy would be the rationale for using a going concern lower than expected. basis for preparing the 2019 financial • Staff costs, particularly in care statements. settings, would be higher. • Significant personal protective equipment (PPE) costs would be incurred.
| 56 Plans for the future
2019 was the second year of our strategic plan which focused on our four key outcomes. To deliver these we said we would: • design activity linked to the strategic plan and define what it will deliver • plan, track and assess all our projects and day-to-day activity • evaluate the impact to learn and improve.
PRIORITIES FOR 2020 Based on our strategic plan and the related outcomes this year we are developing our objectives and key results framework (OKR’s). This framework will allow us to capture the relevant and meaningful metrics to measure our success against the strategic plan. At a top level we have defined the focus for the three key areas of our business for 2020 as well as agreeing the overarching and joint strategic projects. These are outlined in the table below.
JRHT Evidence progress towards mission, vision, outcomes and values Maintaining regular complience Prepare for in depth assessment Achieve key budget 2020 drivers – agency use, property sales, care voids and care fees Review of chargeable revices
Development and asset Housing and community Care services management services Govemance of the Housing and community Review care fees development strategy Service restructure A new approach to care New Lodge completion Review and update rent policy services – review of levers for Derwenthorpe completion Review and update resident chenge Willowbank start on site engagement policy All services rated good by CQC Garge sites complete Sheltered housing review Care service occupancy 96% feasibility Significant reduction in use of Achieve sales targets agency staff
HOW WE WILL IMPLEMENT AND TRACK PROGRESS We anticipated that 2020 would see an in-depth assessment for JRHT from the Regulator of Social Housing but the timing of this is now uncertain due to the IDA programme being paused as a result of the COVID-19 situation. Performance against regulatory compliance is captured via the key performance indicator scorecards which are reviewed quarterly at board.
57 | A newly implemented budget area risk tracker monitors progress and action plans against key financial risks to the organisation, including reduction in agency staffing and care service occupancy. The Business Change Team is working closely with JRHT to review: • Our chargeable services (to ensure charges are legitimate, equitable and reflect actual costs incurred by JRHT to deliver services). • Sheltered housing (this review began in 2019, the findings of which will be reviewed in consultation with residents and, where appropriate, implemented during 2020). • Care fees and care strategy. Any decisions for change or implementation will be taken to board for approval. Development work for 2020 follows the approach outlined in the development strategy which was signed off by board in Q4 2019. The speed and progression of the agreed development plans at Q4 board may vary from the original strategy in response to the COVID-19 situation and the subsequent impact across all sectors. The People Team is supporting the housing and community services restructure, consultation and implementation process. We plan to review our rent policy in 2020, in the light of the Rent Standard 2020 and the policy statement on rents for social housing. For our resident engagement strategy, we will build on the work to date with our residents, which sets out opportunities for increased engagement and feedback. We will work with the JRHT board during 2020 to finalise our new strategy.
CLIMATE CHANGE Climate change is of grave concern around the world, and JRHT and JRF have a strong record of activity in making a positive contribution to the evidence on climate change and social justice, as well as practically through our sustainable housing development Derwenthorpe, in York. In 2020 JRHT, together with JRF, will be considering our impact and how we can maximise our contribution to a more sustainable planet through our services, activities, and investments.
| 58 Joseph Rowntree Foundation - Joseph Rowntree Housing Trust
Our vision is for a prosperous UK without poverty
Our mission is Our mission is to inspire action to build and develop and change to strong empowered solve UK poverty communities without poverty or isolation
Shared Our overarching outcomes: values The change we want to see at our Everyone has a decent home in a good place core Value for Everyone has a good living standard and prospects money Built on informs trust Outcomes Outcomes all our More people want to More people are decisions Show solve poverty, understand independent and well. and we care it and take action. actions More people are shaping Make a More people find a route our communities. difference out of poverty through work. More people can improve their prospects. More people find a route out of poverty through More people live in a a better system of social decent, affordable home. security.
More people live in a decent, affordable home.
A people strategy that creates outstanding places to work Effective and efficient corporate centre that creates an enabling environment Structure and governance designed to support effective operations and decision-making
5
59 | Trustees’ statement of responsibility
The trustees are responsible for preparing the Trustees’ Annual Report and the financial statements in accordance with applicable law and regulations. The Charities Act 2011 requires the trustees to prepare financial statements for each financial year. The trustees have to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), including FRS 102 the Financial Reporting Standard applicable in the UK and Republic of Ireland. The trustees must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the charity – of the incoming resources and application of resources, including the income and expenditure, of the charity for that period. In preparing these financial statements, the trustees are required to: • Select suitable accounting policies and then apply them consistently. • Make judgements and accounting estimates that are reasonable and prudent. • State whether applicable UK accounting standards and the Statement of Recommended Practice (SORP) accounting by registered housing providers 2014, have been followed, subject to any material departures disclosed and explained in the financial statements. • Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the charity will continue in business. The trustees are responsible for keeping adequate accounting records that are sufficient to show and explain the charity’s transactions and disclose with reasonable accuracy at any time the financial position of the charity. They must enable them to ensure that the financial statements comply with the Charities Act 2011, the Charity (Accounts and Reports) Regulations 2008 and the provisions of the trust deed. They are also responsible for safeguarding the assets of the charity and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. Trustees are responsible for the maintenance and integrity of the corporate and financial information included on JRHT’s website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. Approval
This report was approved by the JRHT board at its meeting on Tuesday 22 June 2020 and is signed on behalf of the board by the Chair of the trustees and Chair of JRHT board. Will Haire (Chair of trustees) - 26 June 2020 Helen Evans (Chair of the JRHT board) - 26 June 2020
| 60
Joseph Rowntree Housing Trust Registered Charity
INDEPENDENT AUDITOR'S REPORT TO THE TRUSTEES OF JOSEPH ROWNTREE HOUSING TRUST
Opinion We have audited the financial statements of Joseph Rowntree Housing Trust (the ‘charity’) for the year ended 31 December 2019 which comprise the statement of financial position, the statement of comprehensive income, the statement of changes in reserves, the statement of cash flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102; The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements: • give a true and fair view of the state of the charity’s affairs as at 31 December 2019 and of its surplus for the year then ended; • have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice, the Housing and Regeneration Act 2008 and the Accounting Direction for Private Registered Providers of Social Housing 2015; and • have been prepared in accordance with the requirements of the Charities Act 2011.
Basis for opinion We have been appointed as auditor under section 144 of the Charities Act 2011 and report in accordance with regulations made under section 154 of that Act. We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the charity in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
The impact of macro-economic uncertainties on our audit Our audit of the financial statements requires us to obtain an understanding of all relevant uncertainties, including those arising as a consequence macro-economic uncertainties such as Covid-19 and Brexit. All audits assess and challenge the reasonableness of estimates made by the trustees and the related disclosures and the appropriateness of the going concern basis of preparation of the finanacial statements. All of these depend on assessments of the future economic environment and the charity's future prospects an performance.
Covid-19 and Brexit are amongst the most significant economic events currently faced by the UK, and at the date of this report their effects are subject to unprecedented levels of uncertainty, with the full range of possible outcomes and their impacts unknown. We applied a standardised firm-wide approach in response to these uncertainties when assessing the charity's future prospects and performance. However, no audit should be expected to predict the unknowable factors or all possible future implications for a charity associated with these particular events.
61 Joseph Rowntree Housing Trust Registered Charity
Conclusions relating to going concern We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where: • the trustees’ use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or • the trustees have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the charity’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.
In our evaluation of the trustees' conclusions, we considered the risks associated with the charity's business including effets arising from macro-economic uncertainties such as Covid-19 and Brexit, and analysed how those risks might affect the charity's financial resources or ability to continue operations over the period of at least twelve months from the date when the financial statements are authorised for issue. In accordance with the above, we have nothing to report in these respects.
However, as we cannot predit all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements that were reasonable at the time they were made, the absence of reference to a material uncertainty in this auditor's report is not a guarantee that the charity will continue in operation.
Other information The trustees are responsible for the other information. The other information comprises the information included in the Report of the Board, set out on pages 1-60, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. Matters on which we are required to report by exception. We have nothing to report in respect of the following matters where the Charities Act 2011 requires us to report to you if, in our opinion:
• the information given in the Report of the Board is inconsistent in any material respect with the financial statements; or • the charity has not kept sufficient accounting records; or • the financial statements are not in agreement with the accounting records and returns; or • we have not received all the information and explanations we require for our audit.
Responsibilities of trustees for the financial statements As explained more fully in the Trustees' Statement of Responsibility set out on page 60, the trustees are responsible for the preparation of the financial statements which give a true and fair view, and for such internal control as the trustees determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the trustees are responsible for assessing the charity’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the trustees either intend to liquidate the charity or to cease operations, or have no realistic alternative but to do so.
62 Joseph Rowntree Housing Trust Registered Charity
Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our report This report is made solely to the charity's trustees, as a body, in accordance with Section 154 of the Charities Act 2011. Our audit work has been undertaken so that we might state to the charity's trustees those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the charity and its trustees as a body, for our audit work, for this report, or for the opinions we have formed.
Grant Thornton UK LLP Statutory Auditor, Chartered Accountants Leeds
Date:
Grant Thornton UK LLP is eligible to act as an auditor in terms of section 1212 of the Companies Act 2006
63 Joseph Rowntree Housing Trust Registered Charity
STATEMENT OF COMPREHENSIVE INCOME for the year ended 31 December 2019
2019 2018
Note £'000 £'000
Turnover 3 28,809 26,840
Less: Operating Costs 3 (21,804) (21,780)
Operating Surplus 3 7,005 5,060
Interest Receivable 9 169 163
Interest Payable and similar charges 10 (1,990) (1,973)
Total Comprehensive Income for the Year before Taxation 11 5,184 3,250
Taxation on Ordinary Activities 12 (27) -
Total Comprehensive Income for the Year after Taxation 5,157 3,250 There are no recognised gains or losses other than the surplus for the year. The surplus for the year is entirely generated from continuing activities.
The Financial Statements were approved by the Board of Trustees on 22 June 2020 and signed on its behalf by:
Chair of the Trustees Will Haire
Chair of the JRHT Board Helen Evans
Director of Finance Tracey Preece
The Notes on Pages 68-93 form part of these Financial Statements 64 Joseph Rowntree Housing Trust Registered Charity STATEMENT OF FINANCIAL POSITION as at 31 December 2019 2019 2018
Note £'000 £'000 £'000 £'000 Fixed Assets Housing Land and Buildings: Cost 13 160,092 149,774 Less: Depreciation 13 (24,275) (22,181) 135,817 127,593 Tangible Fixed Asset - Hartrigg Oaks 14 35,943 33,252
Other Fixed Assets - Tangible assets 15 13,573 13,882
Other Fixed Assets - Intangible assets 16 - 107
Homebuy Loans 17 2,392 2,520 Investment Properties 18 2,763 440 5,155 2,960 190,488 177,794 Current Assets Properties held for sale 19 944 2,539 Trade and Other Debtors 20 2,110 1,581 Cash and cash equivalents 4,097 5,878 7,151 9,998
Creditors: Amounts falling due within one year 21 (5,342) (5,817) Net Current Assets 1,809 4,181 Total Assets less Current Liabilities 192,297 181,975
Creditors: Amounts falling due after one year 22 (135,507) (130,342)
Total Net assets 56,790 51,633
Reserves Income and Expenditure Reserve 46,106 40,888 Restricted Reserves 1,080 1,072 Revaluation Reserve 9,604 9,673
Total Reserves 56,790 51,633
The Financial Statements were approved by the Board of Trustees on 22 June 2020 and signed on its behalf by: Chair of the Trustees Will Haire
Chair of the JRHT Board Helen Evans
Director of Finance Tracey Preece
The Notes on Pages 68-93 form part of these Financial Statements 65 Joseph Rowntree Housing Trust Registered Charity
STATEMENT OF CHANGES IN RESERVES for the year ended 31 December 2019
Income and Expenditure Restricted Revaluation Reserve Reserve Reserve Total
£'000 £'000 £'000 £'000
Balance at 1 January 2019 40,888 1,072 9,673 51,633
Surplus for the Year After Taxation 5,157 - - 5,157
Transfer of unrestricted income to restricted reserve (8) 8 - -
Transfer of revaluation reserve to unrestricted reserve 69 - (69) -
Balance at 31 December 2019 46,106 1,080 9,604 56,790
The prior year comparatives are as follows:- Income and Expenditure Restricted Revaluation Reserve Reserve Reserve Total
£'000 £'000 £'000 £'000
Balance at 1 January 2018 37,575 1,066 9,742 48,383
Surplus for the Year 3,250 - - 3,250
Transfer of unrestricted income to restricted reserve (6) 6 - -
Transfer of revaluation reserve to unrestricted reserve 69 - (69) -
Other Expenditure for the Year - - - -
Balance at 31 December 2018 40,888 1,072 9,673 51,633
The Notes on Pages 68-93 form part of these Financial Statements 66 Joseph Rowntree Housing Trust Registered Charity
STATEMENT OF CASH FLOW for the year ended 31 December 2019
2019 2018
£'000 £'000 £'000 £'000
Net Cash generated from Operating Activities (Note 28a) 3,509 4,803
Cash flow from Investing Activities
Interest received 169 163
Expenditure on Housing Land and Buildings (15,837) (15,561)
Purchase of Other Fixed Assets (115) (1,686)
Sale of Other Fixed Assets 101 -
Purchase of Hartrigg Oaks Assets (107) (90)
Sale of Housing Properties (Note 28 b) 3,352 3,616
Disposals of Property in the Course of Construction 2,724 2,824
Homebuy Loans redeemed 128 132
Social Housing Grant - received 1,395 160
(8,190) (10,442)
Cash flow from Financing Activities
Interest paid (1,981) (1,966) Taxation (27) -
Capitalised Community Fees received 446 68
Hartrigg Oaks Residence Fees (Note 28 c) 2,895 1,664
Hartrigg Oaks Loans repaid (61) (62)
Housing Loans received 3,000 5,000
Housing Loans principal repayments (913) (360)
Bonds and Loan Stock repaid (459) (382)
2,900 3,962
Net change in Cash and Cash Equivalents (1,781) (1,677)
Cash and cash equivalents at 1 January 5,878 7,555
Cash and cash equivalents at 31 December 4,097 5,878
The Notes on Pages 68-93 form part of these Financial Statements 67 Joseph Rowntree Housing Trust Registered Charity
NOTES TO THE ACCOUNTS
1 Legal Status Joseph Rowntree Housing Trust (JRHT) is a charity registered with the Regulator for Social Housing and the Charity Commission. It was formed by a Deed of Foundation and Charity Commission Scheme in 1967. Throughout 2019, this entity was not incorporated, although the Trustees as a body were incorporated under section 251 of the Charities Act 2011. A new incorporated JRHT was created as a Community Benefit Society (CBS) on 24 September 2019. The CBS remained dormant until 1 January 2020, when the assets and liabilities of the unincorporated charity were transferred to the CBS, under a Charity Commission Scheme and Order. More detail can be found in the 'Governing Document 2019' section of the Trustees' Annual Report.
2 Accounting Policies
(i) Basis of Accounting
The Financial Statements of Joseph Rowntree Housing Trust (JRHT) are prepared in accordance with UK Generally Accepted Accounting Practice (UK GAAP) including Financial Reporting Standard 102 (FRS 102) and the Housing SORP 2018: Statement of Recommended Practice for Registered Social Housing Providers and comply with the Accounting Direction for Private Registered Providers of Social Housing 2015.
JRHT is a public benefit entity in accordance with FRS 102.
The financial statements are presented in sterling (£).
(ii) Going concern JRHT's activities, current financial position and future plans are set out in its Annual Report. The charity has a detailed financial planning process and at its final meeting of 2019, the Board formally approved a budget for the following year as well as reviewing indicative budgets for the subsequent two years. Cash Flow forecasts are prepared covering the current and following year to ensure that cash balances together with undrawn bank borrowing facilities are sufficient to meet planned expenditure. These are created using JRHT's long-term planning model, a tool used accross the sector to generate the 30-year financial forecast returns required by the Regulator of Social Housing on an annual basis.
Like most of the world, the UK was affected by the Covid-19 pandemic during the first quarter of 2020 and the financial uncertainty that this has created is likely to be present for some time. The financial risks for JRHT Care home occupancy being lower than expected. Staff costs, particularly in care settings, being higher. Significant Personal Protective Equipment (PPE) costs. Reduced property sales as a consequence of the "closure" of the housing market. Increasing housing property voids. Rental bad debts may increase. To understand these, and other risks, a number of increasingly challenging scenarios have been modelled. These were used to establish the point at which: Cash would run out; and/or Covenants with banks would be broken. The scenario modelling performed on the forecasts for 2020 and 2021 demonstrated that even under the most challenging conditions: Cash does not run out. Bank covenants continue to be met. JRHT does not need to draw funds from the £15m loan facility with JRF.
Although not expected to be called upon, the Joseph Rowntree Foundation (JRF), has also formally agreed to provide grant support to JRHT if the operating environment seen during the second quarter of 2020 significantly deteriorates. The level of support agreed is sufficient to ensure JRHT can continue to meet its banking covenants even in situations beyond the most pessimistic scenarios that have beeen modelled.
68 Joseph Rowntree Housing Trust Registered Charity 2 Accounting Policies (continued) (ii) Going concern (continued) Based on this above, the Board is of the opinion that JRHT has access to adequate resources to continue to operate without disruption for the foreseeable future, being a period of at least 12 months after the date on which the Annual Report and financial statements are signed. For this reason, JRHT continues to adopt the going concern basis in the financial statements. More detail in respect of this assessment can be found within the Trustees' Annual Report.
(iii) Significant judgements and estimates
The following are the significant management judgements made in applying the accounting policies of JRHT that have the most significant effect on the financial statements.
(a) Impairment
As part of JRHT's continuous review of the performance of their assets, management identify any properties or schemes, that have increasing void losses, are impacted by policy changes or where the decision has been made to dispose of these properties. These factors are considered to be an indication of impairment.
Where there is an indication of impairment, the assets are written down to the recoverable amount and any impairment losses are charged to operating surpluses.
(b) Classification of loans as basic
Management have considered the terms of loan agreements and concluded that they meet the definition of a basic financial instrument, therefore they are held at amortised cost.
(c) Classification of Business Properties as Other Fixed Assets
Management consider that assets held as business properties should be classified as other fixed assets since they are held for social benefit.
69 Joseph Rowntree Housing Trust Registered Charity
2 Accounting Policies (continued)
(iii) Significant judgements and estimates (continued)
Estimation uncertainty Information about estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenditure is provided below. Actual results may be substantially different.
(a) Useful lives of depreciable assets Management reviews its estimate of the useful lives of depreciable assets at each reporting date based upon the expected utility of the assets. Uncertainties in these estimates relate to technological obsolescence that may change the utility of certain software and IT equipment and changes to decent homes standards which may require more frequent replacement of key housing components. Accumulated depreciation at 31 December 2019 was £28,799,000.
(b) Fair value measurement Management uses valuation techniques to determine the fair value of financial instruments (where active market quotes are not available) and non-financial assets including investment properties. This involves developing estimates and assumptions consistent with how market participants would price the instrument or asset. Management bases its assumptions on observable data as far as possible but this is not always available. In that case management uses the best information available. Estimated fair values may vary from actual prices. Fair value measurements have been applied to bonds and loan stock and investment properties. The total values of these at 31 December 2019 were £1,539,000 and £2,763,000 respectively.
(c) Deferred Land JRHT has acquired certain land from local authorities on deferred consideration terms. The payment is triggered when the properties developed on that land are sold or after a specified date is reached. The sum payable is a percentage of the market value of the properties on the land. The future payment is therefore uncertain and an estimate of the future market value of those properties is required. That estimated future payment is discounted to the Statement of Financial Position date which involves a judgement of the discount rate to be used. The value of the deferred land in the Statement of Financial Position at 31 December 2019 was £2,705,000 .
(d) Hartrigg Oaks - Non-Refundable Residence Fees Non-refundable Residence Fees payable by residents of Hartrigg Oaks are set by reference to actuarial factors linked to life expectancy and estimations of future interest rates. The Non-refundable Residence Fees are amortised in the Financial Statements using the anticipated lives of the individual residents at a rate based on advice from JRHT's actuaries. The amortisation in the year was £257,000 and the unamortised balance of the Non-refundable Residence Fees at 31 December 2019 was £4,239,000.
(e) Hartrigg Oaks - Capitalised Community Fees Capitalised Community Fees payable by residents of Hartrigg Oaks are set by reference to actuarial factors linked to life expectancy, estimations of future interest rates and future fee levels. The Capitalised Community Fees are amortised in the Financial Statements using the anticipated lives of the individual residents at a rate based on advice from JRHT's actuaries. The amortisation in the year was £160,000 and the unamortised balance of the Capitalised Community Fees at 31 December 2019 was £1,992,000.
(f) Shared ownership sales percentages Future shared ownership sales at New Lodge are estimated at 50% reflecting the percentage of each property expected to be sold at completion.
70 Joseph Rowntree Housing Trust Registered Charity
2 Accounting Policies (continued) (iv) Turnover and revenue recognition Turnover comprises rental and fee income receivable in the year, income receivable from shared ownership first tranche sales, other goods and services supplied in the year (excluding VAT) and grants receivable in the year. Rental income is recognised at the point when properties under development reach practical completion or otherwise become available for letting, net of any voids.
Charges for care and support services funded under supporting people and local authority care contracts are recognised as they fall due under the contractual arrangements with the Administering Authorities.
Sales of Housing Land and Buildings are recognised on the date of the legal completion of the sale. The proceeds of sale of the first tranche of shared ownership properties are stated net of any contribution required to cross subsidise other elements of the scheme concerned and are included in turnover. Surpluses on subsequent tranches and from other Sales are recognised in their entirety in the Statement of Comprehensive Income on the date of the legal completion of the sale. At JRHT's Extra Care schemes the Trust is committed to buying back property on the termination of the lease. The price paid to the outgoing resident is the original price paid plus a percentage of the equity appreciation and is included in surpluses on sale. The remaining equity appreciation is retained by JRHT.
(v) Fixed Assets (a) Housing Land and Buildings
Housing Land and Buildings, which includes properties for letting, residential care homes and extra care schemes, are stated at cost and includes properties in the course of construction which are being developed with a view to JRHT retaining a long-term interest. Cost of Housing Land and Buildings includes directly attributable management expenses and directly attributable finance costs which are capitalised until the property reaches practical completion. The cost of pre 1990 rented property in New Earswick was re-stated at the Existing Use Value - Social Housing as at 31 December 2013, in accordance with the SORP at that time. The increase in cost is reflected through a Revaluation Reserve. Costs of modernisation and reimprovements to existing properties are capitalised if they result in the replacement of a component or the enhancement of the economic benefit of the structure.
(b) Shared Ownership properties
Included within Housing Land and Buildings is JRHT's retained interest in dwellings developed on Shared Ownership terms. Under Shared Ownership arrangements the purchaser acquires a portion of the equity of the property and has an option to acquire at any time further portions up to a limit determined by JRHT: The price payable is a corresponding portion of the market value of the property at the date of the initial purchase or the exercise of the option. A rent is payable on any portion of the equity which is retained in the JRHT's ownership.
At the discretion of JRHT the terms of tenure between rent, shared ownership and outright ownership can be varied over time. The book value of JRHT's retained interest in Shared Ownership properties is stated at cost, plus cost of equity subsequently repurchased by JRHT.
The book value of the equity in Shared Ownership Properties held for resale is included within Current Assets as Housing Stock Held for Resale.
71 Joseph Rowntree Housing Trust Registered Charity 2 Accounting Policies (continued)
(v) Fixed Assets (continued)
(c) Deferred Land
JRHT has a number of housing schemes where land has been purchased on deferred consideration terms. Where the terms allow for final payment of the land value to be made by a specified date, the liability has been recognised at the net present value of estimated future cash flows and the value of land within Housing Land and Buildings has been increased accordingly. Where no date for the purchase of the land exists, the liability is shown within contingent liabilities.
(d) Hartrigg Oaks
Hartrigg Oaks represents the cost of construction of 152 bungalows, 43 rooms in the Care Centre, and communal facilities, together with apportioned management expenses, start-up costs, and directly attributable finance costs incurred up to completion. On subsequent sales, when a new lease for the occupation of a bungalow at Hartrigg Oaks is entered into, the cost of the bungalow is restated at the Fully Refundable Residence Fee, or equivalent sum, included in the lease for that bungalow.
(e) Other Land and Buildings
Other Land and Buildings, which are held to support the wider social housing community or which are let at sub-market rents, are treated as 'property, plant and equipment' and are stated at cost. Cost of Other Land and Buildings includes directly attributable management expenses and directly attributable finance costs which are capitalised until the property reaches practical completion.
(vi) Homebuy Under the Homebuy loan arrangements JRHT has made loans to individuals to enable them to purchase a property. The loan is equivalent to a specified percentage, ranging from 12½% to 30% of the market value of the property. No interest is charged on the loan but JRHT is entitled to receive the specified percentage of the market value of the property which is credited in full to interest receivable in the Statement of Comprehensive Income when it is sold. The loans are secured on the properties to which they relate. This scheme is supported by the Homes and Communities Agency through the provision of Social Housing Grant.
(vii) Investment Property
Properties held for investment are held at fair value within the Statement of Financial Position with gains and losses recognised in the Statement of Comprehensive Income. A formal independent valuation in accordance with RICS Valuation Standard guidelines is obtained every three years.
(viii) Depreciation
(a) Housing Land and Buildings
No depreciation is provided on freehold land.
Housing Properties are categorised into their main components and these components are depreciated over their estimated useful economic lives to their estimated residual value. Depreciation of Housing Properties and their components are calculated at the following rates:-
72 Joseph Rowntree Housing Trust Registered Charity
2 Accounting Policies (continued)
(viii) Depreciation (continued)
(a) Housing Land and Buildings (continued) Structure of Housing Properties built since 1 January 2000: over 100 years
Structure of Housing Properties built prior to 1 January 2000:-
Housing Properties built before 1950: over 50 years from 1 January 2000
Housing Properties built since 1950: over the balance of 100 years from 1 January 2000
Roofs: over 45 years (previously 50 years)
Windows: over 35 years
Boilers : over 15 years (previously 20 years)
Kitchens: over 25 years (previously 20 years)
Mechanical Systems: over 40 years
Bathrooms: over 30 years (previously 25 years)
Lifts: over 30 years Fire Protection: over 20 years Resident Safety and Security Equipment: over 20 years (b) Shared Ownership properties
No depreciation is provided on freehold land.
Shared Ownership properties are depreciated over their estimated useful economic lives to their estimated residual value. Under shared ownership, residents may acquire additional shares in the property and ultimately own the property outright, known as 'staircasing out'. The useful economic life is therefore dependent upon choices made by residents. Based on past experience of 'staircasing out', an estimated useful economic life of 70 years has been applied to shared ownership properties
(c) Hartrigg Oaks
The buildings at Hartrigg Oaks are depreciated on a straight line basis, so as to write down the net book value of the buildings to their estimated residual value over their estimated useful economic lives. Depreciation is calculated over the balance of 100 years from 1 January 2000.
(d) Other Land and Buildings Other Buildings are depreciated on a straight line basis, so as to write down the net book value of the buildings to their estimated residual value over their estimated useful economic lives. Depreciation is calculated at the following rate:- Other Buildings built since 1 January 2000: over 50 years Other Buildings built since 1950: over the balance of 50 years from 1 January 2000 Other Buildings more than 50 years old at 1 January 2000 and those from which the JRHT receives no financial benefit have been fully depreciated
(e) Vehicles, Furniture and Equipment
Vehicles, Furniture and Equipment are written off over five years by a straight line method. Computer Equipment is written off over three years by a straight line method.
(f) Intangible Fixed Assets Computer software is written off over five years by a straight line method.
73 Joseph Rowntree Housing Trust Registered Charity
2 Accounting Policies (continued)
(ix) Stock
Stock, which comprises materials, loose tools, other building supplies, and food and drink, is stated at the lower of cost and net realisable value.
(x) Government Grants
Government grants include grants receivable from the Homes England, local authorities and other government organisations. Government grants received for housing properties are amortised to the Statement of Comprehensive Income over the useful life of the housing property structure under the accruals model.
Government grants relating to revenue activities are recognised in the Statement of Comprehensive Income over the same period as the expenditure to which they relate once reasonable assurance has been gained that the JRHT will comply with the conditions and that the funds will be received.
Government grants due or received in advance are included as current assets or liabilities.
Government grants released on sale of a property may be repayable but are normally available to be recycled and are credited to a Recycled Capital Grant Fund and included in the Statement of Financial Position in creditors.
(xi) Other Grants Other Grants, which includes legacies and other donations, are recognised as follows:-
(a) Grants that are not subject to future performance related conditions are recognised as revenue when the grant is receivable
(b) Grants that are subject to future performance related conditions are recognised as revenue when those conditions are met. Grants that are received before the conditions have been met are recognised as a liability
(xii) Deferred Income - Amounts Received in Advance (a) Leaseholders
JRHT has entered into Leases in which it is required to defer income to match against future expenditure on maintenance and repairs and equipment from sums collected via the service charge. Interest is added to the sums set aside at JRHT's marginal cost of borrowing.
(b) Residential Care Homes and Extra Care
JRHT has deferred income to match against future expenditure on furnishings and equipment at its Residential Care Homes and Extra Care schemes from fees and service charges received from residents. Interest is added to the sums set aside at JRHT's marginal cost of borrowing.
(c) Rents Received in Advance
JRHT has received rental income in advance on Office Accommodation which is released to the Statement of Comprehensive Income over the length of the lease.
(d) THFC Bond
Proceeds from the bond, based on the price at issue were in excess of the nominal value of the THFC bond issue which is repayable in 2043. The excess, net of expenditure incurred in securing the facility, is being released to the Statement of Comprehensive Income over the term of the bond.
74 Joseph Rowntree Housing Trust Registered Charity
2 Accounting Policies (continued)
(xiii) Hartrigg Oaks Capitalised Community Fees Hartrigg Oaks Capitalised Community Fees represent sums paid in advance by residents at Hartrigg Oaks towards the Community Fee. Capitalised Community Fees are not refundable when a resident leaves Hartrigg Oaks on a permanent basis, except partial repayments, on a decreasing basis, are made over the first 56 months of residence. Capitalised Community Fees are amortised in the Accounts over the anticipated lives of the residents at a rate based on advice from JRHT's actuaries.
(xiv) Recycled Capital Grant Fund Following the full sale of a rented property (other than under the Voluntary Purchase Grant or Social Homebuy programmes), the demolition of a property, the partial sale of a shared ownership property or upon a Homebuy redemption, the Social Housing Grant attributable to that property is transferred to the Recycled Capital Grant Fund. Sums in that Fund must be applied in accordance with criteria established by the Homes and Communities Agency.
(xv) Hartrigg Oaks Residence Fees
Hartrigg Oaks Residence Fees represents sums received from residents under the Lease and Care Agreements at Hartrigg Oaks. Fully Refundable Residence Fees are refundable in the original sum within 14 days of a resident leaving Hartrigg Oaks on a permanent basis. No interest is payable by JRHT on the sums received. Non-refundable Residence Fees are not refundable when a resident leaves Hartrigg Oaks on a permanent basis except partial repayments, on a decreasing basis, are made over the first 56 months of residence. Non-refundable Residence Fees are amortised in the Accounts over the anticipated lives of the residents at a rate based on advice from JRHT's actuaries.
(xvi) Bonds and Loan Stock JRHT has issued Bonds and Loan Stock at its Residential Care Homes. Residents who take up Bonds or Loan Stock are entitled to a rebate on their fee. Any interest which is earned on the Bonds or Stock in excess of the rebates given is available to provide Bursary Support to those residents in the Homes who are unable to meet the full fee. Repayments are made when a resident ceases to be in occupation or following a re-assessment of a resident's financial position.
Bonds and Loan Stock are recognised in the Statement of Financial Position at the Net Present Value of the estimated future cash flows. The timing of future payments, which will be triggered when a resident ceases occupation, are uncertain and it has been assumed that one in eight residents will cease occupation in any one year based on past experience
(xvii) Restricted Reserves: Sales Re-investment Fund
The surplus on sale over book cost arising from sales of property under the Government's Voluntary Purchase Grant and Social Homebuy programmes have been transferred to the Sales Re-investment Fund. Sums in the Fund will be released when they have been applied to provide replacement housing property.
(xviii) Revaluation Reserves
The revaluation surplus of pre 1990 rented property in New Earswick has been transferred to a Revaluation Reserve.
(xix) Major Repairs and Cyclical Maintenance Expenditure on Major Repairs, including reimprovements, and Cyclical Maintenance on general needs housing accommodation and Residential Care Homes is charged to the Statement of Comprehensive Income in the year in which it is incurred unless it involves the replacement of a capitalised component or the enhancement of the economic benefit of the structure. Major Repair Social Housing Grant which is received is offset against expenditure incurred.
75 Joseph Rowntree Housing Trust Registered Charity
2 Accounting Policies (continued) (xx) Impairment
Impairment reviews are carried out on an annual basis in accordance with Financial Reporting Standard 11 for all properties where there is a relevant triggering event.
(xxi) Joseph Rowntree Foundation
Joseph Rowntree Housing Trust (JRHT) has the same Trustees as Joseph Rowntree Foundation (JRF). JRF is an independent social change organisation working to solve uk policy.
Directors and staff are employed by JRF and certain Administration Costs are shared between JRHT and JRF. Those costs which are solely attributable to one of the Organisations are charged to that Organisation. Shared costs are apportioned between JRHT and JRF on the basis of an estimate of the delivery cost.
(xxii) Pensions JRF participates in the Social Housing Pension Scheme, which is a multi-employer Defined Benefit scheme. All staff are employed by JRF and any liability arising from actuarial valuations is recognised in the Statement of Financial Position of JRF. The employer contribution to future accrual are shared between JRF and JRHT and past service deficits are borne by JRF. (xxiii) VAT JRHT is registered for VAT. Expenditure is included gross of VAT and any recoveries made are netted off other operating costs (Note 3a).
(xxiv) Financial Instruments Financial instruments which meet the criteria of a basic financial instrument as defined in Section 11 of FRS 102 are accounted for under an amortised historic cost model Non-basic financial instruments are recognised at fair value using a valuation technique with any gains or losses being reported in the Statement of Comprehensive Income. At each year end, the instruments are revalued to fair value, with the movements posted to to income or expenditure. JRHT has not adopted hedge accounting for financial instruments.
(xxv) Debtors
Short term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs and are measured subsequently at amortised cost using the effective interest method, less any impairment.
(xxvi) Creditors
Short term trade creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest rate method.
76 Joseph Rowntree Housing Trust Registered Charity
3a Turnover, Operating Costs and Operating Surplus for the Year 2019 2018 Operating Operating Operating Surplus/ Cost of Operating Surplus/ Turnover Cost of Sales Costs (Deficit) Turnover Sales Costs (Deficit) £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Social Housing Lettings (note 20b) 17,239 - (17,348) (109) 17,209 - (16,959) 250 Other Social Housing Activities First Tranche Shared Ownership Sales 1,663 (954) - 709 640 (412) - 228 Disposal of Current Assets 472 (414) - 58 Gain/Loss on disposal of Housing Properties (note 6) - - 1,160 1,160 - - 790 790 Community Services and Special Initiatives (note 4) 2,969 - (1,447) 1,522 4,584 - (1,667) 2,917 Management Services 62 - (60) 2 61 - (60) 1 Property Services 45 - (74) (29) 43 - (53) (10) Other - Leasehold Units at Extra Care Schemes 482 - (493) (11) 445 - (480) (35) Other - VAT - - 24 24 - - 23 23 Non-social Housing Activities
Other (note 3c) 5,877 - (2,198) 3,679 3,858 - (2,962) 896 28,809 (1,368) (20,436) 7,005 26,840 (412) (21,368) 5,060
77 Joseph Rowntree Housing Trust Registered Charity 3b Social Housing Lettings 2019 2018 Supported Housing and Low Cost General Housing for Care Home Needs Older People Homes Ownership Total Total £'000 £'000 £'000 £'000 £'000 £'000 Rent Receivable net of Identifiable Service Charges 5,752 1,472 - 1,700 8,924 8,884 Service Charge Income 49 565 - 286 900 878 Charges for Support Services 1 2,642 3,975 312 6,930 7,224 Amortised Government Grant 199 191 - 95 485 424 Grant previously amortised on properties being Redeveloped - - - - - (201)
Turnover from Social Housing Lettings 6,001 4,870 3,975 2,393 17,239 17,209 Management (1,490) (423) (708) (603) (3,224) (3,423) Service Charge Costs (63) (759) - (281) (1,103) (1,000) Support Charges - (2,984) (4,201) (414) (7,599) (7,631) Routine Maintenance (585) (199) (151) (66) (1,001) (804) Planned Maintenance (718) (181) (94) (69) (1,062) (934) Major Repairs Expenditure (158) (251) (55) (37) (501) (595) Bad Debts (20) (4) (2) (10) (36) (25) Depreciation of Housing Properties (1,372) (703) (154) (344) (2,573) (2,240) Other Costs (272) - - 23 (249) (307) Operating Costs on Social Housing Lettings (4,678) (5,504) (5,365) (1,801) (17,348) (16,959) Operating Surplus/(Deficit) on Social Housing Lettings 1,323 (634) (1,390) 592 (109) 250 Void Losses 51 100 934 9 1,094 418
Charges for Support Services, together with the associated costs include Supporting People contracts.
3c Other Non-social Housing Activity 2019 2018 Operating Operating Operating Operating Surplus/ Surplus/ Turnover Costs (Deficit) Turnover Costs (Deficit) £'000 £'000 £'000 £'000 £'000 £'000 Hartrigg Oaks 2,943 (3,777) (834) 2,894 (3,534) (640) Hartrigg Oaks Sales (Note 6) - 2,523 2,523 - 1,646 1,646 Revaluation of Investment property 2,078 - 2,078 - - - Business Properties and Farms 856 (944) (88) 964 (1,074) (110) 5,877 (2,198) 3,679 3,858 (2,962) 896
78 Joseph Rowntree Housing Trust Registered Charity 4 Community and Special Initiatives
The net income breaks down as:- 2019 2018
£'000 £'000
Bursary Shortfall at Residential Care Homes (192) (206) Adjustment to restate Bonds and Loan stock at net present value (46) (95) Hartrigg Oaks Bursary Support (51) (36) Special Initiatives - Care (4) (11) Contribution to New Earswick Schools (158) (99) Net Cost of Swimming Pool - (151) New Earswick Community Grants (14) (22) New Earswick Folk Hall (277) (274) JRF Grant for Heritage Assets (note 31 (d)) 497 747 JRF Capital Grant Heritage Assets(note 31 (d)) - 741 JRF Capital Grant (note 31 (d)) 360 433 JRF Revenue support- (note 31 (d)) 1,808 2,393 National Lottery Grant Hartfields 80 - National Lottery Grant Hartfields Expenditure (71) - Derwenthorpe Community Facilities (27) (9) Other (30) (66) Management Expense allocation (353) (428)
1,522 2,917
5 Housing Stock Supported Housing & Low Cost Leasehold General Housing for Care Home Extra Care Hartrigg Schemes Needs Older People Homes Ownership Leasehold Oaks for Elderly Total
At 1 January 1,207 327 126 457 63 194 154 2,528 Additions 24 48 45 20 - 1 - 138 Reclassification ------1 1 Net Switches in Tenure 2 - - (5) 3 - - - Sales (1) - - (7) - - - (8) Held for Sale (1) (1) - (1) - - - (3) Other Disposal (1) (24) (38) - - - - (63) At 31 December 1,230 350 133 464 66 195 155 2,593
Within Low Cost Home Ownership there are 152 units in Supported Housing and Housing for Older People schemes. All General Needs and Supported Housing and Housing for Older People is let at a social rent. In addition, the JRHT manages 42 units within two leasehold schemes and owns 13 shops, two farm holdings and a property leased to a third party to provide a Residential Care Home for people with mental illness. There are also 4 units used as accommodation by scheme managers. Reclassification refers to fomer Scheme Managers' acccomodation which is now rented out. Other disposal refers to a former Care & Sheltered Housing scheme which is being demolished in 2020.
6 Surplus on Sales 2019 Housing Properties Hartrigg Oaks Total 2018 £'000 £'000 £'000 £'000
Sales proceeds 3,398 5,819 9,217 6,618
Less: Cost of properties sold (Notes 13 and 14) (2,355) (3,187) (5,542) (4,281) Depreciation (Note 13) 202 - 202 205 Grant Previously amortised (note 24) (39) - (39) (21) Direct Costs (46) (109) (155) (85) (2,238) (3,296) (5,534) (4,182) Surplus on sales 1,160 2,523 3,683 2,436
79 Joseph Rowntree Housing Trust Registered Charity 7 Staff Costs
Staff are employed by Joseph Rowntree Foundation (JRF). Costs are apportioned between JRF and JRHT on the basis of an estimate of the delivery cost. Total staff costs, including those shared with JRF, during the year, were:-
2019 2018 JRF JRHT Total JRF JRHT Total £'000 £'000 £'000 £'000 £'000 £'000
Wages and salaries 3,773 12,203 15,976 2,943 12,703 15,646 Retirement, redundancy and exit payments 34 154 188 149 456 605 National Insurance contributions 373 945 1,318 289 997 1,286 Other pension costs 668 611 1,279 1,533 537 2,070 4,848 13,913 18,761 4,914 14,693 19,607
The average weekly number of persons, including part time staff, employed by JRF in conjunction with JRHT during the year was 664 (2018: 669). The average number of full time equivalent employees, based on a working week of 35 hours, was 551 (2018: 549).
8 Trustees', Executive Directors, Key Management Personnel and Higher Paid Employees' Emoluments
No Trustee received any emoluments or benefits in kind in respect of their services.
The Chief Executive (CE) was required to split his time between York and London and was therefore deemed to have two places of work. In recognition of the fact that a significant amount of time must be spent in York, and that the CE's family would remain based in London, Trustees agreed to fund accomodation in York and pay for travel expenses between London and York to facilitate this. The Benefit in Kind assigned to the CE of £12,000 consists of accommodation costs (£1,000), travel expenses (£4,000) and tax and national insurance (£7,000). These costs are included in the table below. The CE received no payments directly, apart from his core salary.
2019 2018 Compensation Pension Basic Benefits Pension contri- Total Basic for loss of Benefits contri- Total Salary in kind butions Benefits Salary office in kind butions Benefits £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Chief Executive- to 28 June 2019 85 12 14 111 154 - 39 10 203 Strategic Director of Communities -to 28 February 2018 - - - - 16 120 - - 136 JRF Executive Director 101 - 13 114 101 - - 7 108 JRHT Executive Director- from 11 March 2019 76 - 10 86 Director of Finance - to 30 April 2018 - - - - 28 - - 2 30
Director of Finance - from 1 May 2018 95 - 12 107 61 - - 3 64 Director of Corporate Services 95 - 12 107 94 - - 6 100
452 12 61 525 454 120 39 28 641
The aggregate remuneration of Key Management personnel was as follows:- 2019 2018
£'000 £'000
Basic Salary 452 454 Benefits in Kind 12 39 Pension Contributions 61 28 Employer's NIC 29 74 554 595
The total remuneration of key personnel apportioned to JRHT during the year was £277,000 (2018: £268,000). The emoluments of the highest paid director, the JRF Executive Director, excluding pension contributions were £101,000 in 2019 (2018: Chief Executive £193,000) All directors are entitled to be members of the pension scheme on the same terms as all staff . The compensation for loss of office of the Strategic Director of Communities in 2018 was entirely borne by JRF.
80 Joseph Rowntree Housing Trust Registered Charity
8 Trustees', Key Management Personnel (Directors) and Higher Paid Employees' Emoluments (continued)
The number of higher paid employees of JRF, excluding directors, for whom a percentage of full year, full time emoluments (including pension contributions and benefits in kind) was apportioned to JRHT fell in the following ranges:-
2019 2018 £60,001 - £70,000 2 4 £70,001 - £80,000 8 4 £80,001 - £90,000 1 2 £90,001- £100,000 1 - £140,001- £150,000 1 -
The above bandings include two employees who left during the year. Equivalent annual remuneration places one of these employees in the £80,001 to £90,000 band and the other, who received compensation for loss of office in the equivalent band for £140,001 to £150,000. In addition one employee who joined during the year is in the £70,001 to £80,000 band.
9 Interest Receivable 2019 2018 £'000 £'000 Interest receivable and similar income 147 134 Income from other investments 22 29 169 163
10 Interest Payable and Similar Charges 2019 2018 £'000 £'000 Interest Paid: Orchardbrook Ltd 82 84 Joseph Rowntree Foundation 19 23 Lloyds Banking Group plc 1,087 1,083 THFC Bond 798 798 Handelsbanken 347 263 2,333 2,251 Interest Applied to: Income received in advance 51 45 Bonds and Loan Stock 33 39 Recycled Capital Grant Fund (Note 23) 9 7 Bank Overdraft 65 24 2,491 2,366 Less Capitalised:
Housing Land and Buildings (Note 13) (501) (393) 1,990 1,973 Capitalisation rate used to determine the finance costs capitalised during the period 4.0% 4.0%
11 Comprehensive Income for the Year 2019 2018
£'000 £'000 Surplus for the year is stated after charging:
Depreciation Recurring 3,086 2,834 Payments under operating leases 68 77 Auditors' Remuneration (inclusive of VAT) In their capacity as Auditors 30 24
12 Taxation on Ordinary Activities 2019 2018 £'000 £'000
UK Corporation Tax on Surplus for the Year 27 -
Total Current Tax 27 -
81 Joseph Rowntree Housing Trust Registered Charity
13 Housing Land and Buildings Housing Property Property Shared Other in the held for Ownership Residential Housing Course of Letting Properties Care Homes Property Construction Total £'000 £'000 £'000 £'000 £'000 £'000 Cost At 1 January 105,730 20,469 7,103 1,202 15,270 149,774 Additions 2,497 69 26 - 11,924 14,516 Disposals (219) (3) (32) (1) (2,724) (2,979) Transfer to Other Fixed Assets - - - - (280) (280) Transfer to Government Grants - - - - 116 116 Sales (Note 6) (2,137) (218) - - - (2,355) Works to Existing Properties 1,353 43 23 7 - 1,426 Decrease in deferred land ------Reclassification 557 (532) (26) 1 - - Completions 11,489 1,857 4,167 - (17,513) - Transfer to Assets Held For Sale (126) - - - - (126)
At 31 December 119,144 21,685 11,261 1,209 6,793 160,092
Depreciation At 1 January 16,552 3,952 1,411 266 - 22,181 Charge for the year 2,075 330 154 14 - 2,573 Sales (Note 6) (158) (44) - - - (202) Disposals (219) (3) (32) (1) - (255) Reclassification 107 (106) (2) 1 - - Transfer to Assets Held For Sale (22) - - - - (22)
At 31 December 18,335 4,129 1,531 280 - 24,275
Net Book Value At 1 January 89,178 16,517 5,692 936 15,270 127,593 At 31 December 100,809 17,556 9,730 929 6,793 135,817
Represented by: Freehold Land and Buildings 94,858 16,890 9,730 929 6,793 129,200 Long Leasehold Land and Buildings 5,951 666 - - - 6,617
100,809 17,556 9,730 929 6,793 135,817
(i) Included within the net book value of £100,809,000 (2018: £89,178,000) of Housing Properties held for letting are Supported Housing and Housing for Older People properties with a net book value of £37,7919,633 (2018: £28,714,794)
(ii) Additions in the year include £178,573 (2018: £212,200) in respect of Development Administration and £501,080 (2018: £393,173) in respect of bridging interest.
(iii) Transfers were made in the year from property in the course of construction to other freehold land and buildings in respect of a shop unit and to furniture and equipment in respect of fixtures & fittings at New Lodge.
82 Joseph Rowntree Housing Trust Registered Charity
13 Housing Land and Buildings (continued)
(iv) The total accumulated Social Housing Grant received by the JRHT up to 31 December 2019, including Major Repairs Grant, was £36,429,024 (2018: £35,786,620).
(v) Properties are stated at historical cost except for pre 1990 rented properties in New Earswick which are stated at deemed cost being Existing Use Value for Social Housing (EUV-SH).
The carrying value of housing properties that would have been included in the financial statements had the assets been carried at historic cost less accumulated depreciation is as follows:
2019 2018 £'000 £'000
Housing Properties at historical cost 152,761 142,443 Accumulated depreciation (23,858) (21,902)
128,903 120,541
(vi) Expenditure on works to existing properties
2019 2018 £'000 £'000
Improvement works capitalised 272 634 Components capitalised 1,153 1,713 Amounts charged to income and Expenditure 501 595 1,926 2,942
(vii) JRHT considers individual schemes to be separate Cash Generating Units (CGUs) when assessing impairment, in accordance with the requirements of Financial Reporting standard 102 and SORP 2018. No impairment charge was made during the year.
83 Joseph Rowntree Housing Trust Registered Charity
14 Hartrigg Oaks 2019 £'000 £'000 Cost At 1 January 33,962 Expenditure in the year 107 Current Residence Fees on bungalows re-sold in the year 5,819 Less: previous Residence Fees on bungalows re-sold in the year (3,187) Increase in Residence Fees on bungalows re-sold in the year 2,739 At 31 December 36,701
Depreciation At 1 January 710 Charged in the year 48 At 31 December 758
Net Book Value At 1 January 33,252 At 31 December 35,943
Hartrigg Oaks is a Continuing Care Retirement Community built on land under JRHT's ownership in New Earswick. It consists of 152 bungalows, a 43 room Care Centre, together with communal facilities.
15 Other Fixed Assets - Tangible assets Other Freehold Vehicles, Land and Furniture and Buildings Equipment Total £'000 £'000 £'000 Cost At 1 January 17,033 932 17,965 Additions - 115 115 Transfer from Housing Buildings under Construction 108 172 280 Transfer to Investment Properties (245) - (245) Disposals - (125) (125) At 31 December 16,896 1,094 17,990
Depreciation At 1 January 3,420 663 4,083 Charge for the year 352 107 459 Disposals - (125) (125) At 31 December 3,772 645 4,417
Net Book Value At 1 January 13,613 269 13,882
At 31 December 13,124 449 13,573
Other Freehold Land and Buildings consists of the JRHT's business and office premises including solar panels, communal areas at Extra Care schemes and non-housing property in New Earswick and Derwenthorpe. Income generated from these holdings is included within Business Properties and Farms (note 3b). The net book value of the income generating properties at 31 December 2019 was £9,499,000 (2018: £9,890,000).
Farmland previously included within other housing land and buildings was reclassified as an investment property in 2019 Note 18)
16 Other Fixed Assets - Intangible assets
84 Joseph Rowntree Housing Trust Registered Charity
IT Software
£'000 Cost At 1 January 188 Additions - Disposals (129) At 31 December 59
Depreciation At 1 January 81 Charge for the year 6 Disposals (28) At 31 December 59
Net Book Value At 1 January 107 At 31 December -
17 Homebuy Loans 2019 2018 £'000 £'000
At 1 January 2,520 2,653 Repayments (128) (133) At 31 December 2,392 2,520
Homebuy loans are secured on the properties to which the loan relates and are repaid in line with the terms of the scheme.
18 Investment Properties 2019 2018 £'000 £'000
At 1 January 440 440 Transfer from Other Freehold Land & Buildings 245 - Gain on revaluation 2,078 - At 31 December 2,763 440
Farmland previously included within other housing land and buildings was reclassified as an investment property in 2019 (note 15)
Investment properties are included in the statement of financial position at valuation. This is based on an formal valuation obtained in January 2018 and December 2019 provided by an independent, qualified, chartered surveyor.
85 Joseph Rowntree Housing Trust Registered Charity
19 Properties held for sale
2019 2018 £'000 £'000 Shared ownership properties Completed properties 840 144 Work in progress - 1,687 840 1,831 Work in Progress Developed for Outright Sale - 306 Housing Land and Buildings 104 188 Other Freehold Land and Buildings - 214
944 2,539
20 Trade and Other Debtors 2019 2018 £'000 £'000 £'000 £'000
Stock 93 84 Rent Arrears Rent and service charges receivable 503 462 Provision for bad and doubtful debts (138) (127) 365 335 Prepayments and accrued income 865 322 Other Debtors 787 840 2,110 1,581
21 Creditors: Amounts falling due within one year 2019 2018 £'000 £'000
Debt (Note 25) 1,076 429 Rent in Advance 295 284 Recycled Capital Grant Fund (Note 23) 47 289 Deferred Grant Income (Note 24) 485 427 Accruals and deferred income 1,749 1,731 Other Creditors 1,690 2,657 5,342 5,817
86 Joseph Rowntree Housing Trust Registered Charity
22 Creditors: Amounts falling due after one year
2019 2018
£'000 £'000 £'000 £'000
Debt (Note 25) 54,895 53,516 Deferred Income - amounts received in advance: Rents received in advance 183 233 Leaseholders 992 873 Residential Care Homes and Extra Care 921 992 Hartrigg Oaks 361 418 THFC Bond 1,009 1,051 3,466 3,567
Capitalised Community Fees: At 1 January 1,706 1,785 Received in the year 446 68 Amortisation in the year (160) (147) At 31 December 1,992 1,706
Recycled Capital Grant Fund (Note 23) 417 906
Deferred Grant Income (Note 24) 41,994 40,246 Hartrigg Oaks Residence Fees (Note 26) 28,408 25,661 Bonds and Loan Stock (Note 27) 1,539 1,944 Deferred Land 2,796 2,796 135,507 130,342
23 Recycled Capital Grant Fund (RCGF)
2019 2018 £'000 £'000
At 1 January 1,195 1,076 Transfer in the year (Note 24) 126 70 Applied in the year (Note 24) (995) (90) Homebuy Grant repaid (Note 24) 128 133 Homebuy Grant abated - (1) Interest added to the Fund (Note 10) 9 7 At 31 December 463 1,195
RCGF is applicable in the following periods:- 2019 2018 £'000 £'000
Within one year (Note 21) 47 289 More than one year (Note 22) 416 906 463 1,195
87 Joseph Rowntree Housing Trust Registered Charity
24 Deferred Grant Income
2019 2018 £'000 £'000
At 1 January 40,673 40,828
Received in the year 1,395 160
Transferred from Properties in the Course of Construction (note 13) 116 - Transferred from RCGF (Note 23) 995 90 Transferred to RCGF (Note 23) (126) (70) Homebuy Grant Applied to RCGF (Note 23) (128) (133) Grant Previously amortised on Properties Disposed 39 21 Grant Previously amortised on Properties being redeveloped - 201 Amortisation in the year (485) (424)
At 31 December 42,479 40,673
Deferred Grant Income is due in the following periods:- 2018 2018 £'000 £'000
Within one year (Note 21) 485 427 More than one year (Note 22) 41,994 40,246 42,479 40,673
Grant released previously amortised on properties being redeveloped in 2018 relates to a property which will be demolished in 2020 prior to being redeveloped as an Extra Care scheme.
25 Debt Analysis
Borrowings are represented by : 2019 2018 £'000 £'000
Housing Loans (Note i) 40,738 38,651 Hartrigg Oaks loans (Note ii) 233 294 THFC Bond (Note iii) 15,000 15,000 55,971 53,945
Note i The Housing Loans comprise:- 2019 2018 £'000 £'000
Orchardbrook Ltd 738 762 Lloyds Banking Group plc Loan 1 - 889 Lloyds Banking Group plc Loan 2 10,000 10,000 Lloyds Banking Group plc Loan 3 8,000 8,000 Lloyds Banking Group plc Loan 4 6,000 6,000 Handelsbanken Loan 1 8,000 8,000 Handelsbanken Loan 2 8,000 5,000 40,738 38,651
(a) The loans from Orchardbrook Ltd are settled by equal half-yearly instalments of capital and interest over the estimated life of the scheme for which the loan was provided. The final instalments fall to be repaid in the period 2019 to 2047. The rates of interest are fixed and range from 9.25% to 15.875%. The loans are secured against 117 of JRHT's properties.
88 Joseph Rowntree Housing Trust Registered Charity
25 Debt Analysis (continued)
(b) Loan 1 from Lloyds Banking Group plc was for a 25 year term at a fixed rate of interest of 4.89% with the final instalment being due in 2021. The loan was redeemed during 2019.
(c) Loan 2 from Lloyds Banking Group plc is for a 30 year term with a bullet repayment at a fixed rate of interest. The average rate charged during the year was 4.75%. The margins increase over the life of the loan so that from September 2030 the rate, including margins, is 4.77%. The loan is secured against 123 of JRHT's properties.
(d) Loan 3 from Lloyds Banking Group plc is for a 28 year term with a bullet repayment at a fixed rate of interest. The interest rate charged during the year was 4.30%. The margins increase over the life of the loan, so that from 24 March 2036 the rate, including margins, is 4.28%. The loan is secured against 119 of JRHT's properties.
(e) Loan 4 from Lloyds Banking Group plc is for a 20 year term with repayments at 3 yearly intervals and a final repayment on 28 December 2034. Interest charged during the year was 3.57%. The margins increase over the life of the loan, so that from 28 March 2028 the rate, including margins, is 3.57%. The loan is secured against 86 of JRHT's properties.
(f) Handelsbanken Loan 1 represents a revolving credit facility of £8m . Interest is charged at a variable rate linked to LIBOR: the average rate charged during the year was 2.03%. The Facility, which is available until June 2023, is secured against 127 of JRHT's properties.
(g) Handelsbanken Loan 2 represents a revolving credit facility of £15m . Interest is charged at a variable rate linked to LIBOR: the average rate charged during the year was 2.96%. The Facility, which is available until June 2023, is secured against 219 of JRHT's properties.
The Housing Loans are repayable in the following periods:- 2019 2018 £'000 £'000 £'000 £'000
In one year or less (Note 21) 1,015 368 Between one and two years 18 1,376 Between two and five years 1,065 1,243 In five years or more 38,640 35,664 39,723 38,283 40,738 38,651
Note ii
The Hartrigg Oaks Loan comprises:- 2019 2018 £'000 £'000 Joseph Rowntree Foundation Fixed 233 294
Interest is charged on this fixed loan at an interest rate of 6.75%. The loan is due to be repaid in 2023.
89 Joseph Rowntree Housing Trust Registered Charity
25 Debt Analysis (continued)
The Hartrigg Oaks Loan is repayable in the following periods:-
2019 2018 £'000 £'000 £'000 £'000
In one year or less (Note 21) 61 61 Between one and two years 60 61 Between two and five years 112 172 172 233 233 294
Note iii A bond of £15m from THFC was taken out in 2013. Interest is charged at a fixed rate of 5.2%. The bond is secured against 240 of the Trust's properties and is repayable in 2043.
The THFC Bond is repayable in the following periods:-
2019 2018 £'000 £'000 £'000 £'000
In one year or less (Note 21) - - Between one and two years - - Between two and five years - - In five years or more 15,000 15,000 15,000 15,000 15,000 15,000
26 Hartrigg Oaks Residence Fees Fully Refundable Non-refundable Fees Fees Total £'000 £'000 £'000
At 1 January 22,212 3,449 25,661 Received in the year 2,993 1,047 4,040 Repaid in the year (1,036) - (1,036) Amortised in the year - (257) (257) At 31 December 24,169 4,239 28,408
27 Bonds and Loan Stock 2019 2018
£'000 £'000
At 1 January 1,944 2,208 Bonds and Loan Stock received in the year - - Bonds and Loan Stock repaid in the year (459) (382) Indexation 30 46 Transfer to Bursary shortfall (22) (23) Adjustment to net present value 46 95 At 31 December 1,539 1,944
Indexation represents an increase in sums due to Bedford Court bond holders, following the rise in RPI during the year.
90 Joseph Rowntree Housing Trust Registered Charity
28 Note to the statement of cash flows 2019 2018 £'000 £'000 £'000 £'000 28a Reconciliation of Operating Surplus to Net Cash Inflow from Operating Activities Operating Surplus 7,005 5,060 Depreciation of Housing Buildings 2,573 2,240 Depreciation of Hartrigg Oaks 48 27 Depreciation of Other Fixed Assets 465 567 Amortisation of Government Grant (485) (223) Amortisation of Non-refundable Residence Fees (257) (259) Amortisation of Capitalised Community Fees (160) (147) Decrease in Net Present Value of Loan Stock 46 95 Increase in value of Investment Property (2,078) - Increase in Stock of Materials (9) (3) Surplus on sale of properties (3,683) (2,436) Decrease/(Increase) in Housing stock held for resale 1,595 (1,403) (Increase)/Decrease in Debtors (512) 290 (Decrease)/Increase in Creditors (1,039) 995 (3,496) (257) Net Inflow from Operating Activities 3,509 4,803
28b Sale of Existing Stock of Housing Properties 2019 2018 £'000 £'000
Proceeds from sales (Note 6) 3,398 3,654 Less: Direct Expenditure (Note 6) (46) (38) 3,352 3,616
28c Net Cash Movement on Hartrigg Oaks Properties 2019 2018 £'000 £'000
Residence Fees received 4,040 2,491 Residence Fees repaid (1,036) (780) 3,004 1,711
Less: Direct Expenses (Note 6) (109) (47) 2,895 1,664
28d Analysis of changes in net debt At At 1.1.19 Cash 31.12.19 £'000 Flows £'000
Cash (5,878) 1,781 (4,097) Bank Loans due within one year 429 647 1,076 Bank Loans due greater than one year 53,516 1,379 54,895
Total 48,067 3,807 51,874
29 Capital Commitments 2019 2018 £'000 £'000
Expenditure authorised not contracted 10,154 - Expenditure contracted less certified 11,055 23,222 21,209 23,222
Capital commitments include £3,375,000 for deferred land payments where there is no fixed date for the payment.
The above commitments will be financed primarily through borrowings available for drawdown under existing facilities (£7,972,000), social housing grant (£497,000) and property sales (£12,740,000).
91 Joseph Rowntree Housing Trust 30 Leasing Commitments Registered Charity JRHT's total future minimum operating lease payments are set out below: 2019 2018 £'000 £'000 Within one year 62 68 Between two and five years 22 68 84 136
31 Joseph Rowntree Foundation (JRF) - Related Party Transactions
(a) Guarantee
JRF provided a guarantee to Lloyds Banking Group plc against a loan to JRHT. The loan this related to was redeemed in full during the year. The balance outstanding on the loan at 31 December 2018 was £889,082. See also note 25.
(b) Outstanding Loans Outstanding loans from JRF at 31 December 2019 amounted to £233,003 (2018: £294,110). Loans advanced were £nil and loan repayments amounted to £61,107. Interest charged on loans from JRF during the year was £18,512 (2018: £22,603). Further details can be found in note 25.
(c) Loan facility
JRF provides a facility for up to £15,000,000 to JRHT, for any short term cash flow requirements, negating the need to source external funding. Interest will be charged at market value rates, taking external advice as necessary. As at 31 December 2019 none of this facility had been drawn (2018: £Nil).
(d) Grants
JRF provided a grant of £1,808,000 to JRHT in 2019 to provide revenue support. The amount payable to JRHT in 2018 was £2,393,000.
JRF provided a grant to JRHT in 2019 to fund capital works required to improve Fire Safety within Housing Land and Buildings of £360,000. The amount payable to JRHT in 2018 was £433,000. JRF provided a grant of £497,000 to JRHT in 2019 towards the direct running and management costs of heritage assets. The amount payable to JRHT in 2018 for direct running costs only was £747,000. JRF proviided a grant to JRHT in 2018 to fund capital works to heritage assets and associated costs of £741,000.
32 Other Related Parties
Disclosures in relation to key management personnel are included in note 8. One resident, Mrs F Charnock, with a tenancy on normal commercial terms and no arrears at 31 December 2019, was a member of the JRHT Board until the second quarter of 2019. Mr Steven Burkeman, who was a Trustee until October 2019, also owns a property whereby a monthly estate charge is due to JRHT. The sum due is on normal commercial terms and there were no arrears at the year end.
2019 2018 33 Financial Assets and Liabilities £'000 £'000
Financial assets that are debt instruments measured at amortised cost 6,286 9,676 Financial liabilities measured at amortised cost (138,908) (133,784) Financial liabilities that are measured at fair value through the surplus or deficit (1,539) (1,944) (134,161) (126,052)
Financial assets measured at amortised cost are represented by current assets excluding prepayments and accrued income.
Financial liabilities measured at amortised cost are represented by all short and long term liabilities excluding those measured at fair value and liabilities to HMRC. Financial liabilities measured at fair value are represented by the deferred bonds and loan stock. The difference between the carrying amount and contractually obliged payments is: 2019 2018 £'000 £'000 Carrying amount 1,539 1,944 Contractual Obligations 1,634 2,085 (95) (141)
92 Joseph Rowntree Housing Trust Registered Charity 34 Post Balance Sheet Events During March 2020, the outbreak of Covid-19 was announced as a global pandemic by the World Health Organisation. JRHT has concluded that this is a non-adjusting post balance sheet event and as such the pandemic did not have any impact on the measurement of assets and liabilities as at 31 December 2019. The Covid-19 pandemic is, however, expected to have a financial impact on JRHT in 2020 in the following areas: Care homes and retirement villages have been significantly impacted by Covid-19 and,from a financial perspective, there is already evidence of increased costs being incurred on personal protective equipmement and increased staffing. Income in these settings is also lower than expected given reduced levels of occupancy. At the end of March, increased costs and reduced income was having an early effect of £0.3m and when extrapolated for the full year, this could have an estimated forecast impact of £1.2m. JRHT usually generates a proportion of its annual surplus from the sale of properties. There is considerable uncertainty of how the housing market will respond over the next twelve months. The current absence of property sales is estimated to have a negative impact on the surplus by the end of 2020 of £0.7m. In the light of the uncertainty in respect of construction projects, building costs and the housing market, JRHT has decided to pause its ambitious housing development programme. This is not expected to have a significant impact on the 2020 surplus. The only exception to the pause in development is in respect of future phases of New Lodge, a new retirement community which was opened in 2019. There is, however, expected to be a delay in the completion of these future phases as they are dependent upon the demolition of an existing building which contains a greater amount of asbestos than originally envisaged. The cost of the removal of the asbestos has not yet been determined. As the 'Governing Document 2019' section of the Trustees' Annual Report sets out in more detail, on 1 January 2020 the assets and liabilities of the unincorporated charity were transferred to a new Community Benefit Society named Joseph Rowntree Housing Trust under a Charity Commission Scheme and Order.
93