Financial Statements
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Year ended 31 March 2018 Financial Statements www.mvhomes.org.uk Contents Administrative Details .............................................................................................3-5 Strategic Report ........................................................................................................6-13 Board Report .............................................................................................................14-18 Independent Auditor’s Report to the Members ................................................19-21 Statement of Comprehensive Income ................................................................22 Statement of Financial Position ............................................................................23 Statement of Changes in Reserves .......................................................................24 Statement of Cash Flows ........................................................................................25 Notes to the Financial Statements .......................................................................26-55 2 www.mvhomes.org.uk Administrative Details Board Members Independent Board Members: Nicola Evans (Chair) John Chown (Deputy Chair) David Lewis – resigned 1 June 2017 Stephanie Howarth Carol James Marc Fury Elizabeth Lendering Rachel Honey-Jones Jonathan Tumelty – appointed 12 October 2017 Executive Officers: Michael Owen (Chief Executive) Lorraine Oates (Director of Finance and Resources) Victoria Slade (Director of Operations) Paul Allen (Director of Asset Management) – resigned 31st July 2017 Democratic Body Tenant Members: Frances Bevan (Chair) – reappointed 21 September 2017 Kevin Eddy – resigned 15 May 2017 Tracey Powell – reappointed 21 September 2017 Marlene Burns – reappointed 21 September 2017 Kim Ford Graham Walmsley – resigned 11 January 2018 Gaynor Bradley Joan Marshall Val Lloyd Lyndon Humphries – resigned 13 July 2017 Nigel Phillips-Gunter Annette Walters – appointed 21 September 2017, resigned 11 January 2018 Vivian Evans – appointed 21 September 2017 3 www.mvhomes.org.uk Administrative Details (cont.) Employee Members: Natalie Ryan (Deputy Chair) Mansell Mason Ceri Price Stephen Puddy Robert Davenport Chris Cooksey – resigned 13 July 2017 Kevin Clifford Lisa James – appointed 21 September 2017, resigned 16 March 2018 Alex Barlett – appointed 21 September 2017 Council Members: Bill Smith – resigned 30 June 2017 Julian Pike Tanya Skinner – appointed 30 June 2017 Registered Office: Ty Brychan 22 Lansbury Road Gellideg Merthyr Tydfil CF48 1HA Area Office: Johnny Owen Centre Forsythia Close Merthyr Tydfil CF47 9DS Independent Auditor: Mazars LLP Chartered Accountants 45 Church Street Birmingham B3 2RT Internal Auditors: Barcud Shared Services Valleys to Coast Ltd Tremains Business Park Tremains Road Bridgend CF31 1TZ Solicitors: Trowers and Hamlins LLP Sceptre Court 40 Tower Hill London EC3N 4DX 4 www.mvhomes.org.uk Administrative Details (cont.) Bankers: National Westminster Bank Plc Heads of the Valleys Branch 122 High Street Merthyr Tydfil CF47 8BN Funders: The Royal Bank of Scotland plc Global Banking and Markets Housing Finance 9th Floor 250 Bishopsgate London EC2M 4AA Principality Building Society PO Box 89 Principality Buildings Queen Street Cardiff CF10 1UA Merthyr Valleys Homes Limited is a registered society under the Co-operative and Community Benefit Societies Act 2014. Registration number 30532 R. Registered with the Welsh Government as a Registered Social Landlord. Registration number L150 5 www.mvhomes.org.uk Strategic Report Year ended 31 March 2018 The Board presents its Strategic Report on the affairs of Merthyr Valleys Homes Limited (MVH), together with the Financial Statements and Auditor’s Report, for the year ended 31 March 2018. Legal Status Our key objectives are: MVH is established and registered under the Co-operative and Community Benefit Communities Societies Act 2014 and is a Registered Social Landlord, registered with the Welsh • We want to improve all the open plan Government. MVH has adopted charitable green areas. rules. MVH is a not-for-profit mutual • W e want all our homes to be safe, energy organisation administered by a voluntary efficient and look good from the inside and Board of Management. out. • W e will remain the anchor investor and Principal activities and objectives in all areas we will encourage inward MVH owns, manages and maintains 4,131 investment. rented homes, including 206 units of • W e want to provide the greatest sheltered accommodation, located within opportunities for our community. the County Borough of Merthyr Tydfil. • W e want all members of our community to MVH also owns or manages 627 garages, feel valued, safe and supported. 39 retail units, a block of 12 co-operative • We want to provide a housing solution for housing flats which are leased to Taf young people. Fechan Housing Co-operative Ltd and 283 • W e want to build the type of houses our leasehold properties. community needs. Our Corporate Strategy ‘Yfory’ was adopted in 2016/17. For us, Yfory will bring: Organisation • Pride in the communities we live in • Pride in the organisation that we own and • W e are a mutual and we will work together work for to achieve our aims. • Gr eater opportunities for each of us to • We will live the mutual principles in the take responsibility way we operate. • W e will act democratically and be To ensure that Yfory can be achieved, we accountable to our members. need to remain financially strong. • W e will have a skilled and well trained workforce to deliver the services our members need. • We will use technology to build better services and stronger relations. • W e will remain a major employer in the Borough setting and encouraging others to adopt the highest standards. 6 www.mvhomes.org.uk Strategic Report Year ended 31 March 2018 Responsibility Bad Debts and Void Loss Bad debts and voids as a percentage of • W e want to be the best. gross rent receivable remained at 1.7% in • We want to provide support and 2017/18. We have continued to invest in information to our members to empower void properties during the year and turned them. around 17 more properties than the previous • W e want to share skills and learning year. Void losses in 2017/18 increased by between members. £21,000 compared to 2016/17. The number • W e will take responsibility to communicate of void properties at 31 March 2018 were 31. effectively and always seek positive outcomes for our tenants. Rent Arrears • We will support others to reach their full The cumulative rent arrears (current potential through grants and support. and former) increased by £78,000, from £626,000 at 1st April 2017 to £704,000 at 31 March 2018. Current arrears increased Financial Performance by £73,000, from £423,000 at 1st April 2017 The 2017/18 financial statements have to £496,000 at 31 March 2018. Former been prepared under FRS102, the Financial tenant arrears increased by £5,000 from Reporting Standard applicable in the £203,000 at 1st April 2017 to £208,000 at 31 United Kingdom and Ireland (‘FRS102’), March 2018 however the bad debt provision the Housing Statement of Recommended provides for 100% of this debt as soon as it Practice - Housing SORP 2014, Statement arises. of Recommended Practice for Registered Social Housing Providers (‘SORP 2014’) and Fixed Assets the Accounting Requirements for Registered The net book value of our housing stock was Social Landlords General Determination £57.219m at 31 March 2018. We invested (Wales) 2015. £5.321m in capital improvements during the year and this was offset by £3.355m Statement of Comprehensive Income of depreciation charges. A combination of The financial result for the year ended internal cash balances and grant income 31 March 2018 was an operating surplus from the Welsh Government has been used of £2.931m, a decrease of £0.298m. Our to fund the capital programme. operating margin fell from 18% to 15%, with increased turnover of £0.585m to £19.022m An impairment of fixed assets has been (3%) and a 6% increase in operating made at 31 March 2018 to write down expenditure compared to the previous the value of one property which will be year. Rental income is the largest income demolished in 2018/19. An impairment stream, representing 90% of turnover and of office furniture has also been made in the increase in rental income reflects the relation to items of furniture at our satellite agreed 2.5% guideline rent increase issued office site that will become obsolete by the Welsh Government. Income from the following the move to our new head office. sale of Right to Buy properties increased in the year, with 21 sales in 2017/18 compared to 14 in the previous year. 7 www.mvhomes.org.uk Strategic Report Year ended 31 March 2018 Total grant income was made up of Dowry at 31 March 2016 has determined that our Gap Funding of £2.9m and £0.349m Social contribution rates will increase to 8.5% in Housing Grant funding for the development 2018/19, and 10.7% in 2019/20. of 3 new properties at Haydn Terrace, which were completed in 2016/17 and 3 properties Net Assets in Thomas Street. The remaining £0.125m is The overall net assets position at 31 March capital grant to be received for the Thomas 2018 is £15.754m, compared to £12.979m Street development over the next 30 years at 31 March 2017. This is mainly due to the under the Welsh Government’s new Housing increase in the value of housing properties as Finance Grant 2. a result of the major investment programme and the construction of our new head