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2021-03-31-accounts

Magenta Living - Report and financial statements for the year ended 31 March 2021

MAGENTA LIVING

Report and Financial Statements

Year ended 31st March 2021

Company Registration No. 04912562 Registered Charity No. 1106969 Regulator of Social Housing No. L4435

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Magenta Living - Report and financial statements for the year ended 31 March 2021

Contents

Board Members, Executive Directors, Advisors and Bankers 3
Strategic Report 5
Streamlined Energy and Carbon Reporting 38
Report of the Directors 45
Independent Auditor’s Report to the Members of Magenta Living 50
Consolidated Statement of Comprehensive Income 54
Company Statement of Comprehensive Income 55
Consolidated and Company Statements of Changes in Reserves 56
Consolidated and Company Statements of Financial Position 57
Consolidated Statement of Cash Flows 58
Notes to the Financial Statements 59

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Magenta Living - Report and financial statements for the year ended 31 March 2021

Board Members, Executive Directors, Advisors and Bankers

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Board
Date of Date of resignation/
Appointment Retirement
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Chair Gerard Lucas 23 Sept 2021
David Clark 17 Sep 2013 23 Sept 2021
Vice Chair Nick Gerrard 21 Oct 2016
Other Members Jeff Green 21 May 2012 12 May 2020
Steve Foulkes 03 Jan 2013 1 Apr 2021
Muriel Wilkinson 03 April 2013 19 Nov 2020
Stephen 21 Oct 2016 23 Sept 2021
Penlington
Matthew Brown 13 Dec 2016
Sharon Grover 13 Dec 2016
Gordon Ronald 13 Dec 2016
Geoff Broadhead 25 Sept 2018 23 Sept 2021
Susan Goodman 25 Sept 2018
Mike Turner 08 Oct 2019
Trevor Hough 21 Jul 2020 23 Sept 2020
Ann-Louise 12 Nov 2020
Gilmore
Myles Edwards 1 Apr 2021
Liam Kelly 1 Apr 2021
Chief Executive Brian Simpson
Executive Directors
Executive Director of Customer Jayne Winders
Experience
Executive Director of Business Paul Anson
Growth and Resilience
Executive Director of Assets Ian Thompson
Executive Director of Finance and Ann Monk
Company Secretary

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Magenta Living - Report and financial statements for the year ended 31 March 2021

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Registered office Partnership Building
Hamilton Street
Birkenhead
CH41 5AA
Web site magentaliving.org.uk
Registered number Company Registration No. 04912562
Homes England Registration No. L4435
Charity Commission Registration No. 1106969
External Auditors Beever and Struthers Internal BDO LLP
Statutory Auditors Auditors Central Square
St. George’s House, 29 Wellington Street
215-219 Chester Leeds
Road LS1 4DL
Manchester M15 4JE
Solicitors Anthony Collins Bankers and The Royal Bank of
Solicitors LLP Funders Scotland plc
134 Edmund Street 280 Bishopsgate
Birmingham B3 2ES London EC2M 4RB
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Magenta Living - Report and financial statements for the year ended 31 March 2021

Strategic Report

April 2020 to March 2021...a year of the Covid-19 pandemic followed a challenging period for Magenta Living in 2019/20. Thankfully the Magenta Way transformation plan, in place to modernise Magenta and to develop a sustainable and thriving organisation was well underway and sufficiently robust to ensure that our core business could meet our obligations to our tenants.

All staff continued to work from home where they could and where this was not possible colleagues were encouraged to volunteer within Magenta’s communities supporting and helping our customers throughout. No staff were furloughed. Further details of the extensive support provided to our communities can be found on our website https://www. magentaliving.org.uk/annualreports

average arrears of this group have reduced in the period and that the % collection rates are no different to the overall rate. We have been able to continue supporting our tenants who have proved to be able to pay their rent.

The transformation plan, The Magenta Way, had been developed in response to the outcome of the In-depth Assessment (IDA) of May/June 2018 to create a roadmap in order to return to G1 status. Whilst a regrade to G1 did not happen in the year we made great inroads into restructuring areas of the business so that we were in a much better position to address the issues raised from the IDA around stress testing and clear mitigation strategies. Further, the regulator had published a “Regulatory Notice” in April 2019 in response to a breach of the Home Standard relating to our five-year electrical installation inspection programme. In 2020/21 we continued to address the underlying causes, including a review of data integrity and management. Savills and our internal auditors, BDO who

The Covid-19 pandemic led to three national and several local lockdowns and restrictions on day-to-day activities for Magenta Living, its staff and our customers. Rent collection was paramount and there was an obvious risk to collection rates. All tenants presenting to us who were impacted by Covid-19, in any way that affected their income, were given assistance. There were initially very high call levels as the furlough scheme kicked in, people lost their employment and in many cases people had to access Universal Credit for the first time. We have continued to monitor this cohort of over 900 tenants and are pleased to report that the

had been appointed to provide assurance to the Board and the Regulator that lessons had been learned from this experience and the necessary measures put in place, confirmed that this work has been completed and both BDO and Savills signed it off.

Restructuring and

transformation throughout the year meant that we brought in 90 new members of staff. Of these posts 65% related to turnover which overall sits at just under 10% of our total staff. Of the remaining 35% many of these relate to our compliance function specifically to undertake roles in electrical and fire safety and data integrity in Asset Management. Further investment was made in our customer contact centre, the introduction of our business assurance team and an increase to our apprenticeship programme. Wider strategic decisions around our Climate Change strategy also led to a number of focussed posts being created.

Essential repairs and compliance works continued throughout the period with work-flows increasing and ebbing according to the safe working methods that had to be adopted. Balancing risk and staff and customer safety throughout the pandemic led to us meeting our compliance targets especially around gas and electrical safety. A significant major project was undertaken in replacing the HPL cladding to The Towers. This was our only high-rise block with cladding which was in the form of decorative strips to each façade rather than in full. Nonetheless, to ensure the safety of our tenants and to reassure our

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Magenta Living - Report and financial statements for the year ended 31 March 2021

Strategic Report

Board that any risk was mitigated it was replaced with an A rated cladding and insulation system.

Development of new homes continued despite it being a difficult year in the construction industry dealing with the impact of Covid-19 and Britain leaving the EU. The Development team had some senior personnel changes but adapted well to changing working practices and challenges encountered on schemes. The team have continued to progress the delivery of new homes in line with the corporate plan objectives and performed very well. Indeed, they were praised by Homes England for their efforts in achieving as many completions as they did before 31st March 2021 despite the difficult year.

£11.5m

invested across Wirral & Cheshire

Our development highlights from 2020/21 include a total of £11.5m invested in developing new homes across Wirral and Cheshire East. This includes £1.7m grant from Homes England. Some of this investment has been spent on homes completed in the last year whilst others are still on-site and will complete over the next couple of years. A total of 103 homes were built across Wirral and Cheshire East providing options for social rent, affordable rent and shared ownership. We also marketed our first Rent to Buy properties, offering an alternative path to affordable home ownership for those that don’t have a deposit. We have delivered the first new build social rent homes on Wirral in 10 years! All of Willow Sands, located in West Kirby, our first 100% shared ownership scheme, was reserved off plan and sold within two months of handover.

There have been significant savings achieved in the year through procurement across several areas of the business but most notably in Asset Management and IT. An emphasis on competitiveness and ‘tight’ specifications de-risked the procurement process and contributed greatly to the savings target. There will be future transactional savings in contract management and processing of invoices as through our modern procurement regime we have streamlined and merged several contracts to achieve efficiencies of scale.

Following its publication in November 2020 Magenta Living welcomed the Social Housing White Paper as it backs the sector`s own proactive work to improve accountability, quality and transparent relationships with residents, with Magenta Living being an early adopter of the National Housing Federations Together with Tenants initiative. Our Magenta Communities Committee has grown and developed albeit they have had to adapt to remote meetings. They form part of our formal governance structure where tenants form the majority of the Committee. They along with the Board considered the White Paper and approved an action plan to tackle its 7 key themes:

In summary, we better understand the implications of the Building Safety Bill and Fire Safety Bill and the need

for better communication with residents to assure them of their safety and have responded to all issues identified by Merseyside Fire and Rescue Service who have inspected all of our high-rise blocks in addition to our internal inspection regime. We have now built over 1,000 new homes (987 at the year-end position and 13 completed since) and understand the need to effectively balance resources between new build and investment in existing homes, ensuring we can afford both.

Under ‘The Magenta Way’ we have improved our response to complaints, are seeking new ways to engage with a more diverse range of our customers and are improving the quality of our stock condition data to better prepare for the new Decent Home Standard promised by Autumn 2021. We have a longterm climate change framework to address the pressing need for de-carbonisation measures and energy efficiency improvements across all of our activities.

We have signed on as early adopters for Environment, Social and Governance reporting allowing housing associations to benchmark a consistent set of metrics which support our strategic journey in these areas https://www.magentaliving.org. uk/annual-reports

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Development at Delamere Avenue, Eastham
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Magenta Living - Report and financial statements for the year ended 31 March 2021

Strategic Report

All aspects of day-to-day housing services have been brought under a single Assistant Director

and service delivery in these areas will be reconfigured to reflect the key themes of the Social Housing White Paper and what tenants are telling us. We are determined to share in a transparent way our performance and will welcome confirmation from the Regulator outlining satisfaction levels from across a range of performance areas.

Our future corporate plan objectives will continue to have a customer focus – The Magenta Way.

The Board of Magenta Living is pleased to present its report together with the audited financial statements of Magenta Living (ML or the Company), a company limited by guarantee,

and Magenta Living Group (the Group) for the year ended 31

March 2021. These statements are prepared in line with FRS 102 and use the descriptions and naming conventions associated with these accounting standards. The Group consists of the Company and one dormant subsidiary, Wirral Partnership Homes (Building Services) Limited and two trading subsidiaries, Wirral Partnership Homes (WPH) (Developments) Limited and Hilbre Projects LLP (build for direct sale). Further to this the Group has an involvement in a joint venture – Bamboo Estates LLP (private rented sector vehicle with Torus Housing Group). The interrelationship between the various parts of the group is shown below.

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Bridge View, Runcorn
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A reduced detail version of the company structure

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Magenta Living - Report and financial statements for the year ended 31 March 2021

Strategic Report

Magenta Living (ML) commenced trading on 7th February 2005 in order to facilitate the transfer of homes from the Metropolitan Borough of Wirral. The Company’s principal activity is the provision and management of social housing. The Company is a not for profit organisation and operates throughout the Borough of Wirral with its head office at Hamilton Street in Birkenhead. Following the

transfer of the trade and assets 2016-17 with limited activity and into ML effective from 1 April Hilbre Projects began trading 2008, Wirral Partnership Homes from 1st April 2017. (Building Services) Limited is now dormant. WPH (Developments) Limited was incorporated in December 2011 with the principal activity being the construction of new properties for ML. WPH (Developments) Limited commenced trading as from 1st April 2013. Bamboo Estates began trading during

Table 1 shows the mix of housing stock in ownership and management of the company:

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Social Housing Year End 2021 Year End 2020
General Needs:
Opening Stock 10,857 10,887
-
Acquisitions 1
New Build 65 39
Property Sales (41) (66)
-
Reclassification 5
- -
Demolitions
-
Transfer to Bamboo (3)
Total General Needs 10,887 10,857
Supported Housing
Opening Stock 1,763 1,763
-
Reclassification (7)
- -
Acquisitions
-
New Build 21
-
Sold (1)
Total Supported Housing 1,776 1,763
Low Cost Home Ownership (Including intermediate rent)
Opening stock 25 17
New Build 17 9
Property Sales (1)
Total Low cost home ownership 42 25
Total Housing Stock 12,705 12,645
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Strategic Report

Magenta Living - Report and financial statements for the year ended 31 March 2021

Business and Financial Review

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Investment
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The Board reports a Group operating surplus of £6.7 million (2020: £2.9 million). The Group has continued to invest in both its existing stock and undertake new developments for affordable housing to rent.

At the year end, the Group’s total unrestricted reserves amounted to £112.0 million (2020: £115.5 million). These reserves are not cash reserves but rather refer to the total net asset position of the group at the year end.

During 2020/21 £1.3 million (2020: £2.3 million) of expenditure on housing properties was capitalised with a further £8.9 million (2020: £11.9 million) being charged to income and expenditure.

The Group’s turnover for the year ended 31 March 2021 was £69.6 million (2020: £65.7 million). This was principally from lettings £62.4 million (2020: £60.5 million) and other activities £5.5 million (2020: £4.6 million).

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Costs
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Operating costs totalled £59.6 million (2020: £62.0 million), that included routine and planned maintenance of £15.7 million (2020: £16.7 million) and £10.2 million (2020: £14.2million), was invested in the 2020/21 Improvement Programme, both capital and revenue expenditure, as detailed in Note 12.

Management and Service costs in the year totalled £25.4 million (2020: £23.5 million), of this £3.6 million related to pension service costs (2020: £3.9 million).

The volatility of the provision in respect of the defined benefit pension schemes can be seen in table 3. The Board have a longterm approach to this and have not requested any changes to the scheme nor have they requested an interim valuation.

Reserves are retained at levels that allow the group to continue to provide the services that the reserves are intended to support while managing the risks associated with long term expenditure plans. The budget and business plans are approved each year and are set to achieve this. The level of reserves is monitored throughout the year. The Group held £111,971k (2020: £115,515k) in the Income and Expenditure reserve as at 31 March 2021 and £Nil (2020:£nil) in designated reserves. Free reserves, i.e. unrestricted funds excluding tangible fixed assets net of grant, were (£93,958k) (2020: (£87,850k)) at 31 March 2021, as (£233,412k) (2020: (£229,341k)) is represented by fixed assets and can only be realised by their disposal. The funding facility is secured against the housing property fixed assets.

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Sales
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In relation to property sales, a Right to Buy sharing agreement exists with the Council which was agreed at transfer. With reference to this agreement from receipts of £1,413k (2020: £1,618k), £450k (2020: £493k) is due to the Council, £nil was utilised to pay off rent arrears, (2020: £1k), with the Company keeping the balance of £963k (2020: £1,124k). The receipts were generated from the sale of 31 (2020: 37) properties.

Development

Magenta Living has continued to develop throughout a period of significant change in the economic climate of social housing development. We have built a wide range of properties including specialist accommodation for older people and people with disabilities and a small number of shops. Table 2 illustrates the 884 homes we have built since transfer. The majority 703 are in Wirral with 141 in Cheshire West and Chester. Future developments are on site in Wirral, Cheshire East and Halton. In 2020/2021 103 properties were completed.

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Strategic Report - Business and Financial Review (continued)

Magenta Living - Report and financial statements for the year ended 31 March 2021

Table 2 below shows where those properties on site and to be completed in future years are located.

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Area Tenure Completions Completions Future years
Years to 2020/2021 - schemes
2019/20 on site
inclusive
Wirral Social rent 38 15 18
Affordable rent 647 60 28
Shared ownership 3 17 7
- -
For sale 7
- -
Private rent 8
- -
Cheshire West Affordable rent 141
and Chester
Cheshire East Affordable rent 24 11 22
-
Shared ownership 9 23
- -
Rent to buy 7
- -
Halton Affordable rent 65
- -
Shared ownership 65
- -
For sale 30
- -
For sale to Halton 69
Housing Trust
Total 884 103 327
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Our development at McGarva Way, Ellesmere Port
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Strategic Report - Business and Financial Review (continued)

Magenta Living - Report and financial statements for the year ended 31 March 2021

The Group’s five-year Statements of Comprehensive Income and Statements of Financial Position are summarised in the table below;

Table 3 - Group Highlights, five year summary

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For the year ended 31 March 2021 2020 2019 2018 2017
Statement of Comprehensive Income
(£’000)
Total turnover 69,589 65,730 67,282 64,123 63,651
Income from social housing lettings 62,380 60,542 61,139 60,177 60,329
Operating surplus 6,718 2,944 12,213 18,091 20,477
Surplus/(Deficit) for the year transferred (3,544) 6,768 3,654 19,031 15,353
to reserves
Movement in pension provision MPF/SHPS (10,559) 3,787 (8,668) 1,941 (951)
Surplus/(Deficit) for the year excluding 7,015 2,981 12,322 17,090 16,304
movement in pension provision
Statement of Financial Position (£’000)
Fixed assets 233,412 229,341 221,610 216,511 181,356
Net current assets 13,545 14,044 12,116 7,539 3,001
Total assets less current liabilities 246,957 243,385 233,726 224,050 184,357
Loans (due over one year) 76,150 81,100 81,100 89,300 72,764
Deferred capital grants 27,216 25,709 19,031 13,284 6,139
- - - -
Deferred income 1,107
Other creditors due after one year 80 80 80 273 324
Pension provision MPF/SHPS 31,540 20,981 24,768 16,100 18,041
Total Net Assets 111,971 115,515 108,747 105,093 85,982
Total Reserves 111,971 115,515 108,747 105,093 85,982
Housing properties owned at year end: No. No. No. No. No.
Social Housing 12,705 12,645 12,667 12,833 12,435
Statistics
Operating Surplus year as a % of turnover 9.7% 4.5% 18.2% 28.2% 32.2%
Operating Surplus as a % of income from 10.8% 4.9% 20.0% 30.1% 31.2%
social housing lettings
Rent losses (voids and bad debts as a % of 2.0% 2.1% 2.3% 2.9% 2.8%
rent and service charges receivable)
Rent losses (gross arrears as a % of rent 5.28% 5.66% 4.97% 4.94% 4.63%
and service charges receivable)
Liquidity (current assets divided by current 2.0 2.1 2.0 1.6 1.2
liabilities)
Total reserves per social housing £8,813 £9,135 £8,585 £8,189 £6,914
property
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Strategic Report

Magenta Living - Report and financial statements for the year ended 31 March 2021

Objectives, Strategy and Performance Management

The Corporate and Company Plan 2018-2023 sets the strategic direction for Magenta Living outlining our VISION, Vibrant…homes, lives, neighbourhoods and ensuring that Value for Money is central to everything we do the Corporate Plan incorporates our Value for Money strategy and targets. The plan is a guide and each year is reviewed to ensure that it remains relevant. The plan was developed during a period of rapid change in the sector but over the last year the continued impact of the rent reduction regime, Brexit and now the Covid-19 pandemic have created even more uncertainty around the operating environment of the future.

The success of any plan is how it can be adapted to take account of new situations and opportunities as they arise. Magenta Living and its staff and board live by our company VALUES. We are AMBITIOUS, ADAPTABLE and ACCOUNTABLE in order to achieve EXCELLENCE.

Our VIBE, strategic objectives ensure that we will meet our VISION

V ibrant, values driven through our PEOPLE

V

I nvesting in our current and future homes - through the effective use of ASSETS

I

B usinesslike to deliver greater Value for Money - through our efficient processes and use of RESOURCES

B

E xcellent services and neighbourhoods through our engagement with CUSTOMERS

E

The Magenta Way

The Magenta Way is a cultural change programme introduced to drive service improvement with a customer focus. The transformation plan within the Magenta Way has four areas of focus around

The cultural emphasis is to do the right things, at the right time, by working together. There is only one way to do something and that is properly The Magenta Way. A programme to introduce and embed the principles of the Magenta Way and to shape future service delivery was embarked upon and an Assistant Director of the Magenta Way appointed to lead on the initiative. This proved especially beneficial and we saw the success during the Covid-19 lockdown when all staff responded to their new circumstances positively and with great commitment to ensuring services continued to be delivered in The Magenta Way.

Magenta Living has had a planned and considered approach to Covid-19 and has used a 3Rs model – Respond, Recover, Re-invent. As we enter the Re-invent phase we are starting to consider the lessons learnt and what opportunities we may have to do things differently in the future. A delivery programme has been developed called Magenta Futures which brings together the Magenta Way programme, Vibrant Futures (HR and OD programme) and introduces four Experience Panels for – Customer Experience, Colleague Experience, Social Housing Customer (for colleagues who are also customers of social housing) and Community Partners.

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Strategic Report - Objectives, Strategy and Performance Management (continued)

Magenta Living - Report and financial statements for the year ended 31 March 2021

These panels were formed to capture ideas and improvement from our colleagues and partners in a structured way where results can be documented and demonstrated. As an example, the customer panel has mapped the customer journey, created customer personas and identified improvement priorities e.g. digital services for customers and how important one version of customer data is to delivering an excellent customer service. The colleague panel works in the same way, but looking at internal processes and projects e.g. creating a “how do I…?” section of the intranet where colleagues can get answers to the questions they would have asked their colleagues when in the office. The Partnership Panel is being revamped now we can meet in person with the aim of learning from our partners local knowledge and understanding how we can collaborate better. The Social Housing Customer Panel is planned to be launched in early 2022.

Our Customers

Our first priority as a provider of social housing is to address housing need from people who are homeless to those who are inadequately housed to those who are simply wishing to access their first home.

Many or our customers have economic circumstances which require support from welfare benefits. The introduction of Universal Credit (UC) has been a cause for concern over a number of years and we still await the roll out to all qualifying tenants who will transfer from their legacy benefits to UC. It has been identified as a strategic risk however good management has meant that rent collection levels from those in receipt of UC has remained at similar levels to those still on housing benefit or self-paying. During the Covid-19 pandemic over 900 tenants whose circumstances were impacted by furlough, unemployment or reduced income contacted us and a significant number of these were sign-posted

to successful UC claims. These customers continue to be monitored closely to ensure that we are there to help further if necessary however, collection rates remain high as a result of the intervention and support provided.

Homelessness and rough sleeping have been on the rise in all of the major cities and in many smaller towns up and down Britain. It has been a focus during the pandemic for the Liverpool City Region’s combined authority. We have assisted Wirral Council and the other local authorities in which we operate to house homeless people and families. Throughout the pandemic we have been very active in the Housing First regime which provides support in situ to help former street homeless people to settle into a tenancy.

To sustain our business going forward we need to understand the demographics and the requirements that people will have for their housing. This feeds into the development programme as new build homes need to be future proofed to meet that future demand. This is allied to a growing and aging population and the rise of a new generation of millennials taking their place in the workforce and housing market. Demand is changing as a result of new working practices being in place following the pandemic and Magenta Living has an ongoing survey to identify what our current and future customers need in their homes, feedback on the services we offer and to ensure this is aligned to satisfaction. In addition, a high-level strategic survey about demand and opportunity was undertaken by an external consultancy, Arc 4 and this information is being fed into our planning.

Our Regeneration and Development plans

Magenta Living will continue to invest in its existing homes to ensure they remain up to a modern standard. The plan has been updated following issues arising post-Grenfell and our recent experiences with landlord compliance works and reflects our increased focus on safety. There has been significant investment in our homes on health and safety measures to ensure compliance with particular emphasis on fire risk, electrical installation and gas safety. This programme of works and focus on compliance has continued

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Strategic Report - Objectives, Strategy and Performance Management (continued)

Magenta Living - Report and financial statements for the year ended 31 March 2021

throughout the pandemic despite restrictions leading to some working practices being inefficient to deliver.

Magenta Living has introduced a Climate Change strategic framework which enables policies around major initiatives such as energy efficiency and community regeneration, development schemes and zero carbon and agile working to be developed. These areas will have significant resource implications and generate potential economies. They are included in our Business Plan and future budgets.

In some areas, wider regeneration work will be undertaken to make sure that less popular housing remains sustainable for the future. This may include demolition and replacement housing being built.

Table 2 (page 10) above shows that Magenta Living has continued to develop and the number of properties currently on-site. We have a development programme of 839 homes within the current Business Plan with further plans to develop 900+ homes in Wirral and our other strategic areas for investment.

An officer governance group manages the wider regeneration strategy bringing together Housing Management, Asset Management, Development and Finance to ensure a comprehensive approach that is affordable within the Business Plan framework.

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Development at Mallowdale Close, Eastham
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Our Finances

New ways of working and exploring new financial models and delivery entities has resulted in new approaches being adopted outside of the traditional housing association operating model.

Strong financial management has ensured that Magenta Living has been able to fund a comprehensive investment programme of circa £220m and a development programme of 1,000+ new homes to date. (987 at the year end and 13 completed since then).

Investment of circa £220m and development of 1,000+ homes to date

We have updated our business plan taking into account the emerging impacts of Covid-19 and have revised our development plan in line with the latest research available and the Homes England affordable homes funding programme announced during the year. This has resulted in a revised view regarding tenure changes and focus which has fed into the wider support required going forward. We are in the final stages of refinancing in order to drive our plans forward. The current facility contains a high fixed interest rate and therefore requires restructuring in order to progress our development plans and to provide the most effective value for money in respect of finance costs.

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Development at Bridge View, Runcorn
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Strategic Report - Objectives, Strategy and Performance Management (continued)

Magenta Living - Report and financial statements for the year ended 31 March 2021

Our IT and Digital Capacity

Throughout the Covid-19 pandemic we have continued to drive forward with our IT strategy which supports the digitalisation of our processes and the updating of core infrastructure and delivery mechanisms to improve customer service. This has seen a number of changes in the structure of the team along with the implementation of key support systems to drive efficiency for our frontline repairs and maintenance teams.

Our Governance

Magenta Living Board

The Board consists of up to 12 Non-Executive Directors ‘NED’ appointed on a skills basis and will meet at least six times a year. The Board is responsible for determining the long-term strategic direction of the Group and implementing relevant policies to achieve its objectives whilst ensuring compliance with legal and regulatory requirements.

Group Audit & Risk Committee ‘GARC’

The GARC consists of at least four NED members, no member may be an Executive. The Chair is appointed by the Board. The Chair of ML Board may not Chair the Committee or be a Member of the Committee. The GARC meets at least quarterly. The GARC advises the Magenta Living Board on whether the organisation has robust risk management, internal control and assurance frameworks in

place; provides independent scrutiny and challenge, while providing assurance to the Board; ensures that there is a transparent procedure in place for the selection, appointment, oversight and periodic review of external and internal auditors.

Governance & Remuneration Committee ‘G&RC’

The G&RC consists of at least four NED members, no member may be an Executive. The Chair is appointed by the Committee. The Chair of ML Board may not Chair the Committee but may be a Member. The G&RC leads and makes recommendations on matters concerning governance effectiveness, succession planning for nonexecutive directors, appraisal of board directors and the Chief Executive, contractual issues relating to the Chief Executive and remuneration of nonexecutive directors, the Chief Executive and colleagues.

Enterprise & Development Committee ‘EDC’

The EDC consists of at least four NED members, no member may be an Executive. The Chair is appointed by the Committee. The ML Chair may not be a Member of the Committee. The EDC meets at least quarterly. The EDC is responsible for assisting the Magenta Living Board in fulfilling its development responsibilities and is tasked with exercising its delegated authority in relation to the consideration, approval and monitoring of development and commercial activities (including Hilbre Projects LLP and Bamboo (Joint Venture).

Magenta Communities Committee.

Magenta Communities

Committee was set up to ensure that customers retain formal links with the board. It is a full committee of the board made up of three board members, seven tenant members and two community members. It has several scrutiny functions including reviewing lessons learnt and importantly implemented following customer complaints. It also has a Community Fund (see note 25)which makes resources available for community investment in schemes which meet local needs.

Continuous improvement and Governance.

The Board continually strengthens and improves its governance effectiveness and in 2020-21;

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Strategic Report - Objectives, Strategy and Performance Management (continued)

Magenta Living - Report and financial statements for the year ended 31 March 2021

Our Corporate Plan 2018/23

Performance management

The Board of Magenta Living approved our current Corporate Plan in March 2018. It is reviewed each year and our annual plan for 2019-20 retained our focus on our four areas of strategic performance in the style of a “balanced scorecard”, set out under Magenta Living’s four Corporate Objectives, our VIBE. In developing our annual plan for 2020-21 these Corporate Objectives now incorporate the key aims of “The Magenta Way”, our Transformational Change programme. The Board has also sought to enhance strategic performance management and the ”Objectives and Key Results” (OKRs) approach to goal setting and performance review was implemented in 2020-21 and has been further refined in our Corporate Objectives for 202122 which are outlined in the graphic on page 17 ;

These performance areas are also supplemented by our Magenta Living Company Key

Financial Performance Indicators which are presented as part of the strategic dashboard and which are also included in our financial monitoring reports.

Key Financial Performance Indicators

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Performance Indicator Target Actual RAG
Void Rent Loss (%) 2.1 2.2
Rent Due Collected (%) 100.0 100.0
Budgeted v Actual Expenditure 100.0 81.9
Operating Surplus £m (1.3) 6.1
Liquidity: Cash (months) 1 1
Solvency (Curent Ratio) 1 2.3
Loan Drawdown (£m) 96.2 76.2
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Covenants
Performance Indicator Annual Actual RAG
Test
Asset cover Covenant % 105.0 300.5
Interest Cover Covenant/ 110.0 478.9
EBITDA %
Cumulative Cashflow Deficit 139.3 97.6
Covenant £m
Operating Margin (%) N/A 9.7
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16

Magenta Living - Report and financial statements for the year ended 31 March 2021

Strategic Report

Magenta Living Annual Plan 2021/22

Vision

Magenta Living will deliver: Vibrant... homes, lives, neighbourhoods

Values

In order to do this we will be:

• Accountable - acting with integrity and engaging with partners to ensure continued excellence

VIBE

We will deliver our VISION through 4 Strategic Objectives, our VIBE:

Vibrant, values driven culture through our people

Investing in our current and future homes through our effective use of assets

Businesslike to

deliver greater Value for Money through our efficient processes and use of resources

Excellent

services and neighbourhoods through our engagement with customers and partners

Annual Plan We have Objectives transformed our culture to one of high performance and continuous improvement, delivering an excellent customer experience

Current homes Future homes

We have We have invested in delivered our providing multi-tenure high quality, development energy efficient programme homes in providing high neighbourhoods quality and where people energy efficient aspire to live new homes our customers aspire to live in

We have optimised the use of our resources to achieve our vision of Vibrant... homes, lives, neighbourhoods

We are delivering great services by listening to our customers and other stakeholders, adapting to reflect what they value

• Increase in staff

Annual Plan • Increase Key Results in staff survey score for “poor performance is addressed by managers” from 4.9 to 5.5

• Reduce complaints upheld from 75.6 to 71.6 per thousand households

• Achieving IiP Platinum milestones

• Increase EPC rating of 288 households to C or above

148 new properties • 75% of new properties hitting EPC B or above

• Reduce empty property rent loss to 1.9%

• At least 1.9% 50% of new • Implement properties customer will be safety in affordable the home rent measure

• Complete 5900 stock condition surveys

• Deliver • 90.4% of further £1m customers savings agree that from Asset Magenta Management Living listens and Building to their views Services and acts upon • Identify them (up further from 88%)

• Identify further from 88%) £500k in • 92% of process customers efficiencies agree that • Reduce Magenta empty Living property gives them repair costs opportunities by £212 to make their views known • Reduce average relet times ( minor empty homes) to 39.5 days • Generate £530k from commercial initiatives

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Strategic Report

Magenta Living - Report and financial statements for the year ended 31 March 2021

Value for Money Statement

Our Strategic Approach to Value for Money.

As part of the approved 5-year Corporate Plan outlined above, our strategic approach to Value for Money (VfM) is embedded within our four key strategic objectives, our “VIBE” and for this reason we do not have a separate VfM strategy. Instead we highlight through our “VfM Roadmap” how certain elements of the plan are aligned and complement each other to drive VfM for ourselves, our customers and our other stakeholders. The board’s agreed approach to achieving VfM is presented in diagrammatical form on the right:

The Board approved Magenta Living’s new Value for Money (VfM) Strategy in March 2021. Our agreed overall strategic approach to VfM is defined as follows;

“We have finite resources with which to deliver our Vision of Vibrant...homes, lives, neighbourhoods. We will optimise the deployment of these resources to have the greatest possible impact for the benefit of the communities we serve and our other stakeholders. We will achieve this in partnership with our customers, and we will do so openly and transparently.”

Our strategic approach to VfM recognises that we must maintain a robust assessment of the performance of all our assets and resources. In practice this definition of value for money means managing our resources economically, efficiently and effectively to provide homes and services of a high quality. It also means that we need to plan and continually assess our performance to deliver ongoing improvements in value for money.

Our strategic approach recognises that VfM is not just about cutting costs; it is about understanding the ‘Value Chain’ , and optimising the relationships between costs, processes and the quality of outcomes, or the Economy, Efficiency and Effectiveness of everything we do.

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Strategic Report

Magenta Living - Report and financial statements for the year ended 31 March 2021

Economy

Efficiency

Effectiveness

Economy is achieved at the most basic level by managing our costs and what we pay for our goods and services

Efficiency is achieved when we make the best use of our resources and is improved when we continuously review and improve the way we do things

Effectiveness is achieved when we meet our quality standards and our customers’ expectations.

Underpinned by:

Delivered by:

Demonstrated by:

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Our accreditations
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Strategic Report

Magenta Living - Report and financial statements for the year ended 31 March 2021

Our Value for Money policies and guiding principles

Our VfM Policies and Principles are a broad description of our approach to VfM and how we will achieve it. It includes descriptions of the types of activities which we will and won’t consider in our drive to deliver improved VfM.

recognising our primary focus is and will remain affordable homes.

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Community garden at Bentinck Street, Birkenhead
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Strategic Report

Magenta Living - Report and financial statements for the year ended 31 March 2021

The impact of COVID-19 on our 2020-21 performance

The COVID-19 pandemic has prevented us from investing in our existing homes and development of new homes, at the level we had anticipated.

COVID-19 impacts performance

This had resulted in lower than planned spend in year on our investment programmes. It will take some time to catchup on these programmes and an increased budget has been put into place for 2021-22 with programmes re-timed over the coming years. We have seen some of our development contractors and sub-contractors suffer which has had a significant impact on both completion dates and costs.

Performance against our Corporate Objectives and VfM metrics

Investing in homes and delivering new ones

Overall Strategy

Magenta Living’s strategy to investing in existing and future assets (new homes) expressly seeks a balance between the two. We are cognisant of our role as Wirral’s largest landlord and our part in anchoring communities and neighbourhoods. For this reason, our approach to active asset

management is informed by our option appraisal strategy.

We also recognise the role we have in contributing to the need for affordable new homes and in having a development programme delivering a mix of affordable tenures (new build) social rent, affordable rent and shared ownership. We have engaged with Homes England and the urging of government to increase supply and have led on significant brownfield site developments within our current development programme. Our current approved development programme aims to complete a further 461 units by 2022.

461 units by 2022

We are very close to completing the agreement to refinance the organisation to enable us to take forward an aspirational pipeline of additional development opportunities increasing the programme by a further potential 1000 units.

potential to increase by 1000 units

The need for increasing housing supply and tenures also links closely to our two trading entities, Hilbre Homes and Bamboo Lettings. Hilbre Homes is building homes on an investment basis for sale. Bamboo Lettings is managing

both higher value homes for market rent and some hard to let properties achieving both investment and social outcomes. These three strands offer a comprehensive approach to mixed tenure and mixed delivery across the group. The trading activity not only compliments our offer but delivers profits that can cross-subsidise future social and affordable development. This is in the context of our social purpose mission in which we are clear these complimentary trading activities are material but secondary to our core purpose.

We further support the strategy with a geography anchored in Wirral but one that encompasses opportunities within the near authorities of Halton, Cheshire West and Chester and Cheshire East looking to develop logical nodes of stock in these areas increasing housing supply and delivering limited geographic diversification.

Risk is embedded in our

thinking; safe homes, sustainable neighbourhoods across a range of tenures and housing markets mitigates core business risk. This is further mitigated by our measured approach to diversification delivering additional income.

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Abbeyfields development
in Sandbach, Cheshire
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Strategic Report

Magenta Living - Report and financial statements for the year ended 31 March 2021

Development

The Board revised its Risk Appetite in May 2021 and its current appetite for development related activity is as follows:

Development

The Board is Cautious in its appetite for expanding upon the existing development programme of 839 units and the newly agreed programme of an additional 1,000 units. The Board remains Opportunistic in its appetite for inorganic growth through stock acquisition.

Merger

The Board is Cautious in its appetite for Merger as a method by which Magenta Living might better deliver its purpose and has agreed to review its Merger Code statement annually to ensure the statement accurately reflects the Board’s appetite at any given time.

- - Build for sale

The Board is Cautious in its appetite for further development of Build-for-sale units beyond currently agreed levels.

Our current approach is summarised as:

In 2020-21 103 new homes were completed, including 15 social rent homes which were the

first new build for social rent on the Wirral in ten years.

Looking forward, Magenta will be exploring ways to improve the environmental sustainability of its homes and for development that will involve looking at Modern Methods of Construction and new technologies that help to reduce the embedded carbon in actually building the new home as well as improving the energy efficiency making our homes more affordable for our customers to live in.

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Show home at Heathfields,
Audlem, Cheshire
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Strategic Report

Magenta Living - Report and financial statements for the year ended 31 March 2021

Deriving Optimal Benefit from our Resources and Assets

In order to generate surpluses and capacity to invest in the development of new homes and community regeneration activities, the Board has taken the strategic decision to establish an entity to support this objective; Bamboo Estates.

Bamboo Estates

Bamboo Estates is a joint venture between Magenta Living and Torus 62, with each partner owning 50% of the commercial entity with 208 properties invested into Bamboo. Each RP leases both social and hard to let units. There are two primary reasons for this:

Magenta Living has committed all of the profits it receives from Bamboo to be reinvested as internal subsidy for the development of new social properties on Wirral. The £467k profit to be distributed to Magenta Living from 2021/2022 will support this programme. The profit attributable to Magenta Living, net of social rent foregone (£285k) is £182k.

Hilbre Homes

Hilbre Homes (Hilbre Projects LLP) was a partlyowned subsidiary company of Magenta Living with the sole aim of building properties for outright sale. Magenta’s partner in the venture was a commercial construction company. On 30th June 2020 Starfish Commercial Limited the minority member of Hilbre Projects LLP, served a six-month notice of its intention to exit the membership agreement. On 14th September 2020 the Board of Starfish Commercial Limited informed the Board of Wirral Partnership Homes (Developments) Limited of its intention to pass a special resolution to enter creditors’ voluntary liquidation. The six-month notice to exit the membership agreement ended on 30 December 2020 at which point Starfish Commercial Limited exited the membership agreement. At the point that Starfish Commercial Limited exited the membership agreement WPH (Developments) Limited became liable for any losses incurred in Hilbre Projects LLP. Wirral Partnership Homes (Building Services) Limited became the minority member of Hilbre Homes on 30 June 2021.

Hilbre Homes has completed the development of four schemes and retains two schemes with planning. While viewings and the conveyancing process have been heavily impacted by the Covid-19 pandemic, Hilbre has adapted its sales model and had a successful year in terms of selling the remaining new homes in the current housing market, which has been boosted by the incentive of the stamp duty land tax holiday. Magenta Living’s anticipated return from Hilbre Homes has been adversely impacted by performance challenges resulting in prolongation of build profiles, and difficulties at planning stage causing delays to start on site. This contributed to significant increases in construction costs that outweighed increases in property values. The result of this is that Hilbre Homes current financial forecast is loss making. Both of the two remaining sites are at an advanced sales stage. The Board of Hilbre Homes, supported by the Magenta Living Board, are considering a number of options in terms of the future of the organisation including the evaluation of alternative schemes and the potential to place the organisation into a dormant state once the existing assets are divested.

23

Strategic Report

Magenta Living - Report and financial statements for the year ended 31 March 2021

Newcastle Furniture Service (NFS).

The Board has also agreed to establish a partnership with Your Homes Newcastle through implementing their furnished tenancies service, Newcastle Furniture Services (NFS). The service requires limited resource from Magenta Living whilst providing value for money benefits to Magenta Living and its customers.

The service provision helps to deliver the E in Magenta Living’s VIBE, representing Excellent services and neighbourhoods – through our engagement with customers and partners. The goal of the service is to help our customers sustain their tenancies; through making their home more liveable, preventing furniture poverty- a growing issue within our communities, and removing financial pressures, i.e. obtaining furniture through less affordable means that may result in customers falling into arrears. It reaches its goal through its flexible offering - no ‘one size fits all’; there are a number of packages to suit the customers’ needs, and payment is available through Housing Benefit, Universal Credit or selfpayment.

After its first year of active trading, the tenancies service has already exceeded its Year 2 workflow assumptions of 220 packages. It is on target to surpass Year 3 predictions of 330 packages later on this year. Every package contains a weekly Magenta Living administration fee of £3.84, which covers the cost of providing the service.

surplus of £25k reinvested into Magenta Living

This administration fee also provides a surplus; in the 2020/2021 financial year, there was a surplus of just over £25k which will be reinvested into Magenta Living to support future outreach and development activities.

Asset Management

Through asset management we have a clear focus on landlord compliance and keeping people safe, investing in the necessary stock data and processes to support this as part of our Active Asset Management Strategy. As well as enhanced data we have a clear approach to property sustainability and performance and understand the contribution each home makes to the business. Further value is being driven through a supplier review to benchmark supply chain costs.

Magenta Living’s Assets team ensures the provision of an enhanced, safety-focused service to customers, whilst also driving an integrated approach to delivering value for money in relation to its maintenance and improvement services.

The Assets team is committed to delivering a high-quality, customer focused repairs service and to provide homes that are well maintained, habitable and safe for people to live in.

Enshrined in our 2020 Repairs and Maintenance policy is the recognition that a successful

responsive repairs service considers its customers, resources and statutory obligations whilst demonstrating efficiencies and value for money. To help deliver this we have revised the repairs categories so that we can increase the number of jobs completed in one visit and reduce the average time taken to complete a repair. Additionally, following the completion of an in-depth option appraisal process in relation to software for the diagnosis of repairs and a replacement contractor system, we have now progressed with the introduction of the preferred system and this went operational at the end of 2020-21.

Understanding the performance of our assets is a significant part of the Active Asset Management Strategy which sets out how we will make intelligent decisions on the future investment in our stock by ensuring that we understand the performance of our assets.

In order to understand the performance of our assets we need robust data. We have commissioned surveyors to undertake an additional 40% stock condition survey which will ensure we’ve obtained a level of 70-80% stock data by September 2021. From this point a robust level of intelligence will be maintained by a dedicated inhouse resource refreshing stock condition data on a rolling 20% basis.

Magenta Living uses an Asset Performance Evaluation (APE) model, in conjunction with the stock data, to help identify the properties that are financially poor performing. The APE model calculates the financial

24

Magenta Living - Report and financial statements for the year ended 31 March 2021

Strategic Report

Net Present Value (NPV) of our assets, which in simple terms is the income vs expenditure over a 30-year period. The calculation includes factors such as capital investment, maintenance and cyclical costs, rental income and void rent loss. The APE model then enables us to combine the financial information with the social objective data that is held in the model for an overall view of how the assets are performing. To ensure the APE model continues to provide robust information for the option appraisal process, the model will be refreshed in early 2022 following the conclusion of the stock condition survey

We require option appraisals to be carried out on assets that have been identified, via the APE model, as poor performing or where their future viability is in question. The option appraisals process enables us to determine the appropriate investment requirements or help decide whether other interventions are needed in line with our Divestment Policy. This VFM approach has resulted in the disposal of eight properties, a set of commercial units and four areas of land generating an income of c.£770,000.

VFM approach generates c.£770,000

We have developed a new Climate Change Strategy Framework which sets out a range of targets and aspirations in order to reduce the Magenta Living carbon footprint and overall impact on climate

change. Over the coming years, we will commit to meeting these targets throughout the organisation from improving the energy efficiency and climate resilience of the housing stock to ensuring sustainable best practice is executed within the office and stores. In recognition of our achievements to date we have been awarded a ‘Silver’ accreditation status from SHIFT for delivering against our challenging environmental targets.

Silver SHIFT accreditation

Our Strategy is also driven by our ambitions for the economic success of the Wirral, job creation and prosperity. However, in the wake of Housing Sector budget reductions, the emphasis on collaborative working across Wirral and further afield could never be more central to the future outcomes and successes within the scope of energy efficiency and fuel poverty projects. This collaborative approach will ensure Magenta Living accomplishes a cleaner, greener and more sustainable future and our customers can enjoy the kind of health and wellbeing that should be expected in sustainable and vibrant homes.

Last year we identified that

our empty homes management service wasn’t performing in the way we wanted it to. As a result, the way the service was delivered underwent a service review. Following the recovery from Covid-19, we are aiming

to reduce the average cost of an empty home by c. £240 and the average number of days to re-let all empty homes by c.15 days. There is still work to be done to improve our empty home performance, but we are pleased with the progress made so far.

Magenta Living takes a

safety-first approach to Asset Management and, following the outcomes from the Hackett Review, and the organisation’s own Landlord Compliance Review our investment plans have been developed to ensure that they are aligned with the best compliance practices within the sector.

To ensure compliance is delivered with consistent quality and cost effectiveness we are in the process of undertaking several major procurement projects. We have recently concluded the procurement of a number of significant compliance contracts which will provide not only value in terms of efficiencies and improved customer service, but also c.£830k cost reduction per annum.

Aim to reduce costs by c.£830k per annum

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An example of an NFS furniture package
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Strategic Report

Magenta Living - Report and financial statements for the year ended 31 March 2021

Procurement

Magenta Living has an in-house procurement team responsible for ensuring that optimum value is realised from its externally sourced goods, services and works. For new or re-procured contracts negotiated and signed in 2020/21 the team delivered savings of £1.713M.

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savings of £1.713M
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Magenta continues to receive savings annually throughout the duration of Contracts, and the value of that over the last financial year equates to £495K.

We are also working with Building Services and our supplier for building materials supplies after undertaking a benchmarking review of current prices paid and efficiency savings following the implementation of Total Mobile, revised van stocks

and a move towards maximising the delivery service. It is hoped to achieve up to 10% of the annual value of the Contract in each of the remaining years of the Contract which equates to a further circa £300K per annum.

Total savings achieved £2.208M

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Total savings achieved
£2.208M
£
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Performance against our VfM Metrics.

The tables below set out our performance against the VfM targets and objectives that we set ourselves. All benchmarking referred to is against our peer group of Northern Housing Associations with more than 7,500 properties. The Board feels this is an appropriate peer group as it enables comparisons of costs and overheads with organisations of similar size, structure and operations, whilst also minimising potential regional differences in costs. The benchmarked associations are listed below.

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Bernicia Group Knowsley Housing Trust Rochdale Boroughwide
Housing Limited
Beyond Housing Limited Lincolnshire Housing Salix Homes Limited
Partnership Limited
Bolton at Home Limited Livin Housing Limited The Riverside Group Limited
County Durham Housing Mosscare St. Vincent’s Housing Thirteen Housing Group
Group Limited Group Limited Limited
First Choice Homes Oldham One Manchester Limited Together Housing Group
Limited Limited
ForViva Group Limited One Vision Housing Limited Torus62 Limited
Gentoo Group Limited Ongo Homes Limited Trafford Housing Trust
Limited
Great Places Housing Group Onward Group Limited Wakefield And District Housing
Limited Limited
Incommunities Group Limited Plus Dane Housing Limited Wythenshawe Community
Housing Group Limited
Jigsaw Homes Group Limited Progress Housing Group Yorkshire Housing Limited
Limited
Karbon Homes Limited Regenda Limited Your Housing Group Limited
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(NB: Organisations highlighted in magenta are Housemark members against whom our STAR satisfaction and Operational Efficiency is benchmarked in the tables on the next page).

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Strategic Report

Magenta Living - Report and financial statements for the year ended 31 March 2021

VFM Metrics Non-Regulatory: performance and future targets

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VFM Metric Measure 2020/21 2020/21 RAG 2021/22 Comments
of: Target Actual Status Target
Headline Cost Economy
Per Unit
Empty Homes Economy £3,750 £3,893 £3,771 Reduction
repair cost in cost to be
(per unit) achieved by
increase in
amount of
works to be
completed in
house and a
review of our
empty homes
standard.
Empty Efficiency 1.9% 2.13%o 1.9% Performance
Property Rent severely
loss impacted by
Covid-19.
Additional
resources
and process
efficiency
improvements
being
introduced to
empty property
management to
reverse this.
Savings Efficiency n/a n/a n/a £1m New VfM OKR
from Asset for 2021-22
Management
and Building
Services
Savings on Efficiency n/a n/a n/a £240k New VfM OKR
staff turnover for 2021-22
Other Efficiency n/a n/a n/a £0.5m New VfM OKR
Efficiency for 2021-22
gains
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Strategic Report

Magenta Living - Report and financial statements for the year ended 31 March 2021

VFM Metrics Non-Regulatory: performance and future targets

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VFM Metric Measure of: 2020/21 2020/21 RAG 2021/22 Comments
Target Actual Status Target
Development Efficiency n/a n/a n/a 148 New target for
programme starts 2021-22. 148 starts
from new 1,000 unit
programme
Development Efficiency 131 100 185 Target not met.
Programme Performance severely
Completions impacted by Covid-19.
Ongoing staff Efficiency 7.5days 5.0 days 7.5 Target met.
sickness levels at performance remains
below peer group impressive compared
average to peer group.
A year on year Effectiveness 85.0% 88.4% 85.0% Staff engagement
improvement in increased as a result
staff engagement, of the launch of
as measured by our Magenta Way
our in-house staff transformational
survey change programme
and the support for
staff through Covid-19
working arrangements
Investors in Effectiveness Retain IiP IiP Gold Attain IiP IiP platinum is the
People Gold Retained Platinum target for Dec 2021
Number of Effectiveness n/a n/a n/a Increase by New VfM OKR for
existing housing 288 2021-22
units at EPC level
C or above
Customer Effectiveness 90.0% 93.9% 93% Performance is top
satisfaction with quartile compared to
services provided our peer group. Target
by Magenta Living is to maintain top
(STAR survey) quartile performance.
Effectiveness 90.0% 90.1% 90.5% Performance is better
Customer
than the median for
satisfaction with
our peer group. Target
the home (STAR
is to maintain top
survey)
quartile performance.
Effectiveness 90.0% 91.4% 90% Performance is top
Customer
quartile compared to
satisfaction
our peer group. Target
with the
is to maintain top
Neighbourhood
quartile performance.
(STAR survey)
Effectiveness 90.0% 96.1% 85% Performance is top
Customer
quartile compared to
satisfaction
our peer group. Target
that their rent
is to maintain top
represents Value
quartile performance.
for Money (STAR
survey)
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N.B. STAR targets approved by Board Sept 23rd 2021

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Strategic Report

Magenta Living - Report and financial statements for the year ended 31 March 2021

Operational Efficiency.

The tables to the right provide information as to our performance against some of our key operational housing management metrics.

Void (empty properties) rent loss

Our ability to deliver reduced relet times and empty property rent loss was severely impacted by COVID-19. We have set challenging targets for improvement in this area for 2021-22.

Rent Collection

We continue to perform very well in terms of rent collection, with collection rates close to the median for our housemark peer group.

Rent Arrears

Despite the impacts of COVID-19 ongoing excellent performance on rent collection means that our rent arrears are comfortably top quartile for our housemark peer group.

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Strategic Report

Magenta Living - Report and financial statements for the year ended 31 March 2021

Our Performance against Regulatory VfM metrics; at-a-glance summary.

----- Start of picture text -----
No Metric Backward Look Current Forward Look Summary Narrative
Performance
2018-19 2019-20 2019-20 2020-21 2020-21 2021-22 2022-22 2023-24
Actual Actual Sector/ Budget Actual Budget Projected Projected
Peer Group
Median
1 Reinvestment 5.30% 9.93% 6.88%/ 8.09% 6.21% 18.11% 14.20% 16.28% The 1,000-unit
6.93% delivery programme
will be commencing
in the budget year
(2021/22), increasing
the reinvestment. In
addition, the existing
property works will
remain stable past the
budget year, which
includes catch up
works from the delays
due to the impacts of
COVID-19 pandemic
restrictions.
2A New supply 0.17% 0.37% 1.96%/ 1.08% 0.81% 0.65% 1.40% 1.08% The percentage will
delivered % 1.97% fluctuate in line with
(social housing new delivery from the
units) 1,000-unit programme
2B New supply 0.11% 0.00% 0.27%/ 0.18% 0.00% 0.00% 0.23% 0.00% The forecast is not
delivered % 0.28% expecting large levels of
(non-social non-social units, these
housing units) are from two schemes
identified, These will
remain ad hoc in future
years.
3 Gearing % 35.00% 35.54% 78.5%/ 36.74% 32.94% 40.48% 40.41% 38.89% Gearing levels remain
78.95% low for the sector,
the refinancing will
enable reduced costs
in terms of cash
management, however
the new development
programme will cause
a slight increase
to develop. The
programme as forecast
will provide sufficient
surplus to keep the
gearing stable.
4 EBITDA MRI 334.00% 174.30% 319%/ 198.35% 421.46% 224.05% 381.91% 456.37% Reduced costs after
Interest Cover 322.1% the budget catch up
% year leading to higher
operating surplus, the
interest payable is
increasing due to the
drawdowns to fund
the investment in new
properties
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A local neighbourhood, Woodchurch

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Strategic Report

Magenta Living - Report and financial statements for the year ended 31 March 2021

Our Performance against Regulatory VfM metrics; at-a-glance summary (continued)

----- Start of picture text -----
No Metric Backward Look Current Performance Forward Look Summary Narrative
2018-19 2019-20 2019-20 2020-21 2020-21 2021-22 2022-22 2023-24
Actual Actual Sector/ Peer Budget Actual Budget Projected Projected
Group Median
5 Headline social 3,970 4,294 4,454/ 4,462 4,036 4,578 3,904 4,046 Costs remain high in
housing costs 4,458 the budget year due
per unit to catch up costs and
inefficiencies as a
result of the Covid-19
pandemic, this is largely
in relation to property
maintenance along with
increased compliance
and routine works.
Economies of scale with
regards to management
costs will improve
annually and specific
targets and efficiency
programmes are in place
to adress controllable
costs.
6A Operating 5.70% -1.39% 29.28%/ -4.92% 5.36% -1.83% 8.83% 10.02% While an improvement
margin on 29.25% on the prior year due
social housing to the identification of
lettings % savings in other areas
of the organisation, this
margin continues to be
affected by increased
cost to invest in our
management structure
and compliance works.
6B Operating 8.20% -0.32% 26.09%/ -2.55% 6.79% 5.33% 14.80% 17.78% Improved but continues
margin overall 26.11% to be impacted by
% high costs associated
with inefficiencies as a
result of the Covid-19
pandemic along with
costs associated
increased compliance
expenditure.
7 Return 5.30% 1.40% 4.85%/ -1.19% 2.91% 1.40% 3.60% 4.50% Improved but continues
on capital 4.88% to be impacted by
employed high costs associated
with inefficiencies as a
result of the Covid-19
pandemic along with
costs associated
increased compliance
expenditure.
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A local neighbourhood, Prenton

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Strategic Report

Magenta Living - Report and financial statements for the year ended 31 March 2021

Operating Costs

Our costs have risen in recent years through a combination of increased investment in core services, restructure of the management team following the IDA, investment in compliance to ensure the appropriate standards are met, improved housing management, property investment in new and existing stock, and investment in communities. Outcomes for customers and communities have been positive, as evidenced by our high levels of customer satisfaction. While the COVID-19 pandemic has reduced the amount of investment in our new and existing stock in the year we have continued with our plans to improve systems and processes and have diverted resources throughout the pandemic to directly support our customers both directly and through partnership with Wirral Borough Council. We have not furloughed any of our staff and have continued to invest in staff support in terms of training, development, flexibility, health and wellbeing in order to minimise the impact of the pandemic.

Outcomes delivered.

Customer Satisfaction

Our customer satisfaction ratings are very high and as evidenced in the tables above they benchmark extremely positively compared to our peer group. This provides robust evidence of positive Value for Money outcomes for customers and demonstrates that we are focussed on our core business and on putting

our customers first. Across all STAR Survey core questions our performance is either top or second quartile. We will continue to use STAR annually to monitor general customer satisfaction levels. In addition, we have also launched a range of transactional surveys delivered by an independent research company to measure operational outcomes and service quality on a continuous basis.

Social Value

2020-21 was an exceptional year, as the Covid19 pandemic massively impacted our communities and the work we do to create social value. With large numbers of customers affected, our community offer was quickly shifted to an emergency response to assist those vulnerable, isolating and shielding within our neighbourhoods.

We played an active role in Wirral Council’s Humanitarian Cell, in partnership with a vast range of statutory, community and voluntary agencies. An Emergency Food Hub was set up, to support people in the early stages of lockdown and Magenta Living provided funding and assigned a fleet of colleagues with vans to safely deliver thousands of parcels of food and other essential items to those in need. Magenta Communities Committee set

£100,000 set aside by Magenta Communities Committee

aside £100,000 from its budget as an emergency fund to assist the massive challenge faced by our communities.

This fantastic response was recognised as good practice in the sector by Housemark and Magenta Living were formally thanked by Baroness Boycott, Chair of Feeding Britain.

However, understandably, this shift to an emergency response affected our community offer. In line with our vision and strategic objective of developing and supporting the neighbourhoods and communities we work in, Magenta Living invests in community regeneration activities. We utilise the “HACT Wellbeing Evaluation” methodology to provide an indication of the social value created through this investment. In 2020-21 it is estimated that our investment in community regeneration activities generated £13.9million of social value,

£13.9 million of social value

which while still significant, is a large fall from previous years as many of the activities which this figure comprises were impacted by lockdown restrictions. Magenta Communities Committee, a formal subcommittee of our Board, which comprises a majority of tenants supported by Board and Community Members continues to drive forward our ambition in this area. After switching from live to online remote meetings they committed £76,000 to key partner agencies during the year

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Magenta Living - Report and financial statements for the year ended 31 March 2021

to increase support in mental health for young people and create employment opportunities in creative industries within our neighbourhoods, as well as £100,000 set aside for the emergency response (£47,394 committed). Such investment in community partners is a costeffective way to generate social value in local communities. Looking ahead, many of our community activities have begun to re-establish and Magenta Communities Committee is in a strong position, however the need within our neighbourhoods for support is greater than ever and we will have to strategically choose how we can have the greatest impact from our limited resources, once again utilising partnerships as a cost effective way to achieve these aims.

Customer Engagement

With the impact of Covid19, the early part of 2020/21 was challenging in terms of customer engagement. As restrictions were imposed, many elements of our customer engagement strategy came to a halt. While this continued to impact throughout the year, progress was made through remote meetings and digital channels.

At the more formal level, after a break during the early part of the year, Magenta Communities Committee began meeting remotely and considered the organisational approach to following items during the year:

Implications

Magenta Communities Committee entered 2021/22 with a full committee and a reserve, as well as a customer Chairperson, and look well prepared to ensure Magenta Living continues to be influenced by customers as well as delivering objectives such as compliance with the Social Housing White Paper and the NHF Together with Tenants campaign.

Through our Compass brand which offers a range of opportunities for customers to get involved, many formal and less formal engagement opportunities for customers are offered. In total 596 customers were involved during the year influencing 15 service areas.

Looking ahead we have begun working on developing a bespoke customer engagement online platform, using state of the art software, and Magenta Connect will be launched during 2021/22. This will ensure we maximise the opportunity to engage our customers digitally as well as future-proofing our Compass opportunities.

VfM Conclusion

We have invested in our asset compliance functions and management teams to ensure that we have sound foundations upon which to deliver our future plans for stock investment, new homes development, community regeneration and transformational change. We recognise the adverse effect that this has had on our cost base. COVID-19 has and will significantly continue to impact our service delivery model and our development plans for new homes. We have recast our business plan to reflect these influencing factors. Future years will present new challenges in the delivery of Value for Money. The VfM Strategy approved by Board in March 2021 will ensure that Magenta Living is able to effectively respond to these challenges.

The Board’s Value for Money Self-Assessment and Statement of Compliance

The Regulator of Social Housing’s Value for Money Standard 2018 sets out its required outcomes and specific expectations of registered providers and their approach to Value for Money. The Board of Magenta Living has completed a self-assessment against the VfM Standard, and gains assurance that VfM is being achieved from a variety of sources including;

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management delivered by our internal auditors, BDO in May 2020. The framework sets out our risk and assurance approach and the roles of Board, Group Audit and Risk Committee and senior management in how we manage, monitor, report and gain assurance on the effectiveness of our risk management activities. It also contains the Board’s risk appetite statement.

Strategic Risks

Taking into account the evidence provided in this document the Board of Magenta Living is satisfied that we continue to comply with the Regulator of Social Housing’s VfM standard.

The table below provides a summary of Magenta Living’s current strategic risk register. All ratings and controls have been reviewed and updated as a result of the COVID-19 pandemic and several net risk scores have increased in recent months.

Risk Management

The Board of Magenta Living approved the company’s current Risk Management and Business Assurance Framework in May 2021. The framework incorporates enhancements identified as a result of an internal audit of risk

----- Start of picture text -----
Risk area Nature of risk Key controls Net Rating
Score
Government A potential combination Affordability checks prior to sign-up. Net Rating
policy and of Government policy, Rent arrears are pursued via a firm but Medium High
collectable welfare reforms fair approach. Use of specialist arrears 8
income. and demand for our management software and clear escalation
properties has the policies. Managers ensure that the
potential to reduce both organisation is kept abreast of welfare
the amount of income it reforms. Weekly tracking/reporting to
would be possible for us Board of key collection data. Single and
to raise and our ability to multivariate testing of the Business Plan.
collect it. Business Plan approved annually by Board
which encompasses a number of key
metrics and data, performance against
which is monitored monthly.
Business Combination of Business Plan approved annually by Board. Net Rating
Planning and inadequate Business Single and multivariate stress testing Medium High
Value for Planning and failure to is completed annually to demonstrate 12
Money achieve Value for Money business stress scenarios including
(VFM) has the potential external influences e.g. inflation spikes,
to significantly impact Brexit impacts.. Annual Value for Money
on our ability to achieve Assessment is completed against the
and deliver our strategic Value for Money Standard and approved
aims and objectives. by Board. An action plan is created from
the Self-Assessment, targets are then set
annually to improve our compliance with
the Value for Money Standard.
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Magenta Living - Report and financial statements for the year ended 31 March 2021

Strategic Report

----- Start of picture text -----
Risk area Nature of risk Key controls Net Rating
Score
Development Failure to deliver * Enterprise and Development Committee Net Rating
the development (EDC) are provided with reports every Medium High
programme negatively six weeks / two months. Reports provide 16
impacts on the growth an overview of each scheme including
of the business. costs, timescales, consultant information.
Planning Risk issues which covers progress
against planning approvals, delays
and restrictions. Scheme specific Risk
Register which identifies any key issues
e.g. contractors insolvency, land contract
changes. Church Steeple Report - provides
visual representation of asset volumes by
status i.e. complete, onsite and not started
including high level of information. New
site acquisition and development report
provides what programmes are in the
pipeline. EDC have delegated approval
spend of =<£3m decisions on a scheme
(above £3m is sent to ML Board with
recommendation).
Treasury Financial resources are Annual budget is set and approved by Net Rating
Management either inadequate or not ELT and Board. Business Plan approved Medium High
and Financial managed appropriately annually by Board which encompasses a 12
Capacity leading to resource number of key metrics and data including
surpluses or shortages stress testing. Monthly financial report
which could impact containing financial KPI’s (including
on the achievement of Treasury) and budget reports reviewed by
corporate objectives. ELT Board. Quarterly financial monitoring
reports are provided to the Board for
noting. Weekly Cashflow and monthly
Treasury monitoring reports are monitored
to confirm draw down availability against
the Loan Agreement. Reported monthly
to ELT & quarterly to Board. Assets &
Liabilities Register (ALR) is maintained and
reconciled on a quarterly basis; including
the Balance Sheet monthly reconciliation
and narrative.
Ineffective Ineffective Governance Key Governance documents in place Net Rating
Governance leads to failure to and updated in line with company rules. Medium High
achieve Corporate aims. Boards skills matrix is updated on an 9
annual basis. All Board Directors receive
annual performance appraisals and have
a Personal Development Plan Chair and
CEO meetings are held monthly to discuss
emerging issues and forward plan Board
& Committee meeting agendas to ensure
they remain focused on objectives and
industry specific topics.
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----- Start of picture text -----
Risk area Nature of risk Key controls Net Rating
Score
Three yearly review of the Governance
structure and processes for Magenta Net Rating
Living’s Boards & Committees is completed Medium High
by a Third Party. 9
Health & Failure to comply H&S Key Performance Indicator report Net Rating
Safety and with Health and providing assurance of compliance is Medium High
landlord Safety regulations produced; weekly to SLT COVID Ops, 6
compliance (e.g. gas servicing, ELT Monthly, GARC quarterly and Board
Control of Asbestos, bi-annually. Business Assurance Function
Legionella, Fire Safety completes reconciliation of certificates
, electrical safety and monthly and reported to ELT. ISO45001
lift maintenance and certification and regularly internal audits
servicing) would lead provide independent third party assurance.
to a serious breach
of relevant legislation
and Serious Detriment
under the HCA
Consumer Standard.
Customer Engaging with Customer Key Performance Indicators Net Rating
Excellence customers and key and Metrics from across the business are Low 6
partners along with provided to Magenta Living Board on a
excellent service quarterly basis. Magenta Communities
delivery is central to Committee ensures resident involvement
our Corporate Plan for in service prioritisation and improvement.
2018-23, therefore WBC conduct ad-hoc reviews relating to
ineffective customer the provision of housing related support
engagement and the services to individuals funded via welfare
poor delivery of services benefits. An annual Self-assessment
would mean our vision against the Ombudsman Complaint
would not be realised. Handling Code is completed. Annual
accreditation against Emergency Alarm
Services (Telecare Services Accreditation)
confirms meeting the required National
Standards. Regular internal audit of
customer-facing services as part of our
3-yr internal audit programme. An annual
Self-assessment against the Ombudsman
Complaint Handling Code is completed.
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----- Start of picture text -----
Risk area Nature of risk Key controls Net Rating
Score
Data integrity Poor data governance Fortnightly IT Change Control Board Net Rating
results in poor quality meets with key stakeholders from the Medium 9
data which negatively business to discuss changes that impact
impacts MLs ability on data and security. IT Strategy for
to meets in statutory single source data and system integration
duties and impairs progress is provided to ELT and Board
effective decision bi-annually. Annual systems threat
making and governance. simulation testing to highlight areas for
improvement in the IT teams technical
response. Continuous data loss prevention
technology to detect and alert unusual
levels of data extraction, encryption or
deletion.
Hilbre Homes Failure to achieve Monthly Hilbre Board meeting held. Net Rating
anticipated return Performance metrics (property sales, High 16
of 11% results in contract overruns etc) are provided to
less internal subsidy Enterprise and Development Committee
available to support and Group Audit & Risk Committee on a
Magenta’s development quarterly basis for comment / noting. Legal
programme. Hilbre does meetings held on a transactional basis are
not repay the loan to documented through reports on Magenta
Magenta before 31st Living’s position and recommendations are
March 2023 which provided. Legal advice obtained relating to
would cause Magenta current contractual and insurance position
Living to breach its with previous Partner of Hilbre.
covenant with the
lender.
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*Net rating scores agreed at Magenta Living Board Meeting on 13th July 2021

----- Start of picture text -----
A local neighbourhood, Birkenhead
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Magenta Living - Report and financial statements for the year ended 31 March 2021

Streamlined Energy and Carbon Reporting ‘SECR’

Reasons for Change in Emissions

This is the second year of reporting under SECR. The current emissions compared to the base year (April 2019 – March 2020) have been decreased by 344.4 tonnes of CO2e, which accounts for a 17% decrease. The main factors causing this reduction are associated with the COVID-19 pandemic, which resulted in offices and shops being closed for a large proportion of 2020 and 2021 and a significant reduction in land travel.

Business travel

Activities relating to travel are limited to company cars and employee-owned vehicles for business use.

Quantification and Reporting Methodology

HM Government Environmental Reporting Guidelines: including streamlined energy and carbon reporting guidance (March 2019) has been used for the collation of data sources and reporting of emissions. UK Government GHG Conversion Factors for Company Reporting has been used for the reporting of emissions, using the 2020 version.

Exclusions

There are no data exclusions in this reporting period.

Base Year

The base year is April 2019 – March 2020 and the gross reported emissions during that period were 2,078.1 tonnes of CO2e. The emissions for the current period show a significant reduction (17%) regarding the base year, which is mainly due to the COVID-19 restrictions during 2020/21.

17% reduction in CO2e emissions

Target setting & Responsibilities

The target is to reduce gross scope 1, 2, and 3 emissions in tonnes of CO2e per property by 2% per year. The reduction of the performance of the current period against the target was 17%.

Intensity Measurement

Organisational boundary

The financial boundary of the business has been used to determine the reporting boundary.

Operational scope

Measurements include mandatory scope 1, 2, and 3 emissions. Estimates have been made with the collation of data. Additionally, optional emissions from refrigerants and electricity transmission and distribution losses have been included in the report.

The metric chosen for reporting is gross global scope 1 and 2 emissions in tonnes of CO2e per number of portfolio properties as this is a common business metric for a property-based operation. An intensity measurement will be reported each year with comparison made against previous year to highlight performance.

Carbon Offsetting

No Carbon Offsetting is recorded in this reporting period.

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----- Start of picture text -----
SCOPE % estimated Specific April 19 - April 20 - March 21
1 CO2e exclusions March 20
(tonnes) (%)
Natural Gas 0% None 1,290.3 1,197.4
Company 0% None 374.6 373.2
owned
transport
Refrigerants 0% None 11.3 11.3
Total Scope 1 0 None 1,676.2 1,581.9
SCOPE 2 % estimated Exclusions April 19 - April 20 - March 21
CO2e (tonnes) March 20
Electricity 0 None 334.4 100.1
Total Scope 2 0 334.4 100.1
SCOPE 3 % estimated Exclusions April 19 - April 20 - March 21
CO2e (tonnes) March 20
Electricity T & 0 None 28.4 8.6
D Losses
Private 0 None 39.2 43.1
transport
for business
purposes
Total Scope 3 67.6 51.7
TOTAL CO2e Scope 1, 2, 3 Gross emissions 2,078.1 1,733.67
(tonnes)
Intensity Metric Measure (property) 321.00 321.00
Intensity Metric (Gross emissions) tCO2e/ 6.474 5.401
property
Energy Consumption Exclusions April 19 - April 20 - March 21
March 20
kWh As above 10,022,465 8,642,566
Carbon offsets 0.00 0.00
TOTAL CO2e Scope 1, 2, 3 Net emissions 2,078.10 1,733.67
(tonnes)
Intensity Metric (Net emissions) tCO2e/ 6.474 5.401
property
----- End of picture text -----

Figure 1: Emissions summary

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Energy Efficiency Actions

The 2020/21 reporting year has seen the start of energy efficiency actions to reduce carbon emissions across the business. Whilst we have committed to a 30-year 3 stage climate change strategic framework around our housing assets to reduce carbon usage by 80% by 2040 and net zero by 2050, from an offices and operations standpoint, we have taken action in 3 key areas; People, Services and Standards:

Services

Fleet Vehicle Transport Emission Reduction

We have worked with the Energy Saving Trust to understand what a successful transition to Electric Vehicles within our operational fleet would look like. The report has given us a strategic outlook in looking to increasingly adopt EV transport across the fleet over the next 5 years and to reduce carbon emissions within our operational services.

Employee Commuting

Aim to reduce carbon by 80% by 2040

People

We have brought forward electrical car availability within leasing agreements and have introduced further investment to our sustainable travel fund including pedal and E-Bikes for our colleague commuting. Again, this will reduce carbon emissions within our operational services.

Agile Working

Sustainability Team

We have appointed a Sustainability Team within the organization to both lead and liase with all partners around all aspects of sustainability within the organisation. The team strategically lead and provide data on a number of key projects to reduce energy usage within our homes as well as to work with others around offices/operations. The team will also be joined by an Energy Advice Service, whilst for residents, will also take on champion status around energy efficiency with internal partners also.

Climate Champions

To further influence energy efficiency in and out of the organization, we currently have 25 Climate Change Champions with representation from all levels and all areas of the business including committee members and residents. This group aims to influence behavioural usage and organisational awareness of the environment including energy usage and reduction. The group produce an internal Climate Chronicle publication (which is also seen by Board), forward stories to Social Media channels and produce content for resident newsletters, seen by our near 13,000 resident households.

we reach 13,000 residents through Social Media

We have implemented an agile working policy as part of our response towards the COVID19 pandemic. Colleagues have the option to work at home which has reduced carbon output from business and commute mileage by reducing vehicle usage all together from our operational services. No adjustment has been estimated in respect of carbon produced as a result of working from home.

LED Feasibility Case

Over the last year, we have looked at the usage of our electricity within our offices in which we have undertaken a feasibility case to reduce energy usage and carbon reduction within our operational electrical usage.

Resource Reservation Strategies

As part of our commitment towards Environmental Social and Governance frameworks, we are currently writing strategies and associated commitments around resource and water conservation alongside responsibly resourced materials, waste management and pollution reduction. We are hoping to publish these within 2021-22.

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Standards

Sustainability KPI’s

To effectively and accountably measure our standards across the business, we have

implemented 12 sustainability metrics which take account of offices/operations, current home CO2 & energy usage, new development standards and ecology. We produce these on a quarterly basis and have set targets which have been agreed by senior leaders to measure our short, medium- and longerterm progress in a standardized format.

Accredited ESG Framework

As part of showing our commitments towards energy efficiency and environmental causes, we are currently an early adopter of the Good Economy’s Environmental, Social and Governance Framework standards alongside leading housing providers, banks and financial partners. We are measured on our carbon emission reduction via strategy, operation and organisational leadership and how effective we are in acting against our carbon reduction goals to achieve Net Zero by 2050.

Net zero by 2050

Carbon Literacy. We have currently undertaken training with Board and Executive Leadership Team with the view within 21/22 to obtaining training delivery to our Climate Champions and Senior Leadership Teams. To go further, Magenta Living are also committed to ensuring an in-house training network to both promote and standardize decarbonization thinking across the business in the form of Carbon Literacy accredited trainers. With this also, we are looking to achieve Carbon Literate Organisational status and to be able to show the sector we are serious as a collective in increasing our energy efficiency and decreasing our impact on the planet.

SHIFT Accreditation

We have been assessed by third party sector sustainability accreditation body; Sustainable Housing Index for Tomorrow (SHIFT). This has included assessment of the sustainability and energy efficiency actions within our existing homes, new developments, offices and operations, supply chain management and organisational leadership. We were awarded silver status within our first year for our current standard of organisational sustainability and are 1 of only 17 housing associations in the country with this accolade.

Silver SHIFT accreditation

Climate Change Strategic Framework

We saw the CCSF implemented in September 2021 which accounts for 30 years of work towards our Net Zero target of 2050 in 3 main stages. This board endorsed framework looks at all areas across the business including our offices/operations, existing homes, new developments, supply chain and organisational leadership. As standard, we review progress against this every month internally with teams, leaders and Board as well as undertake annual progress updates with accompanying organisational reviews with Board.

Carbon Literacy

To ensure that we have an organisational awareness and culture around decarbonisation, Magenta Living have committed to ensuring standardised organisational training in the form of

Housing Digital Top 30 Sustainable Housing Provider

Similarly, for our efforts and actions, we have just achieved 19th most sustainable housing provider according to Housing Digital. This includes efforts across the business in

energy reduction and decarbonisation within offices/operations, existing homes, new developments, supply chain and organisational leadership.

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Future Investment

The Board is committed to spending £26 million in 2021/22 to improve and maintain its existing housing stock. The Board have allocated £465k for disabled adaptations on our properties.

The Board has budgeted to spend £41.7 million in 2021/22 on the continuation of our new build programme that will see the commencement/continuation of approximately 475 new units across a range of tenures.

Capital Structure and Treasury Policy

Treasury Management is the responsibility of the Executive Director of Finance and the Group’s Treasury Management Strategy is reviewed annually and is approved by the Board. The strategy seeks to address funding and liquidity risks and loan covenant compliance.

To date the Group has only used derivative instruments that are embedded in (and not separable from) its loan agreement. In other words, it has bought protection against interest rate movements from its lender, The Royal Bank of Scotland (RBS).

In keeping with the aims of its Treasury Management Policy, the Group will seek an appropriate level of assurance with regards to its future funding costs. To achieve this aim, approximately 60% of the Group’s loans will be either fixed or will be hedged by a derivative instrument, removing the exposure to adverse interest rate movements. The remaining 40% of loans will be held on

a floating or variable basis, to enable the Group’s total indebtedness to be tailored to changes in its overall business plan requirements. These parameters of 60% fixed/ hedged and 40% variable may be varied by +/-10%, in order to provide flexibility. They may also be varied by the Board upon presentation of a business case for doing so.

The Group has currently drawn £76.15 million (2020: £81.1 million) of its total loan facility of £124.1 million, of which £32.4 million is on fixed rate terms and £43.7 million is on variable rate terms. The Group is due to repay the loans by 31st March 2035. Following the 201718 restatement of the loan agreement with the funders which allows for new initiatives to be funded by on-lending, the overall facility will reduce to £105 million in 2023 and then to £90 million in 2026.

Our current Business Plan is awaiting funder’s approval and this has a peak debt of £155.2m million which is expected to be reached in 2028/29. This may change as the business plan is reviewed and may be revised in the context of our future growth aspirations.

The Group borrows only in sterling and so does not have any currency risk. The Group has no significant exposure to securities price risk as it holds no listed equity investments.

Cash Flows

Cash inflows and outflows for the period under review are shown in the consolidated

statement of cash flows on page 58 of the financial statements. The consolidated statement of cash flows shows that during the year the Group generated net cash inflow, from operating activities of £13.3 million (2020: £11.1 million) and made net interest payments of £2.5 million (2020: £3.2 million).

Current Liquidity

Cash and bank balances at the 31 March 2021 were £5.2 million (2020: £6.0 million), including £0.9 million (2020: £0.9 million) relating to the Community Fund. Variable loans of £4.95 million have been repaid over the year due to lower expenditure on assets and development. As such the Group had a net current asset position at 31 March 2021 totalling £13.5 million (2020: £14.0 million). The Group’s policy is to hold significant cash balances of between one and three months of working capital and to ensure that loan facilities are in place to fund future requirements. The main factor influencing the amount and timing of borrowing is the rate of progress and delivery of the Investment Programme works, the new build programme and the dates of the agreed forward interest rate fixes.

Loan Compliance

Loan covenants are primarily based on asset cover and net operating cash flow. The purpose of the net operating cash flow is to identify a single measure of the overall performance of the business plan, effectively showing the company’s ability to generate funds to cover its debt payments due. The asset cover is a measure of the minimum asset

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cover sufficient to protect the lender’s security.

The Group undertakes regular monitoring of covenant compliance on a quarterly basis. The Business Plan assumptions and forecast figures are also regularly stress tested to ensure covenant compliance is maintained in the future. All the lender’s loan covenants were met throughout the year and at the year end.

Statement by the Directors in performance of their statutory duties in accordance with Section 172(1) of the Companies Act 2006

A director of a company must act in the way he/ she considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole.

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A local neighbourhood, Ellesmere Port
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The following table summarise how the Directors have fulfilled their duties in this regard.

----- Start of picture text -----
Section 172 requirement Page reference
The likely consequences of any decision in the long term 12
The interests of the company’s employees 46
The need to foster the company’s business relationships with 12-14, 32-33
suppliers, customers and others
The impact of the company’s operations on the community and the 12-14, 32-33, 38-41
environment
The desirability of the company maintaining a reputation for high 5-8, 45
standards of business conduct, and
The need to act fairly as between members of the company. 15-16, 23
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NHF Code of Governance

Magenta Living has adopted the NHF’s 2020 Code of Governance published in November 2020 and adopted by the Board in December 2020. The organisation originally adopted the 2010 NHF Code of Governance and it’s subsequent revisions. Reporting for the 2020/21 financial year is on the 2015 Code. Magenta Living is fully compliant and is now working towards ensuring full compliance against the 2020 Code at the end of the 2021/22 financial year.

Governance and Viability Standard

The Board confirms that Magenta Living complies in all material respects with the Governance and Viability Standard as set out by the Regulator for Social Housing. The most recent In-Depth Assessment (IDA) which took place in 2018 resulted in a compliant G2/V1 assessment.

Statement of compliance

In preparing this Strategic report, the board has followed the principles set out in the Statement of Recommended Practice: Accounting by registered social housing providers (SORP) 2018.

The Strategic Report was approved by the board on 28th September 2021 and signed on its behalf by:

Nick Gerrard Vice Chair

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A Building Services Technician carrying out repairs
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Report of the Directors

Board members and executive directors

The present Board members and the Executive Directors of the Group and those who served during the year and up to the date of approval of these financial statements are set out on page 3. The Board members are drawn from a wide background bringing together professional, commercial and local experience. The Board members are appointed on a skills basis with the mix of skills being regularly assessed and reviewed in line with the board skills matrix. Board Directors appointed after October 2019 will usually be appointed for two terms of three years. In extenuating circumstances, this may be extended by one year appointments up to a maximum of three additional years. Board Directors appointed prior to October 2019 are appointed for two terms of four years and in extenuating circumstances, this may be extended by one additional year. All Board appointments will be for a maximum term of nine years.

The Executive Directors consist of the Chief Executive and the other members of the Group’s Executive Leadership Team. The Executive Directors that served during the period are set out on page 3.

The Executive Directors act as executives within the authority delegated by the Board.

The Group has insurance policies in place that indemnify its Board members and Executive Directors against liability when acting for the Group.

Service contracts

The Chief Executive and the other Executive Directors are appointed on permanent contracts of employment on individual contracts, their notice periods being six months.

Pensions

The Executive Directors are members of either the Social Housing Pension Scheme or the Merseyside Pension Fund, both defined benefit final salary pension schemes. They participate in the schemes on the same terms as all other eligible staff and the Group contributes to the schemes on behalf of its employees.

Other benefits

In addition to their basic salary, the Executive Directors are entitled to the provision of a car allowance. Details of the remuneration bandings are included in note 10 to the audited financial statements.

Tenant involvement

We actively encourage tenants’ involvement in decision-making by promoting mechanisms of tenant involvement and there are clear reporting arrangements between tenant groups and the Board.

Donations

During the year ended 31st March 2021 the Group has made no political contributions and any charitable donations were made during the course of its ordinary activities.

Post balance sheet events

On 30th June 2021 Wirral Partnership Homes (Building Services) Limited became the minority member of Hilbre Projects LLP.

The organisation is close to completion of refinancing our long-term debt with our existing funder in order to reduce funding costs and support our ongoing investment plans.

We consider that there have been no other events since the year end that have had a significant effect on the Group’s financial position.

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Payment of creditors

In line with government guidance, our policy is to pay purchase invoices within 30 days of receipt, or earlier if agreed with the supplier. We will comply with all of the requirements of the new Supplier Payment Practices and publish our supplier payment performance accordingly. Payment performance within 30 days for the financial year was 99%.

Employees

The strength of the Group lies in the quality of all its employees. In particular, our ability to meet our objectives and commitments to tenants in an efficient and effective manner depends on their contribution.

The Group shares information on its objectives, progress and activities through regular office team briefs and departmental meetings involving Board members, the Executive Leadership Team and staff.

We are committed to equal opportunities and in particular we support the employment of disabled people, both in recruitment and in the retention of employees who become disabled whilst in the employment of the Group.

Health and safety

The Board is aware of its responsibilities on all matters relating to health and safety. The Group has prepared detailed health and safety policies and provides staff training and education on health and safety matters. It is the Group’s policy

to maintain and, where possible, exceed the health and

safety standards stipulated by legislation.

Internal controls assurance

The Board acknowledges its overall responsibility for establishing and maintaining the whole system of internal control and for reviewing its effectiveness.

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

The process for identifying, evaluating and managing the significant risks faced by the Group is ongoing and has been in place throughout the period commencing 1 April 2020 to the date of approval of the annual report and financial statements.

Key elements of the control framework include:

retention, training and development policies for all staff;

The Board cannot delegate ultimate responsibility for the system of internal control, but it can, and has, delegated authority to the Group Audit and Risk Committee to regularly review the effectiveness of the system of internal control. The Board receives quarterly reports from the Group Audit and Risk Committee together with minutes of committee meetings.

The Group Audit and Risk Committee has received and approved the Chief Executive’s annual review of the effectiveness of the system of internal control for the Company and the annual report of the internal auditor and has reported its findings to the Board.

46

Report of the Directors

Magenta Living - Report and financial statements for the year ended 31 March 2021

Statement of Responsibilities of the Board for the report and financial statements

The Board is responsible for preparing the Strategic Report, the report of the directors and financial statements in accordance with applicable law and regulations.

Company law requires the Board to prepare financial statements for each financial year. Under that law the Board has elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable laws including FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”). Under company law the Board must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairsof the Group and Company and profit and loss of the Group and Company for that period.

In preparing these financial statements, the Board is required to:

Housing

Providers (2018), have been followed, subject to any material departures disclosed and explained in the financial statements;

The Board is responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and Company and enable them to ensure that the financial statements comply with the Companies Act 2006, the Housing and Regeneration Act 2008 and the Accounting Direction for Private Registered Providers of Social Housing 2019. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Board confirms that:

aware of that information.

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

Going concern

The Group’s business activities, its current financial position, and factors likely to affect its future development are set out within the Report of the Directors. The Group has in place long term debt facilities, including £47.95 million of undrawn facilities at 31 March 2021 (2020 £43.9 million), which provide adequate resources to finance committed reinvestment and development programmes along with the Group’s day to day operations. A refinancing agreement with NatWest for £125 million, due to be completed in 2021/22, will ensure that core business activities can continue, whilst savings in interest rates contribute to surplus to reinvest.

The COVID-19 pandemic has seen a reduction in short to medium term expenditure due to challenges with the availability of resources and materials in the construction sector. Rental income has however remained stable. The retiming of investment in our housing assets as a result of a reduction in expenditure due to COVID-19 pandemic will enable the organisation to effectively manage the impact on the cashflow.

47

Magenta Living - Report and financial statements for the year ended 31 March 2021

Report of the Directors Going concern (continued)

The Group’s subsidiary Hilbre Projects LLP is showing a loss at 31 March 2021 including a provision for impairment which is based on the latest available information in respect of anticipated sales values that can be achieved.

A further prudent provision has been made in the parent company accounts in respect of the potential partial nonrecovery of the on-lending from Magenta Living to WPH (Developments) Limited for onlending to Hilbre Projects LLP. An estimate of future income from the sale of properties and land currently held has been considered against the remaining costs to complete, timing of sales activity and forecast interest costs. WPH (Developments) Limited is reliant on the support of the parent Magenta Living in terms of the risk of the partial non-recovery of the on-lending to Hilbre Projects LLP. The loan to Hilbre Projects LLP is being repaid as sales proceeds from the completed sites are received and any remaining balances are due for repayment 31 January 2023.

The Board of Hilbre Projects LLP are considering a number of options in terms of the future of the organisation including the evaluation of alternative schemes and the potential to place the organisation into a dormant state once the existing assets are divested.

The long-term business plan is being developed to take account of the development aspirations of the organisation in order to align this to meet social housing demand in the region.

business plan which shows it is able to service these debt facilities while continuing to comply with lender’s covenants. The Consolidated Statement of Income shows a surplus for the year (before actuarial loss in respect of the pensions schemes) and the underlying EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) position remains strong. Discretionary spend continues to be closely managed.

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

Public Benefit

Magenta Living’s charitable purposes and objectives are;

  1. to provide houses or hostels including Social Housing and any associated amenities for persons in necessitous circumstances upon terms appropriate to their means;

  2. to provide for aged, disabled or chronically sick persons in need thereof houses or hostels including Social Housing and any associated amenities specially designed or adapted to meet the disabilities and

requirements of such persons;

  1. to provide services, advice or assistance upon terms appropriate to their means to aged, disabled, or chronically sick persons in need thereof and provide any associated amenities specially designed or adapted to meet the disabilities and requirements of such persons;

  2. to provide recreation or other leisure facilities in the interest of social welfare with the object of improving the conditions of life for the residents of the local authority areas in which the Company owns or manages housing stock;

  3. to relieve poverty amongst residents of the local authority areas in which the Company owns or manages housing stock;

  4. the advancement of education, training or retraining, particularly among unemployed people and providing unemployed people with work experience;

  5. to maintain, improve or provide public amenities for the public benefit in the interests of regeneration in areas of social and economic deprivation in which the Company owns or manages housing stock.

These financial statements detail the achievements, strategies adopted and activities undertaken in the furtherance of these purposes and objectives.

The Group also has a long-term

48

Report of the Directors Going concern (continued)

Magenta Living - Report and financial statements for the year ended 31 March 2021

The Board members (who are also the charitable trustees) confirm they have referred to the guidance contained in the Charity Commission’s general guidance on public benefit when reviewing the Charity’s aims and objectives and in planning future activities and setting policies for the year.

External auditors

The external audit contract term is for a period of 3 years and is currently in its third year with the current auditors appointed to complete the audit for the year ended 31 March 2022. A resolution to appoint external auditors in accordance with section 487(2) of the Companies Act 2006 was approved on 4 May 2021 by the Group Audit and Risk Committee and reported to Board on 13th July 2021.

Information set out in the Strategic Report

In accordance with s414C(11) of the Companies Act, the Company has chosen to include information in respect of its financial risk management objectives and policies and exposure to risk in the Strategic Report. This information would otherwise be required by Schedule 7 of the ‘Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008’ to be contained in the Report of the Directors.

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An ‘Inspiring Dreams ‘ workshop
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Approval

The report of the Board was approved by the Board on 28th September 2021 and signed on its behalf by:

Nick Gerrard Vice Chair

49

Magenta Living - Report and financial statements for the year ended 31 March 2021

Independent Auditor’s Report to the Members of Magenta Living

Opinion

We have audited the financial statements of Magenta Living (the parent company) and its subsidiaries (the group) for the year ended 31 March 2021 which comprise the Consolidated Statement of Comprehensive Income, the Company Statement of Comprehensive Income, the Consolidated and Company Statements of Changes in Reserves, the Consolidated and Company Statements of Financial Position, the Consolidated Statement of Cash Flows and the notes to the financial statements, including a summary of significant accounting policies in note 2. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 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:

with United Kingdom Generally Accepted Accounting Practice; and

Basis for opinion

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 group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial

statements, we have concluded that the Board’s use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group’s or the parent Company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the Board with respect to going concern are described in the relevant sections of this report.

Other information

The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. The Board is responsible for the other information contained within the annual report. 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.

Our responsibility is to read

50

Independent Auditor’s Report to the Members of Magenta Living (continued)

Magenta Living - Report and financial statements for the year ended 31 March 2021

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 course of 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 this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Report of the Directors.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

are not in agreement with the accounting records and returns; or

In addition, we have nothing to report in respect of the following matter where the Housing and Regeneration Act 2008 requires us to report to you if, in our opinion:

Responsibilities of directors

As explained more fully in the Statement of Responsibilities of the Board for the report and financial statements set out on page 47, the Board is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Board determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the board is responsible for assessing the group’s and the parent company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the board either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.

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

51

Independent Auditor’s Report to the Strategic Report Members of Magenta Living (continued)

Magenta Living - Report and financial statements for the year ended 31 March 2021

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 web-site at www.frc. org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

Extent to which the audit was considered capable of detecting irregularities, including fraud

We identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and then design and perform audit procedures responsive to those risks, including obtaining audit evidence that is sufficient and appropriate to provide a basis for our opinion.

In identifying and addressing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, our procedures included the following:

during the accounting period.

and regulations was discussed within the audit team and tests were planned and performed to address these risks. We identified the potential for fraud in the following areas: laws related to the construction and provision of social housing recognising the regulated nature of the Group’s activities.

Due to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, as with any audit, there remained a higher risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing fraud or non-compliance with laws and regulations and cannot be expected to detect all fraud and non-compliance with laws and regulations.

52

Independent Auditor’s Report to the Members of Magenta Living (continued)

Magenta Living - Report and financial statements for the year ended 31 March 2021

Use of our report

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body for our audit work, for this report, or for the opinions we have formed.

Sue Hutchinson FCCA (Senior Statutory Auditor) For and on behalf of BEEVER AND STRUTHERS Statutory Auditor St George’s House 215/219 Chester Road Manchester M15 4JE

Date: 30 September 2021

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A local neighbourhood, Hamilton Square
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53

Magenta Living - Report and financial statements for the year ended 31 March 2021

Consolidated Statement of Comprehensive Income

For the year ended 31 March 2021 year ended 31 March 2021
Note 2021 2020
£’000 £’000
Turnover 3 69,589 65,730
Cost of Sales 3 (5,277) (3,955)
Operating expenditure 3 (59,589) (61,985)
4,723 (210)
Gain on disposal of fxed assets 6 1,747 2,898
Gain on revaluation of investment properties 15 248 256
Operating surplus 5 6,718 2,944
Share of proft in joint venture 17 467 467
Interest receivable and other fnance income 7 4 220
Interest and fnancing costs 8 (2,969) (3,757)
Surplus/(defcit) on ordinary activities before taxation 4,220 (126)
Tax on surplus on ordinary activities 11 (162)
(17)
Surplus/(defcit) for the year 4,058 (143)
Actuarial (loss)/gain in respect of MPF pension scheme 26 (7,022) 6,583
Actuarial (loss)/gain in respect of SHPS pension scheme 26 (580) 328
Total comprehensive income for the year (3,544) 6,768
Total comprehensive income for the year is attributable to:
-
Owners of the parent company		 (4,226) 7,288
-
Non-controlling interests		 682 (520)
(3,544) 6,768

The consolidated results relate wholly to continuing activities.

The accompanying notes on pages 59 to 96 form part of these financial statements.

The financial statements on pages 54 to 96 were approved by the Board and authorised for issue on 28th September 2021 and signed on its behalf by:

54

Nick Gerrard , Vice Chair

Susan Goodman, Chair of Group Audit and Risk

Magenta Living - Report and financial statements for the year ended 31 March 2021

Company Statement of Comprehensive Income

For the year ended 31 For the year ended 31 March 2021
Note 2021 2020
£’000 £’000
Turnover 3 66,593 63,551
Cost of Sales 3 (3,133) (2,099)
Operating expenditure 3 (59,333) (61,802)
4,127 (350)
Gain on disposal of fxed assets 6 1,747 2,898
Gain on revaluation of investment properties 15 248 256
Operating surplus 5 6,122 2,804
Interest receivable and other fnance income 7 1,004 806
Interest and fnancing costs 8 (2,969) (3,757)
Surplus/(defcit) on ordinary activities before taxation 4,157 (147)
Tax on surplus on ordinary activities 11 (7) (17)
Surplus/(defcit) for the year 4,150 (164)
Actuarial (loss)/gain in respect of MPF pension scheme 26 (7,022) 6,583
Actuarial (loss)/gain in respect of SHPS pension scheme 26 (580) 328
Total comprehensive income for the year (3,452) 6,747

The company’s results relate wholly to continuing activities.

The accompanying notes on pages 59 to 96 form part of these financial statements.

The financial statements on pages 54 to 96 were approved by the Board and authorised for issue on 28th September 2021 and signed on its behalf by:

Nick Gerrard, Vice Chair

Susan Goodman, Chair of Group Audit and Risk

55

Magenta Living - Report and financial statements for the year ended 31 March 2021

Consolidated and Company Statements of Changes in Reserves

For the year ended 31 March

----- Start of picture text -----
Income & Consolidated Total Company
Expenditure Non-controlling Income &
Reserve interest Expenditure
Reserve
£’000 £’000 £’000 £’000
Balance as at 31 108,909 (162) 108,747 111,626
March 2019
-
Deficit for the year (143) (143) (164)
-
Actuarial gain in 6,583 6,583 6,583
respect of MPF
pension schemes
-
Actuarial gain in 328 328 328
respect of SHPS
pension schemes
Amounts 520 (520) - -
attributable to
non-controlling
interests
Balance as at 31 116,197 (682) 115,515 118,373
March 2020
-
Surplus for the 4,058 4,058 4,150
year
-
Actuarial loss in (7,022) (7,022) (7,022)
respect of MPF
pension scheme
-
Actuarial loss in (580) (580) (580)
respect of SHPS
pension scheme
Amounts (682) 682 - -
attributable to
non-controlling
interests
-
Closing reserves 111,971 111,971 114,921
as at 31 March
2021
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The accompanying notes on pages 59 to 96 form part of these financial statements.

56

Magenta Living - Report and financial statements for the year ended 31 March 2021

Consolidated and Company Statement of Financial Position

Company Number: 04912562

----- Start of picture text -----
Note Group Company
2021 2020 2021 2020
£’000 £’000 £’000 £’000
Fixed assets
Tangible fixed assets – housing 12 215,503 211,430 219,017 214,327
properties
Other tangible fxed assets 13 3,956 4,206 3,956 4,206
Intangible fxed assets 14 - - - -
Investment properties 15 13,284 13,036 13,284 13,036
Investment - subsidiary 16 - - 130 130
Investment in joint venture 17 669 669 90 90
233,412 229,341 236,477 231,789
Current assets
Properties held for sale 18 16,548 14,710 10,340 5,117
Stock 92 141 92 141
Trade and other debtors due 19 4,719 6,510 4,613 6,294
within one year
Trade and other debtors due in 19 - - 4,638 8,629
more than one year
Cash and cash equivalents 20 5,169 5,962 4,021 5,173
26,528 27,323 23,704 25,354
Creditors: Amounts falling due 21 (12,983) (13,279) (10,354) (10,980)
within one year
Net current assets 13,545 14,044 13,350 14,374
Total assets less current 246,957 243,385 249,827 246,163
liabilities
Creditors: Amounts falling due 22 (103,446) (106,889) (103,366) (106,809)
after more than one year
Provisions for liabilities 26 (31,540) (20,981) (31,540) (20,981)
- Pension provision MPF/SHPS
Total net assets 111,971 115,515 114,921 118,373
Reserves 111,971 115,515 114,921 118,373
Income and expenditure reserve
Reserves attributable to 111,971 116,197 114,921 118,373
Owners of the Parent Company
Non-controlling interests - (682) - -
Total reserves
111,971 115,515 114,921 118,373
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The accompanying notes on pages 59 to 96 form part of these financial statements.

The financial statements on pages 54 to 96 were approved by the Board and authorised for issue on 28th September 2021 and signed on its behalf by:

Nick Gerrard, Vice Chair

Susan Goodman, Chair of Group Audit and Risk

57

Magenta Living - Report and financial statements for the year ended 31 March 2021

Consolidated Statement of Cash Flows

For the year ended 31 March 2021

----- Start of picture text -----
Note 2021 2020
£ ’000 £ ’000
Net cash inflow from operating activities 29 13,266 11,077
Cash flow from investing activities
Purchase and construction of housing properties (12,531) (19,502)
-
Purchase of fixed assets – other
Proceeds from sale of housing properties 2,119 3,706
Social Housing Grant 3,328 3,991
Interest received 471 220
-
Purchase of Investment Properties
(6,613) (11,585)
Cash flow from financing activities
- -
Loan drawdown of borrowing
-
Loan repayment of borrowing (4,950)
Interest paid (2,496) (3,160)
(7,446) (3,160)
Net change in cash and cash equivalents (793) (3,668)
Cash and cash equivalents at beginning of the year 5,962 9,630
Cash and cash equivalents at end of the year 20 5,169 5,962
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The accompanying notes on pages 59 to 96 form part of these financial statements.

58

Magenta Living - Report and financial statements for the year ended 31 March 2021

Notes to the Financial Statements

1 . Legal status

The Company is a private company limited by guarantee with no share capital, registered under the Companies Act 2006 and is a registered housing provider. The registered office is Partnership Building, Hamilton Street Birkenhead CH41 5AA. The Group consists of the Company and one dormant subsidiary, Wirral Partnership Homes (Building Services) Limited and two trading subsidiaries, Wirral Partnership Homes (Developments) Limited and Hilbre Projects LLP (build for direct sale). In addition the Group has an involvement in a joint venture – Bamboo Estates a registered LLP with two partners – Magenta Living and Torus62 Limited.

2. Accounting policies

Basis of accounting

The financial statements 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 Registered Providers of Social Housing 2019.

Magenta Living is a public benefit entity in accordance with FRS102.

The financial statements are presented in sterling (£) and rounded to the nearest £’000.

Going concern

The Group’s business activities, its current financial position and factors likely to affect its future development are set out within the Strategic Report and include a review of the potential impacts of the COVID-19 pandemic based on management judgements. We have also considered the impact of COVID-19 on the underlying demand or expected future cash flows of our

housing assets. The Group has seen no reduction in demand for our properties. Void levels have remained consistent with historic levels and are in-line with the business plan. Going forward the Group now has safe working practices in place to be able to continue to let properties in a manner that is safe and socially distanced, which will withstand any further waves of COVID-19. Hence the Group do not consider COVID-19 as an impairment trigger at this time. (see page 47). The underlying EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) position remains strong and discretionary spend continues to be closely managed. The COVID-19 pandemic has seen a reduction in short to medium term expenditure due to challenges with the availability of resources and materials in the construction sector. Rental income has however remained stable. The retiming of investment in our housing assets as a result of a reduction in expenditure due to COVID-19 pandemic will enable the organisation to effectively manage the impact on the cashflow. The Group’s subsidiary Hilbre Projects LLP is showing a loss at 31 March 2021 including a provision for impairment which is based on the latest information available in respect of sales values that can be achieved. An estimate of future income from the sale of properties and land currently held has been considered against the remaining costs to complete, timing of sales activity and forecast interest costs. A further prudent provision has been made in the parent company accounts in respect of potential under-recovery of the outstanding loan provided from Magenta Living to WPH (Developments) Limited for on-lending to Hilbre Projects LLP. The Board of Hilbre Projects LLP, supported by the Magenta Living Board, are considering a number of options in terms of the future of the organisation including the evaluation of alternative schemes and the potential to place the organisation into a dormant state once the existing assets are divested.

The long-term business plan has been developed to take account of the development aspirations of the organisation in order to align this to meet

59

Notes to the Financial Statements

Magenta Living - Report and financial statements for the year ended 31 March 2021

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

On this basis, the Board has a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future, being a period of not less than twelve months after the date on which the report and financial statements are signed. For this reason, it continues to adopt the going concern basis in the financial statements

Significant judgements and estimates

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

Recoverability of amounts due from Hilbre Projects LLP relating to on-lending and associated interest. An estimate of future income from the sale of properties and land currently held has been considered against the remaining costs to complete, timing of sales activity and forecast interest costs. An estimate of £2.801m (2020: £1.027m) for the potential non recovery of amounts owed has been provided for in Magenta Living.

Valuation of work in progress. In respect of Hilbre Projects LLP has been carried out to ascertain the costs to complete and estimated sales values leading to an impairment of £844k (2020: £978k).

Significant management judgements

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

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Notes to the Financial Statements

Magenta Living - Report and financial statements for the year ended 31 March 2021

Significant Estimates

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

Useful lives of depreciable assets

Management reviews its estimate of the useful lives of depreciable assets at each reporting date based on the expected utility of the assets. Uncertainties in these estimates relate to technological obsolescence that may change the utility of certain software and IT equipment and changes to decent homes standards which may require more frequent replacement of key components. Accumulated depreciation at 31 March 2021 for tangible and intangible fixed assets was £89.3 million (2020: £80.7million)

Basis of consolidation

The consolidated financial statements include the parent, Magenta Living and its subsidiaries, Wirral Partnership Homes (Building Services) Limited, Wirral Partnership Homes (Developments) Limited (WPH Developments) and Hilbre Projects LLP and are prepared using the purchase method of accounting. The relevant proportions of Joint Venture profit/loss are consolidated as reported by those entities.

Turnover and revenue recognition

Turnover and revenue recognition

Turnover represents rental income receivable in the year, service charges, fees, income from property sales and other income receivable in the year (excluding VAT) for goods and services supplied in the year and revenue grants (including those from the Community Fund) receivable in the year.

Rental income is recognised from the point when properties under development reach a practical point of completion or otherwise become available

for letting. Charges for support services funded under Supporting People are recognised as they fall due under the contractual arrangements with Administering Authorities.

Taxation

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Taxation
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The Company is a registered charity and as such is potentially exempt to corporation or capital gains tax on its charitable activities. Any taxable profits generated by the subsidiaries will be subject to corporation tax.

Deferred taxation

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Deferred taxation
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Deferred tax is recognised in respect of all timing differences at the reporting date, except as otherwise indicated. Deferred tax assets are only recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. If and when all conditions for retaining tax allowances for the cost of a fixed asset have been met, the deferred tax is reversed. Deferred tax is calculated using the tax rates and laws that have been enacted or substantively enacted by the reporting date that are expected to apply to the reversal of the timing difference. Amounts recognised in respect of deferred tax are not discounted in accordance with FRS 102.

Value Added Tax

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Value Added Tax
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The Group is registered for VAT and charges

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Notes to the Financial Statements

Magenta Living - Report and financial statements for the year ended 31 March 2021

value added tax (VAT) on some of its income and is able to recover only part of the VAT it incurs on expenditure. The financial statements include VAT to the extent that it is suffered by the Group and is not recoverable from H.M. Revenue and Customs or is subject to the VAT sharing agreement. The balance of VAT payable or recoverable at the year end is included as a current liability or asset.

Prior to application of the Fund’s monies a deferred income creditor is recognised that is released on utilisation of the related cash balance. As the Company’s approval is required for all fund allocations the deferred income balance is shown as due after one year and linked by disclosure to the cash balance. Where it is known that funds will be allocated in the next 12 months, these are classified as due within one year.

Community Fund

Government Grants

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Community Fund
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As part of the stock transfer arrangement with Wirral Metropolitan Borough Council (“the Council”), the Community Fund (“the Fund”) was established. The purpose of the Fund is to provide the Company with funds to undertake projects that are mutually beneficial to the Company and the Council while furthering the Company’s principal business. A Working Group, made up of an equal number of representatives from the Company and the Council, exists to determine the use of the funds.

The Fund comprises of money from three principal sources:

  1. Balance of the Council’s Housing Revenue Account on its closure.

  2. VAT savings from arrangements put in place at transfer.

  3. Council and Company disposal claw back share on the sale of land not to be used for the purpose of social housing.

The monies received by the Fund shall be used for purposes that include several specifically referred to in an agreement between the Council and the Company. The remainder is to be utilised by joint agreement of the Working Group set between the Council and the Company.

Although access to such funds is subject to the agreement of the Working Group (and are therefore not treated as income until agreement has been reached by the Working Group), the Fund’s monies are beneficially and legally those 62 of the Company and are therefore included in the Company’s reported cash balance.

Government grants include grants receivable from Homes England, local authorities and other government organisations. Government grants received for housing properties are recognised in income over the useful life of the housing property structure and, where applicable, its individual components (excluding land) under the accruals model. Grants relating to revenue are recognised in income and expenditure over the same period as the expenditure to which they relate once reasonable assurance has been gained that the entity will comply with the conditions and that the funds will be received.

Grants due from government organisations or received in advance are included as current assets or liabilities. Government grants received for housing properties are subordinated to the repayment of loans by agreement with Homes England. Government grants released on sale of property may be repayable but are normally available to be recycled and are credited to a Recycled Capital Grant Fund and included in the statement of financial position in creditors. If there is no requirement to recycle or repay the grant on disposal of the asset, any unamortised grant remaining within creditors is released and recognised in income and expenditure.

Other grants

Grants received from non-government sources are recognised using the performance model. A grant which does not impose specified future performance conditions is recognised as revenue when the grant proceeds are received or receivable. A grant that imposes specified future performance-related conditions on the company is recognised only when these conditions are met.

A grant received before the revenue recognition criteria are satisfied is recognised as a liability.

Notes to the Financial Statements

Magenta Living - Report and financial statements for the year ended 31 March 2021

Interest payable

Interest payable

Supporting people

Charges for support services funded under Supporting People are recognised as they fall due under the contractual arrangements with Administering Authorities.

Housing properties

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

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. The Group has applied the provisions of both Section 11 and Section 12 of FRS 102 in full and as such has classified all financial instruments as basic.

Housing properties

Housing Properties are principally properties available for rent and are stated at cost less depreciation. Costs include the cost of acquiring land and buildings, development costs and expenditure incurred in respect of improvements.

Pensions

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Pensions
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The Group participates in two funded multi-employer defined benefit schemes, the Social Housing Pension Scheme (‘SHPS’) and the Merseyside Pension Fund (‘MPF’).

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

The current service cost and costs from settlements and curtailments are charged against operating surplus. Past service costs are spread over the period until the benefit increases vest. Interest on the scheme liabilities and the expected

Works to existing properties which replace a component that has been treated separately for depreciation purposes, along with those works that result in an increase in net rental income over the lives of the properties, thereby enhancing the economic benefits of the assets, are capitalised.

Shared ownership properties are split

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

Freehold land is not depreciated.

Depreciation of housing properties

The Group depreciates the major components of

its housing properties over the following useful economic lives:

return on scheme assets are included net in other finance costs. Re-measurements are reported in 63 other comprehensive income.

Notes to the Financial Statements

Magenta Living - Report and financial statements for the year ended 31 March 2021

Structure 60 years
Windows and Doors 30 years
Kitchens 20 years
Bathrooms 30 years
Boilers 15 years
Roofs 40 years
External wall insulation 20 years
CCTV systems 10 years
Car Park 30 years
For High Rise and Sheltered Blocks:
Heating Systems
25 years
Door Entry, Lift, Fire Alarm and 20 years
Water Systems
Electrical systems 15 years

Assets are not depreciated while under construction or until they are brought into use.

Sale of housing properties

Under the terms of the transfer agreement a

proportion of the proceeds from the right to buy sales are shared with the Council. The balance of any funds due to the Council will be included as a current liability.

Impairment

Housing properties are assessed annually for impairment indicators. Where indicators are identified an assessment for impairment is undertaken comparing the scheme’s carrying amount to its recoverable amount. Where the carrying amount of a scheme is deemed to exceed its recoverable amount, the scheme is written down to its recoverable amount. The resulting impairment is recognised as operating expenditure. The Group carries out an impairment review, assessing the Useful Economic Lives of properties and their future value to the Group, taking into account the current level of demand for properties, the level of void losses, projected discounted cash flows and the ongoing investment in property maintenance and improvement. We have also considered the impact of Covid-19 as a specific

external shock that could impact the underlying demand or expected future cash flows of our housing assets. However, the Group have seen no reduction in demand for our properties. Void levels have remained consistent with historic levels and are in-line with the business plan. The Group has safe working practices in place to be able to continue to let properties in a manner that is safe and socially distanced, which will withstand any further waves of Covid-19. Hence the Group do not consider Covid-19 as an impairment trigger at this time.

Investment Properties Investment Properties

Investment properties

Investment properties consist of commercial properties and other properties not held for the social benefit or for use in the business. Investment properties are measured at cost on initial recognition and subsequently at fair value as at the year end, with changes in fair value recognised in income and expenditure. Investment properties were valued as at 31 March 2021 by Smith & Sons professional qualified external valuers. The valuation of properties was undertaken in accordance with the Royal Institute of Chartered Surveyors Valuation Standards. The comparable technique was used to assess the value of the scheme. The valuation broadly corresponds with broader market trends: the ONS house price index showed that property valuations in the North West of England had increased by 12.8% over the 12 months to the end of March 2021.

64

Notes to the Financial Statements

Magenta Living - Report and financial statements for the year ended 31 March 2021

Other tangible fixed assets

Depreciation is charged on other tangible fixed assets on a straight-line basis over their expected useful lives.

Freehold offces 30 years
Car Parking 30 years
CCTV system 10 years
Furniture, fxtures 4 years
and fttings
Computers and offce 4 years
equipment
Other equipment 4 years

Assets are not depreciated while under construction or until they are brought into use.

Intangible fixed assets

Depreciation is charged on intangible assets on a straight-line basis over their expected useful lives.

Software 3 years

Leased assets

Leased assets

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership of the leased asset to the group. All other leases are classified as operating leases. Rentals payable under operating leases are charged to income and expenditure on a straightline basis over the lease term, unless the rental payments are structured to increase in line with expected general inflation, in which case the group recognises annual rent expense equal to amounts owed to the lessor.

Properties leased to Group Company

Housing properties are leased to Bamboo Estates based on a 5 year lease. The lease commences from the time the tenancy in Bamboo Estates begins and is recognised on a straight line basis over the lease term.

Investment in Subsidiaries and Joint Ventures

The consolidated financial statements incorporate the financial statements of the Association and entities controlled by the group. Control is achieved where the group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. Investments in subsidiaries and joint ventures are accounted for at cost less impairment in the individual company financial statements.

An entity is treated as a joint venture where the Group is party to a contractual agreement with one or more parties from outside of the Group to undertake an economic activity that is subject to joint control. The Consolidated Statement of Comprehensive Income includes the Group’s share of the operating results applying accounting polices consistent to the Group. In the Consolidated Statement of Financial Position the interest in associated undertakings are shown as the Group’s share of the identifiable net assets/liabilities.

Debtors

Short term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transactions costs, and are measured subsequently at amortised cost using the effective interest rate method, less any impairment.

Where deferral of payment terms have been agreed at below market rate, and where material, the balance is shown at the present value, discounted at a market rate.

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.

65

Notes to the Financial Statements

Magenta Living - Report and financial statements for the year ended 31 March 2021

Properties for sale

Properties for outright sale (including those under construction) are valued at the lower of cost and net realisable value. Cost comprises materials, direct labour and direct development overheads. Net realisable value is based on estimated sales price after allowing for all further costs of completion and disposal.

Stock

Stocks are stated at the lower of cost or net realisable value. Where necessary, provision is made for obsolete and defective stock.

Current asset investments

Investments are stated at cost.

Gift Aid Income

Gift aid income is recognised in the year of receipt.

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Development at Delamere Avenue, Eastham
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Barncroft, Extra Care Scheme, Pensby
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66

Notes to the Financial Statements

Magenta Living - Report and financial statements for the year ended 31 March 2021

3. Particulars of turnover, cost of sales, operating expenditure and operating surplus

Group - continuing activities

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2021
Turnover Cost of sales Operating Operating
expenditure surplus/
(deficit)
£ ’000 £ ’000 £ ’000 £ ’000
Social housing lettings 62,380 - (59,039) 3,341
Other social housing activities
-
Current asset property sales 1,375 (1,019) 356
- -
Development expenditure (69) (69)
Other (see note below) 340 - - 340
1,715 (1,019) (69) 627
Activities other than Social Housing
Corporate Repairs 371 (339) (35) (3)
-
Lettings 1,047 (125) 922
Other 4,076 (3,919) (321) (164)
69,589 (5,277) (59,589) 4,723
2020
Turnover Cost of sales Operating Operating
expenditure surplus/
(deficit)
£ ’000 £ ’000 £ ’000 £ ’000
Social housing lettings 60,542 - (61,384) (842)
Other social housing activities
-
Current asset property sales 167 (111) 56
- -
Development expenditure (16) (16)
Other (see note below) 387 - - 387
554 (111) (16) 427
Activities other than Social
Housing
Corporate Repairs 382 (820) (67) (505)
-
Lettings 1,046 (73) 973
Other 3,206 (3,024) (445) (263)
65,730 (3,955) (61,985) (210)
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Costs associated with Other “Other social housing activities” are predominantly staff costs relating to staff included within social housing lettings operating costs. Any allocation of these costs

against the above income streams would be arbitrary and therefore has not been undertaken.

Turnover associated with Other “Activities other

67

Notes to the Financial Statements

Magenta Living - Report and financial statements for the year ended 31 March 2021

than Social Housing” includes property sales £3,026k, services to related entities £313k, other funding/grants £216k,support link £116k, miscellaneous services £222k,aerial masts £121k, and leasehold major repairs £63k. Cost of Sales

associated with Other “Activities other than Social Housing” includes £844k for impairment against Hilbre Homes’ activities.

Particulars of turnover, cost of sales, operating expenditure and operating surplus

Company – continuing activities

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2021
Turnover Cost of sales Operating Operating
Expenditure surplus/
(deficit)
£ ’000 £ ’000 £ ’000 £ ’000
Social housing lettings 62,380 - (58,784) 3,596
Other social housing activities
-
Current asset property sales 1,375 (1,019) 356
- -
Development expenditure (69) (69)
- -
Other (see note below) 340 340
1,715 (1,019) (69) 627
Activities other than Social Housing
Corporate Repairs 371 (339) (35) (3)
-
Lettings 1,047 (125) 922
Other 1,080 (1,775) (320) (1,015)
66,593 (3,133) (59,333) 4,127
2020
Turnover Cost of sales Operating Operating
Expenditure surplus/
(deficit)
£ ’000 £ ’000 £ ’000 £ ’000
-
Social housing lettings 60,542 (61,201) (659)
Other social housing activities
-
Current asset property sales 167 (111) 56
- -
Development expenditure (16) (16)
Other (see note below) 387 - - 387
554 (111) (16) 427
Activities other than Social Housing
Corporate Repairs 382 (820) (67) (505)
-
Lettings 1,046 (73) 973
Other 1,027 (1,168) (445) (586)
63,551 (2,099) (61,802) (350)
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68

Notes to the Financial Statements

Magenta Living - Report and financial statements for the year ended 31 March 2021

Costs associated with Other “Other social housing activities” are predominantly staff costs relating to staff included within social housing lettings operating costs. Any allocation of these costs against the above income streams would be arbitrary and therefore has not been undertaken.

Turnover associated with Other “Activities other than Social Housing”, includes services to subsidiaries and related entities £342k, aerial masts £121k, support link £116k, miscellaneous services £222k, other funding/grants £216k, and leasehold major repairs £63k. Cost of sales includes £1,775k to reflect the provision for loss on payment of loan from Hilbre Homes.

Particulars of turnover and operating expenditure from social housing lettings Group

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General 2021 Total 2020
Housing Supported Total
£’000 Housing £’000
£’000 £’000
Turnover from social housing lettings
Rent receivable net of identifiable 50,352 8,055 58,407 57,184
service charges and net of voids
Service charge income 1,136 182 1,318 1,248
Charges for support services 1,034 165 1,199 1,253
Amortisation of government grants 223 36 259 269
Other revenue grants 1,032 165 1,197 588
Turnover from social housing lettings 53,777 8,603 62,380 60,542
Operating expenditure on social
housing lettings
Management 19,888 2,968 22,856 21,139
Service charge costs 2,166 347 2,513 2,373
Routine maintenance 8,253 1,320 9,573 10,445
Planned maintenance 5,311 850 6,161 6,231
Major repairs expenditure 7,697 1,231 8,928 11,901
Bad debts (69) (11) (80) 217
Depreciation of housing properties 7,804 1,257 9,061 9,034
Restructuring and other costs 23 4 27 44
Operating expenditure on social 51,073 7,966 59,039 61,384
housing lettings
Operating surplus/(deficit) on social 2,704 637 3,341 (842)
housing lettings
Void losses 1,122 179 1,301 1,016
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Management costs include £3,414k of current and past pension service costs for both the Merseyside

Pension Fund (MPF) and the Social Housing Pension Scheme (SHPS) (2020: £3,930k).

69

Notes to the Financial Statements

Magenta Living - Report and financial statements for the year ended 31 March 2021

Particulars of turnover and operating expenditure from social housing lettings Company

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2021 2020
General Supported Total Total
Housing Housing
£’000 £’000 £’000 £’000
Turnover from social housing lettings
Rent receivable net of identifiable service 50,352 8,055 58,407 57,184
charges and net of voids
Service charge income 1,136 182 1,318 1,248
Charges for support services 1,034 165 1,199 1,253
Amortisation of government grants 223 36 259 269
Other revenue grants 1,032 165 1,197 588
Turnover from social housing lettings 53,777 8,603 62,380 60,542
Operating expenditure on social
housing lettings
Management 19,580 2,968 22,548 20,915
Service charge costs 2,166 347 2,513 2,373
Routine maintenance 8,253 1,320 9,573 10,445
Planned maintenance 5,311 850 6,161 6,231
Major repairs expenditure 7,697 1,231 8,928 11,901
Bad debts (69) (11) (80) 217
Depreciation of housing properties 7,857 1,257 9,114 9,075
Restructuring and other costs 23 4 27 44
Operating expenditure on social 50,818 7,966 58,784 61,201
housing lettings
Operating surplus/(deficit) on social 2,959 637 3,596 (659)
housing lettings
Void losses 1,122 179 1,301 1,016
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70

Notes to the Financial Statements

Magenta Living - Report and financial statements for the year ended 31 March 2021

4. Accommodation in management and development

Group and Company

At the end of the year accommodation in management for each class of accommodation was as follows (see reconciliation in Table page 8):

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Group & Company
2021 2020
No. No.
Social housing
General housing
- Social Rent 9,476 9,498
- Affordable Rent 1,411 1,359
Supported housing 1,776 1,763
-
Intermediate Rent 7
Low Cost home ownership 35 25
Total owned 12,705 12,645
Accommodation managed for others 30 30
Total managed 12,735 12,675
Accommodation in development at year end 327 287
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Wilkinson Way, Woodchurch named in memory of our Board Director, Muriel Wilkinson BEM
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71

Notes to the Financial Statements

Magenta Living - Report and financial statements for the year ended 31 March 2021

5. Operating surplus

The operating surplus is arrived at after charging/(crediting):

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Group Company
2021 2020 2021 2020
£’000 £’000 £’000 £’000
Depreciation of housing properties (Note 3) 9,061 9,034 9,114 9,075
Depreciation of other tangible fixed assets 208 250 208 250
(note 13)
- - - -
Amortisation of intangible fixed assets
(note 14)
Amortisation of government grants (259) (269) (259) (269)
Operating lease rentals - vehicles 477 460 477 460
Auditors’ remuneration (excluding VAT)
- for the audit of the financial statements of the Company 21 21 21 21
- for the audit of the financial statements of the subsidiaries 7 5 7 5
- for the audit of the financial statements of joint ventures 3 2 3 2
- -
-for other services 5 5
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6. Surplus on sale of fixed assets – housing properties

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Group & Company
2021 2020
£ ’000 £ ’000
Disposal proceeds 2,580 4,216
Amount due to council re RTB sales (450) (493)
Carrying value of fixed assets (372) (899)
-
Released on disposal of grant 91
Administration and legal expenditure (11) (17)
1,747 2,898
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There were 31 Right to Buy properties sold during the financial year (2020: 37) and 9 Right to Acquire sales (2020: 21).

72

Notes to the Financial Statements

Magenta Living - Report and financial statements for the year ended 31 March 2021

7. Interest receivable and other income

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Group Company
2021 2020 2021 2020
£’000 £’000 £ ’000 £ ’000
Interest receivable and similar income 4 21 4 21
- -
Interest receivable from group undertakings 533 566
-
Distribution of Profit from Joint Venture 199 467 199
Gift Aid received from Subsidiary - - - 20
undertaking
4 220 1,004 806
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8. Interest payable and financing costs

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Group & Company
2021 2020
£ ’000 £ ’000
Loans and bank overdrafts 2,496 3,161
Defined benefit pension charge – MPF 467 581
Defined benefit pension charge - SHPS 6 15
2,969 3,757
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73

Notes to the Financial Statements

Magenta Living - Report and financial statements for the year ended 31 March 2021

9. Employees

Average monthly number of employees expressed in full time equivalents (calculated based on a standard working week of 37 hours):

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Group & Company
2021 2020
No. No.
Administration 208 184
Property services 61 27
Housing, support and care 165 168
Building operatives 109 115
543 494
Employee costs:
Group & Company
2021 2020
£’000 £’000
Wages and salaries 17,679 15,868
Social security costs 1,746 1,518
Other pension costs 3,599 3,827
Restructuring 229 225
23,253 21,438
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The majority of the Group’s employees are members of the Merseyside Pension Fund or of the Social Housing Pension Scheme (SHPS). Further information on each scheme is given in note 26.

74

Notes to the Financial Statements

Magenta Living - Report and financial statements for the year ended 31 March 2021

10. Key management personnel

Aggregate remuneration of the Executive Management Team and the Board for the year ended 31 March 2021:

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Executive Directors
2021 2020
£ £
Executive director emoluments 642,162 490,906
Executive director employers national insurance 82,218 62,598
Executive director pension contributions 80,566 59,865
Executive Director emoluments 804,946 613,369
Board emoluments 75,807 81,868
880,753 695,237
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Compensation for loss of office payments for the year totalled £ nil (2020: £ nil).

The emoluments of the Executive Management Team and other staff, including pension contributions, for the year or period of actual service, fell into the following bands:

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2021 2020
No. No.
£60,001 - £70,000 15 10
£70,001 - £80,000 7 4
£80,001 - £90,000 4 7
£90,001 - £100,000 2 2
-
£100,001 - £110,000 1
- -
£110,001 - £120,000
-
£120,001 - £130,000 1
£130,001 - £140,000 2 1
-
£140,001 - £150,000 3
- -
£150,001 - £160,000
- -
£160,001 - £170,000
- -
£170,001 - £180,000
-
£180,001 - £190,000 1
-
£190,001 - £200,000 1
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75

Notes to the Financial Statements

Magenta Living - Report and financial statements for the year ended 31 March 2021

The table above includes a number of staff whose total remuneration included redundancy and pay in lieu of notice. These fell into the following bandings:

----- Start of picture text -----
2021 2020
No. No.
£60,001 - £70,000 1 1
£70,001 - £80,000 2 1
£80,001 - £90,000 - 1
£90,001 - £100,000 - 1
£130,001 - £140,000 1 -
£140,001 - £150,000 1 -
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The emoluments of the highest paid director, the Chief Executive, for the 12 month period, excluding pension contributions, were £164,994 (2020: £161,100). The Chief Executive is a member of the Merseyside Pension Fund. He is an ordinary member of the pension scheme and no enhanced or special terms apply. The Company does not make any further contribution to an individual pension arrangement for the Chief Executive. The Executive Team and Board are considered the key management personnel for the purposes of FRS 102.

£139k was paid in the year to third parties, for making available the services in the role of director of the Company or its subsidiaries (2020: £979k). Board expenses of £5,215 were incurred in the year (2020: £5,839).

Non-Executive Directors

The fees and expenses paid by the Association during the year, to the non-executive Directors, its subsidiary Boards and its Committees, are shown below.

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Board Director 2021 2020
Steve Foulkes 5,000 5,000
David Clark 15,289 15,310
Muriel Wilkinson 3,549 5,323
Jeff Green 809 7,093
Stephen Penlington 5,000 5,000
Nick Gerrard 7,000 7,493
-
Phil Gandy 2,685
Matthew Brown 5,000 5,000
Gordon Ronald 5,000 5,000
Sharon Grover 6,644 5,479
Sue Goodman 7,000 8,189
Geoff Broadhead 5,000 5,296
Mike Turner 5,000 5,000
-
Andrew McCullagh 2,569
-
Trevor Hough 1,016
Ann-Louise Gilmore 1,931 -
Total Magenta Remuneration
75,807 81,868
John Fedden 7,334 7,755
Ken Russell 5,444 5,481
Martyn Green 5,000 6,886
Total Board Remuneration 93,585 101,990
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John Fedden and Ken Russell are Board Directors of Hilbre Projects LLP and Martyn Green is a Board Director of Bamboo Estates LLP.

76

Notes to the Financial Statements

Magenta Living - Report and financial statements for the year ended 31 March 2021

11. Tax on Surplus on ordinary activities:

----- Start of picture text -----
Group Company
2021 2020 2021 2020
£’000 £’000 £’000 £’000
Current tax
- - -
UK corporation tax on surplus for the period 65
Adjustments in respect of prior years 97 17 7 17
162 17 7 17
Deferred tax
Net origination and reversal of timing differences - - - -
Total Tax 162 17 7 17
Group Company
2021 2020 2021 2020
£’000 £’000 £’000 £’000
Total tax reconciliation
Surplus/(deficit) on ordinary activities before tax 4,220 (126) 4,157 (147)
Theoretical tax at UK corporation tax rate 19% (2020: 19%) 802 (24) 790 (28)
- Income not taxable for tax purposes (737) 24 (790) 28
- Adjust in respect of prior years 97 17 7 17
Total tax charge 162 17 7 17
----- End of picture text -----

77

Notes to the Financial Statements

Magenta Living - Report and financial statements for the year ended 31 March 2021

12. Tangible fixed assets - properties

----- Start of picture text -----
Group Housing Properties Social Social Shared Completed Total
housing housing ownership shared
properties properties housing ownership
held for under properties housing
letting construction under properties
£’000 £’000 construction £’000 £’000
£’000
Cost
At 1 April 2020 266,894 16,975 2,779 1,126 287,774
Additions - 9,140 2,385 - 11,525
- - -
Work to existing properties 1,266 1,266
-
Schemes completed 10,688 (10,688) (1,564) 1,564
Adjustments - Grant 588 - - - 588
- - - - -
Adjustments - Land
-
Transferred to shared ownership (190) (35) (35) (260)
Transfer to rent to buy 967 (580) 387
- - -
Disposal of components (441) (441)
Disposal – sales (628) - - - (628)
At 31 March 2021 279,334 15,237 3,565 2,075 300,211
Depreciation and impairment
At 1 April 2020 76,325 - - 19 76,344
Depreciation charged in year 9,044 - 17 9,061
- - -
Released on disposal of (441) (441)
components
Transfer to rent to buy 10 - - (10) -
Released on disposal - sales (256) - - - (256)
At 31 March 2021 84,682 - - 26 84,708
Net book value
At 31 March 2021 194,652 15,237 3,565 2,049 215,503
At 31 March 2020 190,569 16,975 2,779 1,107 211,430
----- End of picture text -----

78

Notes to the Financial Statements

Magenta Living - Report and financial statements for the year ended 31 March 2021

12. Tangible fixed assets – properties (continued)

----- Start of picture text -----
Company Housing Properties Social housing Social housing Shared Completed Total
properties properties ownership shared
held for letting under housing ownership
£’000 construction properties housing
£’000 under properties
construction £’000 £’000
£’000
Cost
At 1 April 2020 269,281 17,661 2,779 1,126 290,847
Additions - 9,809 2,385 - 12,194
- - -
Work to existing properties 1,267 1,267
-
Schemes completed 11,442 (11,442) (1,564) 1,564
Adjustments - Grant 588 - - - 588
-
Adjustments to shared (190) (35) (35) (260)
ownership
Transfer to Rent to Buy 967 - - (580) 387
- - -
Disposal of components (441) (441)
Disposals – Sales (628) - - - (628)
At 31 March 2021 282, 476 15,838 3,565 2,075 303,954
Depreciation and impairment
At 1 April 2020 76,501 - - 19 76,520
Depreciation charged in year 9,096 - 18 9,114
- - -
Released on disposal of (441) (441)
components
Transfer to rent to buy 10 - - (10) -
Released on disposal - sales (256) - - - (256)
At 31 March 2021 84,910 - - 27 84,937
Net book value
At 31 March 2021 197,566 15,838 3,565 2,048 219,017
At 31 March 2020 192,780 17,661 2,779 1,107 214,327
----- End of picture text -----

79

Notes to the Financial Statements

Magenta Living - Report and financial statements for the year ended 31 March 2021

Housing properties including offices (note 13) book value net of depreciation comprises:

----- Start of picture text -----
2021 2020
£’000 £’000
Freehold land and buildings - Housing Properties 215,503 211,430
Freehold land and buildings - Office Properties Note 13 3,962 4,112
Total 219,465 215,542
Housing properties including offices (note 13) book value, net of depreciation comprises:
Company
2021 2020
£’000 £’000
Freehold land and buildings - Housing Properties 219,017 214,327
Freehold land and buildings - Office Properties Note 13 3,962 4,112
Total 222,979 218,439
Social housing assistance Group & Company
2021 2020
£’000 £’000
Total accumulated social housing grant received or 28,696 26,930
receivable at 31 March
Held as deferred capital grants Note 23 27,483 25,976
Recognised in statement of comprehensive income 1,213 954
Total
28,696 26,930
Expenditure on works to existing properties Group & Company
2021 2020
£’000 £’000
Components capitalised 1,267 2,277
Amounts charged to income and expenditure account 8,928 11,901
(Note 3)
Total 10,195 14,178
----- End of picture text -----

At 31 March 2021 the Group owned 12,705 housing properties (2020: 12,645). The properties are carried in the balance sheet at cost after depreciation. The loans are secured against the charged properties, there are currently 11,725

charged properties and 980 uncharged properties. The carrying value of the charged properties is £166,163K

80

Notes to the Financial Statements

Magenta Living - Report and financial statements for the year ended 31 March 2021

13. Tangible fixed assets – other

Group and Company

Freehold offce
properties
£’000
Furniture
fxtures and
fttings
£’000
Computers
and offce
equipment
£’000		 Freehold offce
properties
£’000
Furniture
fxtures and
fttings
£’000
Computers
and offce
equipment
£’000		 Freehold offce
properties
£’000
Furniture
fxtures and
fttings
£’000
Computers
and offce
equipment
£’000		 Freehold offce
properties
£’000
Furniture
fxtures and
fttings
£’000
Computers
and offce
equipment
£’000		 Freehold offce
properties
£’000
Furniture
fxtures and
fttings
£’000
Computers
and offce
equipment
£’000		 Freehold offce
properties
£’000
Furniture
fxtures and
fttings
£’000
Computers
and offce
equipment
£’000		 Freehold offce
properties
£’000
Furniture
fxtures and
fttings
£’000
Computers
and offce
equipment
£’000		 Other
Equipment
£’000		 Other
Equipment
£’000		 Total
£’000
Cost
At 1 April 2020 5,303 59 1,118 730 7,210
Additions - - - - -
At 31 March 2021 5,303 59 1,118 730 7,210
Depreciation
At 1 April 2020 1,191 59 1,040 714 3,004
Charged in period 180 - 62 8 250
At 31 March 2021 1,371 59 1,102 722 3,254
Net book value
At 31 March 2021		 3,932 - 16 8 3,956
At 31 March 2020 4,112 - 78 16 4,206

14. Intangible fixed assets

----- Start of picture text -----
Group and Company
Software Total
£’000 £’000
Cost
At 1 April 2020 1,310 1,310
Additions - -
At 31 March 2021 1,310 1,310
Depreciation
At 1 April 2020 1,310 1,310
Charged in period - -
At 31 March 2021 1,310 1,310
Net book value
At 31 March 2021 - -
At 31 March 2020 - -
----- End of picture text -----

81

Notes to the Financial Statements

Magenta Living - Report and financial statements for the year ended 31 March 2021

15. Investment Properties – Non Social Housing Properties held for letting

----- Start of picture text -----
Group and Company
2021 2020
£’000 £’000
At 1 April 13,036 12,780
Revaluation 248 256
At 31 March 13,284 13,036
----- End of picture text -----

Properties are valued at Open Market Value as at 31 March 2021 based on the valuation by external RICS advisors and are held to be leased to the joint venture Bamboo Estates.

16. Investment in subsidiary

The financial statements consolidate the results of Wirral Partnership Homes (Building Services) Limited “WPH (Building Services)”, Wirral Partnership Homes (Developments) Limited “WPH (Developments)” and Hilbre Projects LLP.

WPH (Building Services) is a company limited by guarantee. Magenta Living is the sole guarantor and in the event of the Company being wound up, the liability of Magenta Living is limited to £1. Effective 1st April 2008 the trade, assets and all liabilities of WPH (Building Services) were transferred to the parent. The subsidiary has not traded during the year and is dormant.

WPH (Developments) was incorporated in December 2011 with the principal activity being the construction of new properties for Magenta Living. WPH (Developments) commenced trading from April 2013.

Hilbre Projects is a registered LLP consisting of two partners (members) with the primary purpose of the development of residential properties for open market sale. The controlling partner is WPH (Developments) holding 60% of the initial capital invested. The second partner was

Starfish Commercial holding 40% of the initial capital invested. The LLP was incorporated on 18th November 2016 and commenced trading in the 2017-18 financial year. On 30th June 2020 Starfish Limited, the minority member of Hilbre Projects LLP, served a six-month notice of its intention to exit the membership agreement. On 14th September 2020 the Board of Starfish Commercial Limited informed the Board of WPH (Developments) of its intention to pass a special resolution to enter creditors’ voluntary liquidation. The six-month notice to exit the membership agreement continued to run through to 30 December 2020 at which point Starfish Commercial Limited exited the membership agreement and WPH (Developments) became liable for any losses incurred in Hilbre Projects LLP. On 30 June 2021, WPH (Building Services) became the minority member of Hilbre Projects LLP with a 1% membership interest. The current membership of Hilbre Projects LLP is held as (WPH (Developments) 99%, WPH (Building Services) 1%.

The Group holds the following interest in the subsidiary undertakings of the group:

82

Notes to the Financial Statements

Magenta Living - Report and financial statements for the year ended 31 March 2021

----- Start of picture text -----
Class of shares Holding
WPH (Developments) Limited Ordinary 100%
The aggregate of share capital and reserves as at 31st March 2021 and of the profit and loss for the
year ended on that date for the subsidiary undertakings were:
Aggregate of share Reserves Profit / (Loss)
capital
£ £’000 £’000
WPH (Developments) Limited 1 (2,018) (1,569)
----- End of picture text -----

----- Start of picture text -----
Capital contribution Members interests Profit / (Loss
£’000 £’000 £’000
Hilbre Projects LLP 120 (3,162) (1,457)
Investment in WPH Dev Co Hilbre Total
Subsidiary £’000 £’000 £’000
At 1 April 2020 10 120 130
Additions - - -
At 31 March 2021 10 120 130
----- End of picture text -----

17. Investment in Joint Venture

----- Start of picture text -----
Company 2021 2020
£’000 £’000
1 April 2020 90 90
Additions - -
At 31 March 2021 90 90
Group 2021 2021
£’000 £’000
1 April 2020 669 202
Additions - -
Share of profit distributed within the (467) -
year
Share of profit retained by the joint 467 467
venture and available for distribution
At 31 March 2021 669 669
----- End of picture text -----

Bamboo Estates is a registered LLP in which the group has a 50% interest. The other party to

the venture is Torus62 Limited, another housing provider.

83

Notes to the Financial Statements

Magenta Living - Report and financial statements for the year ended 31 March 2021

18. Properties for sale

----- Start of picture text -----
Group Company
2021 2020 2021 2020
£’000 £’000 £’000 £’000
- -
Properties and land for outright sale
Work in Progress 13,732 11,332 7,524 2,579
Outright Sale - completed 839 - -
Shared ownership – completed 349 553 349 552
Shared ownership – work in progress 2,467 1,986 2,467 1,986
16,548 14,710 10,340 5,117
----- End of picture text -----

Work in progress represents the value of work performed on development schemes both for Magenta Living (£7.5m) and Hilbre Projects (£6.2m).

19. Debtors

----- Start of picture text -----
Group Company
2021 2020 2021 2020
£’000 £’000 £’000 £’000
Due within one year
Rent and service charges receivable 3,151 3,308 3,151 3,308
Less: Provision for bad and doubtful rent and service (608) (594) (608) (594)
charge debts
2,543 2,714 2,543 2,714
Trade debtors 680 2,879 585 2,740
Less: Provision for bad and doubtful trade debts (84) (130) (84) (130)
Other debtors 967 319 956 242
Prepayments and accrued income 555 728 555 728
Amounts due from related entities 58 - 58 -
Due within one year 4,719 6,510 4,613 6,294
Due after more than one year - - 4,638 8,629
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The debt due after more one than year represents the loan made by Magenta Living to Wirral Partnership Homes (Developments) Ltd for onlending to Hilbre Projects LLP. The loan is repayable

by 31 January 2023 and interest is charged at a fixed rate of 6%.

84

Notes to the Financial Statements

Magenta Living - Report and financial statements for the year ended 31 March 2021

20. Cash at bank and in hand

----- Start of picture text -----
Group Company
2021 2020 2021 2020
£’000 £’000 £’000 £’000
Cash at bank and in hand 5,169 5,962 4,021 5,173
----- End of picture text -----

The above bank balances include a total of £951k (2020: £951k) held in respect of the Community Fund. Further background regarding the Community Fund is given in note 2 to the financial

statements. All payments from the Community Fund have to be agreed by a Working Group, which is comprised of an equal number of representatives from the Company and the Council.

21. Creditors: amounts falling due within one year

----- Start of picture text -----
Group Company
2021 2020 2021 2020
£’000 £’000 £’000 £’000
Trade creditors 1,755 1,344 1,732 732
Rent and service charges received in advance 1,904 2,039 1,904 2,039
Deferred capital grants (note 23) 267 267 267 267
Other taxation and social security 909 610 747 603
Other creditors 541 1,221 549 782
Accruals and deferred income 7,607 7,798 4,469 5,651
Amount due to Group undertakings – WPH - - 686 906
(Developments) Limited
12,983 13,279 10,354 10,980
----- End of picture text -----

The above accruals and deferred income balance includes £2,096k (2020: £2,096k) in respect of the Community Fund (note 25).

22. Creditors: amounts falling due after one year

----- Start of picture text -----
Group Company
2021 2020 2021 2020
£’000 £’000 £’000 £’000
Debt (note 24) 76,150 81,100 76,150 81,100
Deferred capital grants (note 23) 27,216 25,709 27,216 25,709
Minority Interest 80 80 - -
103,446 106,889 103,366 106,809
----- End of picture text -----

85

Notes to the Financial Statements

Magenta Living - Report and financial statements for the year ended 31 March 2021

23. Deferred capital grants

----- Start of picture text -----
Group & Company
2021 2020
£’000 £’000
At 1 April 25,976 19,116
Grant received in year 1,766 7,220
Amortisation of capital grant (259) (269)
Released on disposal - (91)
At 31 March 27,483 25,976
The deferred income is included in the financial £’000 £’000
statements as follows:
Amounts to be released within one year 267 267
Amounts to be released in more than one year 27,216 25,709
27,483 25,976
----- End of picture text -----

24. Debt analysis

----- Start of picture text -----
Group Company
2021 2020 2021 2020
£’000 £’000 £’000 £’000
- - - -
In less than one year
- -
Between one and two years 7,050 7,050
- -
Between two and five years 10,100 10,100
After five years 69,100 71,000 69,100 71,000
76,150 81,100 76,150 81,100
----- End of picture text -----

The bank loans are secured by way of a floating charge on the housing properties. See note 30 for further information on these balances. The bank loan consists of a variable rate revolving credit facility and a turn facility of both fixed and variable rates. The weighted average interest rate as at 31 March 2021 was 3.45%. The current loan facility expires and is repayable by 31 March 2035.

86

Notes to the Financial Statements

Magenta Living - Report and financial statements for the year ended 31 March 2021

25. Deferred income

----- Start of picture text -----
Group & Company
2021 2020
£’000 £’000
At 1 April 2,096 2,592
Deferred income received in year - 2
Utilised in year:
-
Wirral Borough Council (250)
Magenta Living - (248)
At 31 March 2,096 2,096
The deferred income is included as follows: £’000 £’000
Amounts falling due within one year 2,096 2,096
Amounts falling due in more than one year - -
2,096 2,096
----- End of picture text -----

Deferred income relates to monies paid into the Community Fund and monies received by Magenta to fund future revenue projects. Further background regarding the Community Fund is given in note 2. Related balances to the Community Fund are shown within cash at bank and in hand of £0.9m (2020: £0.9m). The remainder of the balance is shown within deferred income payments received in advance.

There were no sums utilised in the year (2020: £498k).

26. Employee Pension Schemes

Summary of Pension Liability

All 2020 revised figures relate to an interim valuation requested at the year end 31 March date to determine whether the difference between the 31 December 2020 forecast and 31 March 2021 actuals was material. The difference was not material and therefore was not adjusted in the prior year financial statements and is shown here for completeness.

----- Start of picture text -----
Scheme 2021 2020 Revised 2020
£’000 £’000 £’000
SHPS (825) (292) (292)
MPF (30,715) (19,906) (20,689)
Total Pension Liability (31,540) (20,198) (20,981)
----- End of picture text -----

Social Housing Pension Scheme (Group and Company)

The company participates in the scheme, a multiemployer scheme which provides benefits to some 500 non-associated employers. The scheme is a defined benefit scheme in the UK.

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

87

Notes to the Financial Statements

Magenta Living - Report and financial statements for the year ended 31 March 2021

26. Employee Pension Schemes (continued)

Social Housing Pension Scheme (Group and Company)

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

the scheme. Participating employers are legally required to meet their share of the scheme deficit on an annuity purchase basis on withdrawal from the scheme.

Present values of defined benefit obligation, fair value of assets and defined benefit asset (liability)

31 March 2021
(£’000s)
31 March 2020
(£’000s)		 31 March 2021
(£’000s)
31 March 2020
(£’000s)		 31 March 2021
(£’000s)
31 March 2020
(£’000s)		 31 March 2021
(£’000s)
31 March 2020
(£’000s)		 31 March 2021
(£’000s)
31 March 2020
(£’000s)
Fair value of plan assets 2,159 1,855
Present value of defned beneft obligation (2,984) (2,147)
(Defcit) in plan (825) (292)
Reconciliation of opening and closing balances of the defned beneft obligation
Period ended
31 March 2021
(£’000s)
Period ended 31
March 2020
(£’000s)
Defned beneft obligation at start of period 2,147 2,340
Current service cost 66 106
Expenses 4 4
Interest expense 50 57
Contributions by plan participants 31 36
Actuarial loss due to scheme experience 50 19
Actuarial losses/(gains) due to changes in demographic
assumptions		 10 (20)
Actuarial losses/(gains) due to changes in fnancial assumptions 728 (365)
Benefts paid and expenses (102) (30)
Defned beneft obligation at end of period 2,984 2,147

----- Start of picture text -----
Reconciliation of opening and closing balances of the fair value of plan assets
Period ended 31 Period ended 31
March 2021 March 2020
(£’000s) (£’000s)
Fair value of plan assets at start of period 1,855 1,712
Interest income 44 42
Experience on plan assets (excluding amounts included in 208 (38)
interest income) – gain/(loss)
Contributions made by the employer 123 133
Contributions by plan participants 31 36
Benefits paid and expenses (102) (30)
Fair value of plan assets at end of period 2,159 1,855
----- End of picture text -----

The actual return on the plan assets (including any changes in share of assets) over the period ended 31 March 2021 was £252k)

88

Notes to the Financial Statements

Magenta Living - Report and financial statements for the year ended 31 March 2021

26. Employee Pension Schemes (continued)

Defined benefit costs recognised in statement of comprehensive income (SOCI)

Period ended
31 March 2021
(£’000s)
Period ended
31 March 2020
(£’000s)		 Period ended
31 March 2021
(£’000s)
Period ended
31 March 2020
(£’000s)		 Period ended
31 March 2021
(£’000s)
Period ended
31 March 2020
(£’000s)		 Period ended
31 March 2021
(£’000s)
Period ended
31 March 2020
(£’000s)		 Period ended
31 March 2021
(£’000s)
Period ended
31 March 2020
(£’000s)
Current service cost 66 106
Expenses 4 4
Net interest expense 6 15
Defned beneft costs recognised in statement of comprehensive income
(SOCI)		 76 125
Defned beneft costs recognised in other comprehensive income
Period ended
31 March 2021
(£’000s)
Period ended
31 March 2020
(£’000s)
Experience on plan assets (excluding amounts included in net interest cost) –
gain/(loss)		 208 (38)
Experience gains and losses arising on the plan liabilities – (loss) (50) (19)
Effects of changes in the demographic assumptions underlying the present
value of the defned beneft obligation – (loss)/gain		 (10) 20
Effects of changes in the fnancial assumptions underlying the present value
of the defned beneft obligation – (loss)/gain		 (728) 365
Total amount recognised in other comprehensive income – (loss)/gain
 (580) 328

----- Start of picture text -----
Key assumptions
31 March 2021 31 March 2020
% per annum % per annum
Discount rate 2.22% 2.32
Inflation (RPI) 3.18% 2.50
Inflation (CPI) 2.88% 1.50
Salary Growth 3.88% 2.50
Allowance for commutation of 75% of maximum allowance 75% of maximum allowance
pension for cash at retirement
The mortality assumptions adopted at 31 March 2021 imply the following life expectancies:
Life expectancy at age 65 Previous Year
(Years) (Years)
Male retiring in 2021 21.6 21.5
Female retiring in 2021 23.5 23.3
Male retiring in 2041 22.9 22.9
Female retiring in 2041 25.1 24.5
----- End of picture text -----

Merseyside Pension Fund (MPF)

The Merseyside Pension Fund is a multi-employer scheme, administered by Wirral Metropolitan Borough Council under the regulations governing the Local Government Pension Scheme, a defined benefit scheme. The most recent formal actuarial valuation was completed as at 31 March 2016. The employers’ contributions to the Merseyside

Pension Fund by the Group and Company for the year ended 31 March 2021 were £956k (2020: £1,743k) at a contribution rate of 16.8% of pensionable salaries. The employer’s contribution rate for the year ending 31 March 2022 has been set at 16.8%. Estimated employers’ contributions to the Merseyside Pension Fund during the accounting period commencing 1 April 2021 are £707k.

89

Notes to the Financial Statements

Magenta Living - Report and financial statements for the year ended 31 March 2021

26. Employee Pension Schemes (continued)

Principal actuarial assumptions

The main financial assumptions used by the actuary in calculating the figures for FRS 102 (Retirement Benefits) were:

Merseyside Pension Fund

----- Start of picture text -----
|||| |---|---|---| |31 March 2021|31 March 2020| |% per annum|% per annum| |Discount rate|2.1|2.4| |Rate of increase in salaries|4.2|3.6| |Rate of increase in pensions|2.8|2.2| |Inflation assumption - CPI|2.7|2.1|

----- End of picture text -----

Mortality Assumptions

The post-retirement mortality assumptions adopted to value the benefit obligation at March 2020 and March 2021 are based on the S3PA CMI 2018 tables for both non-retired members and current pensioners.

The assumed life expectations on retirement at age 65 are:

----- Start of picture text -----
|||| |---|---|---| |Life expectancy|2021|2020| |No. of years|No. of years| |Retiring today:| |Males|21.0|20.9| |Females|24.1|24.0| |Retiring in 20 years:| |Males|22.6|22.5| |Females|26.0|25.9|

----- End of picture text -----

Analysis of the amount charged to income and expenditure account – Group & Company

----- Start of picture text -----
||||| |---|---|---|---| |2021|2020|2020| |£’000|Revised|£’000| |£’000| |Current service cost|3,315|3,633|3,620| |Past service cost|33|203|204| |Effect of curtailments or settlements|123|411|411| |Administration expenses|58|58|58| |Amount charged to operating costs|3,529|4,305|4,293| |2021|2020|2020| |£’000|£’000|£’000| |Net Interest|(467)|(581)|(581)| |Amounts charged to interest payable and|(467)|(581)|(581)| |financing costs| |2021|2020|2020| |£’000|Revised|£’000| |£’000| |Actuarial (loss)/gain|(7,022)|7,330|6,583|

----- End of picture text -----

90

Notes to the Financial Statements

Magenta Living - Report and financial statements for the year ended 31 March 2021

26. Employee Pension Schemes (continued)

----- Start of picture text -----
Changes in present value of defined benefit obligations: Group & Company
2021 2020 Revised 2020
£’000 £’000 £’000
Opening defined benefit obligations 120,290 127,518 127,518
Current service cost 3,315 3,633 3,620
Interest cost 2,868 3,158 3,162
Members contributions 780 768 771
Past service cost 33 203 204
Actuarial losses/(gains) 19,154 (12,240) (12,261)
Curtailment 123 411 411
Benefits/transfers paid (2,404) (3,161) (2,806)
Closing defined benefit obligation 144,159 120,290 120,619
Changes in plan assets: Group & Company 2021 2020 Revised 2020
£’000 £’000 £’000
Opening fair value of plan assets 100,384 103,377 103,377
Interest on plan assets 2,401 2,577 2,581
Actuarial gains/(losses) 11,385 (4,910) (5,678)
Administration expenses (58) (58) (58)
Employer contributions 956 1,791 1,743
Member contributions 780 768 771
Benefits / transfers paid (2,404) (3,161) (2,806)
Closing fair value of plan assets 113,444 100,384 99,930
2021 2020 Revised 2020
£’000 £’000 £’000
Actual return on scheme assets 13,786 1,034 244
Major categories of plan assets as a percentage of 2021 2020 Revised 2020
total plan assets: Group & Company
Equities 39.8% 38.5% 41.2%
Government bonds 2.9% 20.2% 17.8%
Other bonds 26.9% 9.4% 11.0%
Property 6.9% 8.4% 7.5%
Cash / liquidity 5.1% 3.3% 4.0%
Other 18.4% 20.2% 18.5%
----- End of picture text -----

91

Notes to the Financial Statements

Magenta Living - Report and financial statements for the year ended 31 March 2021

26. Employee Pension Schemes (continued)

----- Start of picture text -----
Sensitivity Analysis
Central +0.1% p.a. +0.1% p.a. +0.1% p.a. pay 1 year
£’000 discount inflation growth increase
rate £’000 £’000 in life
£’000 expectancy
£’000
Liabilities 144,159 141,601 146,764 144,603 148,507
Assets (113,444) (113,444) (113,444) (113,444) (113,444)
Deficit 30,715 28,157 33,320 31,159 35,063
Projected Service Cost for next year 4,213 4,102 4,328 4,213 4,354
Projected Net Interest Cost for next 638 612 692 647 729
year
----- End of picture text -----

27. Financial commitments

----- Start of picture text -----
Capital expenditure commitments were as follows: Group & Company
2021 2020
£’000 £’000
Capital expenditure
Expenditure contracted for but not provided in the accounts 8,668 12,739
Expenditure authorised by the Board, but not contracted 17,296 17,402
25,964 30,141
----- End of picture text -----

The above commitments will be financed primarily through current cash balances and the draw down under existing loan arrangements.

Operating leases

The total future minimum lease payments are as set out below. Lease payments relate to the vehicle fleet.

----- Start of picture text -----
Group & Company
2021 2020
£’000 £’000
Motor vehicles minimum lease payments:
Less than one year 406 350
One to five years 478 350
884 700
----- End of picture text -----

92

Notes to the Financial Statements

Magenta Living - Report and financial statements for the year ended 31 March 2021

The total future minimum lease receipts in respect of properties leased to Bamboo Lettings are set out below.

----- Start of picture text -----
Group & Company
2021 2020
£’000 £’000
Property minimum lease receipts:
Less than one year 461 460
One to five year 524 984
985 1,444
----- End of picture text -----

28. Contingent liabilities

There were no contingent liabilities at 31 March 2021 (2020 : none)

29. Net cash inflow from operating activities

----- Start of picture text -----
2021 2020
£’000 £’000
Surplus for the year 4,058 (126)
Adjustments for non-cash items:
Depreciation of tangible fixed assets 9,311 9,284
Revaluation of Investment Properties (248) (256)
Share of profit on Joint Venture (467) (467)
Increase in properties for sale (2,225) (1,183)
Decrease/(Increase) in stock 49 (62)
Increase in trade and other debtors (359) (339)
(Decrease)/Increase in trade and other creditors (296) 1,346
Pension costs less contributions payable 2,484 2,527
Carrying amount of tangible fixed asset disposals 372 899
-
Release of grant on disposal (91)
Adjustment for investing or financial activities
Proceeds from the sale of tangible fixed assets (2,119) (3,706)
Government grants utilised in the year (259) (269)
Interest payable 2,969 3,757
Interest receivable (4) (220)
Taxation paid - (17)
Net cash generated from operating activities 13,266 11,077
----- End of picture text -----

30. Financial assets and liabilities

Financial assets

Other than short-term debtors, financial assets held are cash balances held as cash at bank. They

are sterling denominated and the amounts and interest rate profile at 31 March was:

93

Notes to the Financial Statements

Magenta Living - Report and financial statements for the year ended 31 March 2021

30. Financial assets and liabilities (continued)

----- Start of picture text -----
Group 2021 2020
£’000 £’000
Floating rate 5,169 5,962
5,169 5,962
----- End of picture text -----

The floating rate financial assets attract interest at rates that vary with bank rates.

Financial liabilities excluding trade creditors – interest rate risk profile

The Group’s financial liabilities are sterling denominated. The amounts and interest rate profile of the Group’s financial liabilities at 31 March was:

----- Start of picture text -----
2021 2021
£’000 £’000
Floating rate 43,722 39,295
Fixed rate 32,428 41,805
Total (note 24) 76,150 81,100
----- End of picture text -----

The fixed rate liabilities have been drawn down at the fixed rate of 5.4% (2020: 5.4%). The loan is repayable between 2017 and 2035. The floating rate financial liabilities bear interest rates based on the three month LIBOR plus a margin.

Borrowing facilities

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

----- Start of picture text -----
2021 2021
£’000 £’000
- -
Expiring in one year or less
- -
Expiring in more than one year but not more than two years
Expiring in more than two years 47,950 43,900
47,950 43,900
----- End of picture text -----

94

Notes to the Financial Statements

Magenta Living - Report and financial statements for the year ended 31 March 2021

31. Analysis of net debt

----- Start of picture text -----
1 April Cash 31 March
2020 Flow 2021
£’000 £’000 £’000
Cash at bank and in hand 5,962 (793) 5,169
Changes in cash 5,962 (793)
Loans (81,100) 4,950 (76,150)
Changes in debt (81,100) -
Changes in net debt (75,138) 4,157 (70,981)
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32. Related parties

Of those Board Directors who served during the year only one was a tenant of Magenta Living: Muriel Wilkinson. Rent arrear balances at 31 March 2021 were £291.27 (2020: £16.08). The rent charged for the year in respect of the tenant Board directors totalled £3,417 (2020: £4,961), with the charge being made on normal commercial terms.

The Board also included two elected members of Wirral Metropolitan Borough Council. The members who served during the year were as follows:

Jeff Green

Steve Foulkes

basis. The balance at the year end due to Magenta Living was £686k (2020: £906k) being made up of intercompany creditor balance of £2,344k less loan interest of £1,658k.

During the year the Group had intra group transactions with Hilbre Projects LLP, an unregulated entity, of £29k (2020: £80k) relating to management and build services. During the year Hilbre Projects LLP had intra group transactions with Starfish Commercial of £101k (2020: £467k) relating to construction management services. The balances at the year-end due to Magenta Living and Starfish Commercial were £0k (2020: £0k) and £0k (2020: £0k) respectively.

None of the Board members who are councillors are able to use their position to their advantage. Declarations of interest are taken at each Board meeting and connected parties leave the meeting during relevant discussions/decisions.

Transactions with non-regulated entities

During the year the Group had intra group transactions with subsidiary WPH (Developments) Limited, an unregulated entity, of £14,284k (2020: £13,469k) relating to housing property design and build services. A management charge of £308k (2020: £183k) was made to WPH (Developments) Limited which was calculated on a pro rata staff

Intra Group Interest charges

Intra group interest is charged by the company to its subsidiaries at an agreed commercial rate. At present the only such agreement is in respect of a loan facility to a maximum of £20 million provided by Magenta Living to WPH (Developments) Limited for on-lending to Hilbre Projects LLP. The loan is advanced in instalments to meet approved expenditure on development for sale projects. Loan repayments are made as soon as sales receipts are received. The balance at the year end due to Magenta Living in respect of the loan to WPH (Developments) was £7,439k (2020: £9,656k). The loan interest charged in the year totalled £533k

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Notes to the Financial Statements

Magenta Living - Report and financial statements for the year ended 31 March 2021

32. Related parties (continued)

(2020: £566k). During the year Hilbre Projects LLP repaid £2,217k to WPH (Developments) (2020 onlent £736k). The balance due from Hilbre Projects LLP to WPH (Developments) in respect of the loan at the year end was £7,439k (2020: £9,656k).

A provision of £2,801k for the potential underrecovery of the outstanding loan provided from Magenta Living to WPH (Developments) Limited for on-lending to Hilbre Projects LLP has been made within the Magenta Living accounts. This provision takes into account the current and projected performance of Hilbre Projects LLP in addition to the potential impact of the COVID-19 pandemic on the net realisable (sales value) of the assets within the subsidiary.

Joint Venture

Magenta Living has an investment of £90k in Bamboo Estates (2020: £90k) and during the year Magenta Living had intra group transactions of £338k (2020 £388k). During the year Bamboo Estates had intra group transactions with Torus62 Limited of £548k (2020: £462k). The balances at the year end due to Magenta Living and Torus62 Limited were £58k (2020: £3k) and £5k (2020: £131k) respectively.

Disclosures in relation to key management personnel are included in note 10. There were no other related party transactions with Board members.

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A Bamboo Estates development, St Helens
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Magenta Living - Report and financial statements for the year ended 31 March 2021

Magenta Living Partnership Building Birkenhead CH41 5AA

Company Registration No. 04912562 Registered Charity No. 1106969 Regulator of Social Housing No. L4435

0808 100 9596 magentaliving.org.uk magentaliving MagentaLive magentaliving contactus@magentaliving.org.uk

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