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2023-03-31-accounts

ri-.[_ Financial Statements 2022/23 ¥-4 east endHOMES

Registered Company number 4516155

EAST END HOMES LIMITED

FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2023

EAST END HOMES LIMITED

Financial Statements for the Year ended 31 March 2023

CONTENTS

Page
BOARD MEMBERS 4
EXECUTIVE MANAGEMENT TEAM 4
REGISTERED OFFICE AND ADVISORS 5
STRATEGIC REPORT OF THE BOARD OF MANAGEMENT FOR THE YEAR ENDED 31 March 2023 6
FINANCIAL PERFORMANCE 9
VALUE FOR MONEY (VFM) 14
FINANCIAL AND BUSINESS PERFORMANCE 14
ANALYSIS OF TURNOVER AND OPERATING COSTS 17
OPERATING COSTS PERFORMANCE AND COMPARISON 18
VALUE FOR MONEY SELF-ASSESSMENT CONCLUSION 19
RISK MANAGEMENT 21
PENSION COMMITMENTS AND ASSOCIATED ISSUES 25
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF EAST END HOMES LIMITED 30
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2023 34
ASSOCIATION STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2023 35
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2023 36
ASSOCIATION STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2023 37
CONSOLIDATED STATEMENT OF CHANGES IN RESERVES 38
ASSOCIATION STATEMENT OF CHANGES IN RESERVES 38
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2023 39
ASSOCIATION STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2023 40
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2023 41

BOARD MEMBERS

The Board Members who served from 1 April 2022 up to the date of approval of these financial statements were as follows:

Kevin Moore Chair
Neil McAree Vice Chair until resigned 14 June 2023
John Kettlewell
Forhana Begum
Helen Goody
Carol Hinvest
Emdadul Haque Jahangir Mannan
Kevin Whittle
Marek Wiluszynski
Loula Saragoudas Resigned 24 June 2022
David Edgar Resigned 5 August 2022
Cllr Motin Uz-Zaman Resigned 5 August 2022
Jacqui Bateson From 14 June 2023
Emma Palmer From 14 June 2023
EXECUTIVE MANAGEMENT TEAM
John Henderson Managing Director
Stephen Elliott Deputy Managing Director
Steven Inkpen Director of Special Projects and New Business
David Opoku Head of Finance
Roger Thompson Head of Asset Management
Stuart Veysey Head of Housing Services
SECRETARY
Alexander Bailey

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EAST END HOMES LTD REGISTERED OFFICE AND ADVISORS

Registered office

3 Resolution Plaza London E1 6PS

Auditors

Beever and Struthers 150 Minories London EC3N 1LS

Solicitors

Trowers & Hamlins Sceptre Court 40 Tower Hill London EC3N 4DX

Bankers

Barclays Bank plc 1 Churchill Place London E14 5HP

Legal status

Registered Company number 4516155 Registered Charity number 1107691 A Registered Provider of Social Housing with the Regulator of Social Housing number L4434

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EAST END HOMES LIMITED STRATEGIC REPORT OF THE BOARD OF MANAGEMENT FOR THE YEAR ENDED 31 MARCH 2023

The Board is pleased to present its report and the audited financial statements for East End Homes Limited (East End Homes) for the year ended 31 March 2023.

The Association

East End Homes was established in 2002 as a community-focussed housing association to accept the transfer of homes from the London Borough of Tower Hamlets as part of their Housing Choice programme. The first transfer, Mile End East, took place on 11 April 2005, followed by St George’s and Island Gardens on 16 January 2006. Further transfers took place for Holland estate on 13 November 2006 and for Glamis estate on 8 October 2007.

Our stakeholders all have an interest in the financial performance of East End Homes:

Structure, governance, and management

East End Homes is a company limited by guarantee, governed by its Memorandum and Articles of Association, and a registered charity, administered by a Board of Management. It is also registered with the Regulator of Social Housing as a Registered Provider of Social Housing.

East End Homes has adopted the National Housing Federation’s (NHF) Code of Governance (2020). The East End Homes Board carries out an annual self-assessment review of compliance, most recently completed in July 2023. The self-assessment indicated general compliance with the Code. The Board identified actions which were being taken to strengthen governance arrangements, including the proposed revisions to the Board and committee structure and amendments to the Articles of Association. The changes include asserting the Board as having primary responsibility for financial discussions and reconstituting the Finance & Audit Committee as an Audit & Risk Committee.

The Board has discussed during 2022/23 the potential introduction of Board remuneration at the 2023 AGM. The Board has noted the requirements of the Code of Governance around remuneration and has taken measures to ensure that it complies with these expectations such as consultation processes around the potential introduction.

The Board has also strengthened its arrangements relating to member appraisal and succession planning. This includes consideration of how the Board can collectively meet its requirements as identified in the agreed Skills and Competencies Matrix, and work is underway to introduce more comprehensive appraisal processes to cover the contributions of each Board Member towards desired outcomes.

The Board has noted the expectation under 3.7 (5) of the Code of Governance that membership of subsidiary committees would count towards overall tenure on the Board. However, the Board’s position is that where appropriate it may co-opt potential Board Members to sub-committees as part of its succession strategy and does not believe it is in the best interests of the effective operation of the Board’s activities to restrict potential members’ overall service by including time spent as a co-optee within their overall maximum tenure. The Board has also used its discretion in limited circumstances to extend Board Member terms by an additional year beyond six years. This is because a significant proportion of the existing Board was due to reach six or nine years of service at the same time, and it was not considered in the best interests of East End Homes to need to replace multiple members, including those in key roles, at the same time.

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EAST END HOMES LIMITED STRATEGIC REPORT OF THE BOARD OF MANAGEMENT FOR THE YEAR ENDED 31 MARCH 2023

The non-executive directors are responsible for the overall strategic direction of East End Homes. The Board of Management comprised 12 non-executive directors at the yearend who are listed on page 4: at that point comprising 4 resident members; 2 local authority members nominated by the London Borough of Tower Hamlets; and 6 independent members. There have been changes to the composition of the Board since year end and there are currently 10 non-executive directors, of whom 3 are resident members, and 7 are independent members. This includes 2 members co-opted temporarily onto the Board from June 2023. The Board is considering amending its Articles of Association to remove the distinction between different ‘categories’ of member and moving to a solely skills-based appointment process. Consultation with key stakeholders, including residents, is underway. The Board remains committed to maintaining a resident voice on the Board and the ability to contribute with direct experience of the local community has been identified as an essential skill for the Board.

Board members are recruited via advertising or sourcing through professional bodies. Vacancies are targeted where possible to address skills gaps or strengthen areas of comparative weakness. Applicants are interviewed by a panel to confirm their suitability. Training and induction of Board members is provided by officers with support from external specialists where required and is overseen by the Managing Director.

East End Homes has promoted and developed extensive resident involvement in the management of its estates and in the overall governance arrangements of East End Homes. The East End Homes Board believes that accountability to the local community and resident involvement in decision-making contributes strongly to the delivery of improvements in service provision and the achievement of corporate objectives.

As an organisation which was set up following extensive stakeholder consultation leading to stock transfers, East End Homes’ business priorities have always been shaped by the needs and priorities of our residents. This has included maintaining local housing centres as the frontline of service provision and delivering substantial block and estate improvements while working to address the financial concerns of long-standing resident homeowners.

The Board has the authority to appoint or remove the Executive Management Team as required and has responsibility for agreeing their pay and remuneration. The Board also retains responsibility to appoint the directors of the Board of the subsidiary organisation East End Homes (Community Development) Limited and receives minutes of all meetings of the subsidiary Board.

East End Homes analyses its pay records annually to identify key ratios related to the governance of the organisation. If calculated using the mean salary, male employees were paid 1% more on average than female employees. Analysed using the median salaries, female employees received 7% less than their male counterpart. 62% of East End Homes employees are male, with the pay gap data being influenced by an uneven gender distribution across pay bands. The top six earners and the lowest 27 earners in this analysis were all male.

The ratio of remuneration for the highest earner (the Managing Director) to the lowest earner was 5.47:1. The ratio of the MD earnings to the median earner was 3.36:1.

Principal activities

East End Homes is in business to provide local people with quality and affordable homes, sustainable estates, and effective and efficient local housing services. East End Homes’ principal activities are to effectively manage, maintain, and develop homes, and to improve and regenerate its estates. Currently it manages 3,912 homes within the London Borough of Tower Hamlets and 8 homes within the London Borough of Newham.

7

EAST END HOMES LIMITED STRATEGIC REPORT OF THE BOARD OF MANAGEMENT FOR THE YEAR ENDED 31 MARCH 2023

As of 31 March 2023, East End Homes held a 100% share (1 share of £1) in East End Homes (Community Development) Limited. The principal activity of this subsidiary is to generate funds from non-social housing activities to support East End Homes’ core activities.

Public Benefit

East End Homes is a Registered Charity, and the Board are required under Charity Law and the Charity Commission’s guidance to consider the public benefit delivered by the Charity. The Charity meets its public benefit obligations through its social housing activities which are explained in the rest of the report. As a public benefit entity, East End Homes has applied the public benefit entity (‘PBE’) prefixed paragraphs of FRS 102.

Our Mission

To provide a local housing service which is efficient, gives value for money and meets the needs, priorities, and aspirations of all residents.

Our Vision

To achieve the comprehensive regeneration of our estates and bring about a sustained improvement in the homes and quality of life for residents.

Investment Programme

In 2022/23 East End Homes continued to work on improving the quality of its housing properties and estates, and the acquisition of new homes, spending £19.82million (2021/22: £18.5 million) on new build properties, refurbishment and fire safety remediation works to existing stock. To date East End Homes has invested £236.02 million into our Major Works and New Build programme analysed in the table below.

2022/23 2021/22 2020/21 2019/20
Capital Investment (Major works and new properties)
(cumulative)		 £236.02m £216.2m £197.7m £182.0m
Investment in refurbishment to existing properties
(cumulative)		 £133.04m £129.5m £123.4m £121.8m
Social rented homes meetingthe Decent Homes Standard(%) 94.63 91.32 100 100
Investment in new build properties (cumulative) £102.98m £86.7m £74.3m £60.2m
New homes added 117 7 - 12
New homes added (net of property sales) 113 7 - 11
Value of stock (EUV-SH) £153.92 £141.23m £133.01m £133.01m

As set out in the Corporate Plan 2019 -2024, East End Homes’ vision is to achieve the comprehensive regeneration of our estates. East End Homes total capital investment since 2005 to date is £236.02 million. The investment has been funded through £70.7 million of overage and land sale receipts, generated through East End Homes’ development partnership with Telford Homes; £95 million in loans; £17 million of grant and gap funding; and £53.32 million, through the group’s internally generated surpluses.

To date £133.04 million has been invested in the refurbishment of our existing properties, ensuring that most of East End Homes’ social rented units are up to at least the Decent Homes Standard. In June 2023, as part of the business plan update process, the Board agreed an updated 5-year capital investment programme of £39.92 million running from 2023 to 2028. The works included in the agreed capital investment programme have been determined by our existing stock condition data and with reference to the outcomes of recent Stock Condition Surveys completed by Savills, which confirmed that any internal component replacement could be accommodated within the elemental works budget already in the programme. All components that would

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EAST END HOMES LIMITED STRATEGIC REPORT OF THE BOARD OF MANAGEMENT FOR THE YEAR ENDED 31 MARCH 2023

cause a property to become non-compliant with the Decent Homes Standard have been included in the agreed five-year programme. Based on current data, the programme would result in no properties falling non-decent by the end of the 5-year period. The proposed programme includes all scheduled non-decent homes works and a provision to commence EPC energy efficiency works, towards the 2030 target, in the latter three years.

The investment programme includes a £14.6 million budget for the schemes identified for fire safety remediation works following the updated Building Safety reforms and legislation on fire safety by the Government. Since early 2020 EEH has commissioned Type 4 FRAs to void properties in high rise blocks as they arise, and undertaken any works identified (which have been limited in scope). Seven schemes have been identified to date and these have budget estimated costs included in the programme. Further remediation works may be identified with ongoing inspections.

A number of purpose-built community facilities have been created or refurbished as part of the regeneration works to the estates. East End Homes aims to facilitate the availability of a wide range of activities for our communities from these facilities, with some remaining directly managed and others operated in partnership with local organisations.

In 2022/23, East End Homes invested a further £16.3 million in new homes, bringing the total investment to date to £102.98 million. This investment has already brought into management a total of 430 brand new homes for rent and shared ownership under our capital investment programme, including several large familysized homes and adapted properties. Our partnership working with developers has also led to the creation of around 820 homes for private sales on estates managed by East End Homes, supporting the overall availability of housing within Tower Hamlets. The private properties on East End Homes estates contribute around £199,000 annually in ground rents to the East End Homes business plan.

East End Homes owns a small portfolio of 60 privately rented residential units, including 8 units in LB Newham. The private rented properties generated £1.018 million of income in 2022/23 and produced a surplus of £676,000.

East End Homes has continued to invest in the acquisition of new homes. In May 2022, East End Homes took ownership of 102 new homes at the Orchard Wharf development in E14, with 59 let on Tower Hamlets Living Rent tenancies. The remaining 43 units are being marketed for shared ownership. There were 6 first tranche sales from this stock in 2022/23. The Toynbee Street scheme was completed in November 2022 and has provided an additional 5 new homes for rent and shared ownership. The Violet Road scheme is expected to be completed in 2023/24 and will provide an additional 23 new homes for rent and shared ownership. The major scheme on Eric Street in Mile End is now projected to deliver 84 new homes, following the Board’s decision during the year to scale back the Eric Street scheme from the original programme of 121 new homes, by invoking a ‘break clause’ thereby pausing phases 5 & 6 of the scheme. There have already been 11 homes taken into management from this scheme, all for rent. East End Homes’ financial investment in these schemes has been supported by the £45 million funding facility provided by M&G Investments.

The Board has taken the decision to diversify its development programme to include the first schemes of shared ownership units for sale. It was recognised that this could help to meet the corporate objective to meet a range of local housing needs, as well as providing significant capital receipts to the Business Plan. As a new area of activity, the Board has sought to closely monitor the sales programme and associated risks, including receiving regular updates on sales and projected income. As part of its oversight, the Board has engaged external expertise to oversee the marketing and sales programme.

The original programme of sales for the first tranche of units was for sales to complete in 2022/23 and 2023/24. Given the rapid change in the economic climate during 2022/23, sales in the early period of 2022/23 were significantly slower than previous expectation and the Board took the decision to reprofile sales over a longer period than originally planned, up to and including 2024/25. The Business Plan was updated to reflect the revised programme of sales and stress tested to ensure that the plan remained robust and projected compliance with our financial covenants.

In line with planning consents East End Homes is also taking into management units with different affordable

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EAST END HOMES LIMITED STRATEGIC REPORT OF THE BOARD OF MANAGEMENT FOR THE YEAR ENDED 31 MARCH 2023

or intermediate housing products. These include London Living Rent, which seeks to support tenants to gradually become shared owners; and London Affordable Rent, which is another form of sub-market rented tenancy. Where necessary, external expertise has been sought on managing novel tenures.

East End Homes inherited a portfolio of commercial units as part of the stock transfers from LB Tower Hamlets and this portfolio has been increased and enhanced as part of the estate-wide regeneration programme. In 2022/2023 East End Homes had 82 commercial units in management which generated £1.606 million income and contributed around £743,000 to the business plan. The Board has continued to maintain regular oversight of the performance of the commercial portfolio, as this area of activity was significantly impacted by the pandemic and continues to face other challenges brought about by ongoing global instability, high inflation, and high costs of living. In September 2022 the Board agreed an updated Shops and Commercial Premises Policy which included a provision to take appropriate measures to support high occupancy and tenancy sustainment within the commercial premises in management.

Financial Performance

Statement of Comprehensive Income

In the year to 31 March 2023, the group achieved a surplus of £3.691 million compared to a deficit of £1.104 million in the previous financial year. The surplus in the year includes £2.627 million, being the increase in the value of the group’s investment properties since the last valuation and £0.728 million gain on the disposal of property achieved through right to buy and right to acquire sales.

The key areas of income and expenditure contributing to the results for East End Homes are as follows:

Turnover : £24.171 million, £2.824 million higher than the £21.347 million achieved in 2021/22. The income in 2022/2023 was impacted by the following:

Operating costs: £20.317 million, up £2.640 million from £17.677 million in 2021/22. The increase in operating costs is mainly due to the following additional revenue expenditures:

Loan interest costs: decreased by £1.350 million to £3.479 million in 2022/23. The 2021/22 costs included a one-off £2.303 million ‘loan breakage fee’ incurred, following the completion of the refinancing of the existing Barclays loan debt. Excluding this fee, year-on-year interest payments has increased by £0.953 million, due to

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EAST END HOMES LIMITED STRATEGIC REPORT OF THE BOARD OF MANAGEMENT FOR THE YEAR ENDED 31 MARCH 2023

the impact of £15 million net additional loan borrowings during the year. East End Homes’ total loan debt at the yearend was £95.0 million (2021/22: £80.0 million).

Movement in valuation of Pension Schemes: In 2022/23, the net surplus in East End Homes’ pension schemes recognised in the statement of comprehensive income was £2.872 million.

Statement of Financial Position

East End Homes’ reserves has increased by £6.563 million to £87.156 million; arising from £3.691 million surplus archived in 2022/23 and from £2.872 million net surplus recognised on the Local Government Pension Scheme and Social Housing Pension Scheme.

Cash Flow

East End Homes’ cash balance as of 31 March 2023 was £8.977 million (2021/22: £10.129 million), a cash reduction of £1.152 million from 1 April 2022. The cash reduction during the year is the result of £20.848 million cash spend on the acquisition of new homes and refurbishment and fire safety remediation works to existing housing properties, £3.221 million net interest costs and £0.041 million spend on other fixed assets. The payments were offset by cash receipts of £4.652 million cash inflow from operating revenue activities, £15.0 million net loans drawn, £1.121 million cash receipts from the sale of properties and £2.185 million grants received.

Treasury Management

At 31 March 2023, East End Homes had agreed £116.0 million loan and overdraft facilities, comprising £50.0 million with NatWest Bank, £45.0 million with M&G Investments and £21.0 million with Barclays Bank, of which £95 million has been drawn, consisting of £40 million from the NatWest facility, £45 million from the M&G facility and £10 million from the Barclays facility. These loans are secured against the group’s assets.

The Board has approved a Treasury Management Policy to control the risks associated with its treasury activities. The policy sets out a clear framework of policies, procedures, and delegated authorities, which require reporting on the operations of the treasury function to the Finance and Audit Committee and to the Board on a quarterly basis.

Borrowings and Loan Profile

At 31 March 2023, East End Homes had a total loan debt balance of £95.0million comprising £85.0 million on a forward fixed interest rate arrangement and £10.0 million on a variable SONIA-linked rate.

The Board has an agreed Treasury Management Strategy which underpins how East End Homes supports its Business Plan, and a Risk Appetite Statement which summarises the strategic appetite and approach to risk, setting ‘golden rules’ for the Board to assess performance. In keeping with the Board’s approach to risk, the debt profile has been managed such that forward fixed rate loans consistently form a majority of the loan portfolio. The group currently has a healthy amount of fixed rate debt (89.5%) thus providing a good hedge against interest rate risk and a relatively low weighted average cost of debt (WACD) of 3.87%, demonstrating the Board’s relatively low risk approach to pursuing its corporate objectives.

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EAST END HOMES LIMITED STRATEGIC REPORT OF THE BOARD OF MANAGEMENT FOR THE YEAR ENDED 31 MARCH 2023

The East End Homes Board approved loan debt profile within the Business Plan is set out below.

----- Start of picture text -----
120,000
Fixed Rate Debt
100,000
Variable Rate Debt
80,000
60,000
40,000
20,000
0
83% 83% 82% 82% 82% 82% 82%
86%
89% 90% 90% 90%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
( £' 000s) 100% 100%
100%
100%
100%
100%
2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 2049 2050
----- End of picture text -----

Homes in Management

East End Homes has an asset management strategy which aims to deliver homes and facilities which are in good condition, of suitable design, and in the right locations, to meet the aspirations of our communities.

The number of homes in management at the yearend was:

2022/23 № at start
(1 April 2022)		 Additions Disposals № at Year End
(31 March
2023)
Social Rented 2,243 - (4) 2,239
Intermediate Rent 16 72 - 88
Private Rented 60 - - 60
Shared Ownership
(first tranche)		 0 45 - 45
Shared Ownership
(fullystaircased)		 0 - - -
Leasehold 1,484 4 - 1,488
Total 3,803 121 (4) 3,920

East End Homes stock increased by 117 during the year following completion and handover of properties at the Orchard Wharf (102) and Toynbee Street (5), Eric Street (8) and Gordon House Infills (2) schemes. During the year 4 properties were sold under the preserved right to buy or right to acquire schemes.

Strategic Asset Management

In March 2023 the Board of East End Homes approved a revised Asset Management Strategy, which updated and expanded the strategic approach to management and investment in our key assets. The revised strategy sought to address emerging and evolving challenges including delivery against targets for environmental

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EAST END HOMES LIMITED STRATEGIC REPORT OF THE BOARD OF MANAGEMENT FOR THE YEAR ENDED 31 MARCH 2023

performance and ‘net zero’ emissions, as well as strengthening our approach to collecting and managing data relating to the condition of our stock.

East End Homes is in the process of implementing a new asset management system to support comprehensive and active asset management and to develop our understanding of asset performance. The quality of data held is of critical importance in developing the business plan and understanding medium and long-term investment needs. During 2022/23 an internal property components survey was completed for 50% of the units in management, with the remaining 50% to be surveyed during 2023/24. Updating our information on stock condition provides assurance to the Board that the resources allocated for investment in property condition across the 30-year Business Plan are adequate for the needs of the organisation, both in maintaining properties to an appropriate level (with the anticipation on amendments to the Decent Homes Standard) and investing in environmental enhancements. Active asset management also includes carrying out options appraisals for units where it may be uneconomic to bring the property up to the habitable standard, including environmental performance. East End Homes will assess units on a Net Present Value (NPV) basis for their contribution to the business plan but will also consider social performance and the contribution that such homes may make to delivering social value. For example, a large family-sized home may be more ‘valuable’ to local overcrowded households in terms of fulfilling unmet local needs. The options appraisal process will be a comprehensive process which considers all inputs and outcomes, in considering the relative merits of approaches such as renewal or disposal.

The current five-year programme (as of June 2023), informed by stock condition data held, includes £25.31million of investment in asset renewal works. This is in addition to budgeted investment of £14.86million in improvement fire safety performance. The asset renewal programme includes replacement or renewal of all component failures which would cause non-decency under the current Decent Homes Standard, and investment in improving environmental performance for all units to reach ‘C’ grade under the EPC system by 2030.

East End Homes has developed a comprehensive Assets & Liabilities Register which compiles all the group’s assets and liabilities, providing up to date information for stakeholders including the Board. The Board continues to keep the register under review.

The Board’s Development and Asset Growth Strategy sets out the key principles and priorities for East End Homes in pursuing new business opportunities and the delivery of new affordable housing. A key element of this strategy is to reconfirm that while there is a focus on maximising the potential of our existing assets, East End Homes will only seek to progress potential regeneration schemes on our estates where it can be shown that the scheme will viably deliver an increase in the overall level of social rented homes. The Board’s attitude towards growth is also influenced by the adopted Risk Appetite Statement, which includes golden rules summarising the corporate approach to risk.

The inclusion of any prospective development scheme into the Business Plan will initially involve a financial appraisal of the scheme to assess the scheme’s ability to repay any potential borrowing and deliver a net contribution over the 30-year life of the Business Plan, as set out in the golden rules of the Risk Appetite Statement. Approval of the scheme must be supported by an independent appraisal of the scheme to further assure the Board that the scheme provides value for money in terms of the assumptions around valuations and the price offered. As part of the process for Board approval for inclusion of a new scheme into the Business Plan, the plan is updated, and stress-tested to provide assurance to the Board that the inclusion of the new scheme would improve the plan and is not forecast to lead to any breaches of the agreed golden rules or financial covenants.

The current approved plan includes a 50-unit shared ownership sales programme, within the Orchard Wharf scheme (43 units), Violet Road scheme (5 units) and Toynbee Street scheme (2 units), which is projected to contribute circa £6 million gross sales receipts to the plan in 2023/24 and 2024/25. The Board receives a quarterly report summarising the latest position regarding development or acquisition schemes agreed by the Board, identifying any amendments to anticipated completion or handover dates, or adjustments to details of

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EAST END HOMES LIMITED STRATEGIC REPORT OF THE BOARD OF MANAGEMENT FOR THE YEAR ENDED 31 MARCH 2023

the scheme e.g., tenure composition or rent levels. The Board is given updates of shared ownership sales, and/or applications in the pipeline which are being evaluated.

Value for Money (VFM)

Defining and Delivering VFM

East End Homes’ approach to VFM remains as set out in its VFM Strategy, agreed by the Board in December 2020. This strategy describes how EEH seeks to deliver efficiency in pursuing its corporate objectives; the role of the Board; and EEH’s strategic framework for monitoring VFM activity and delivering compliance with regulatory requirements. The strategy for 2020-25 was updated to reflect the revised regulatory framework and code of practice; the increased emphasis on performance metric reporting; and developing challenges for the financial performance of the organisation such as expenditure on building safety. It also built upon the strategic objectives set out in the Corporate Plan for 2019-24.

This VFM Strategy continues with the same summary definition of VFM for EEH as:

“ The provision of homes and services, at the right cost, that are fit for purpose and of the right quality for the needs and aspirations of our residents and stakeholders.”

The VFM Strategy sets out the key responsibilities of the Board and where these are delegated to Committees, maintaining an ongoing process of monitoring and review. These are categorised into three main strands:

VFM performance will be monitored through the reporting against the adopted strategic metrics – including those specified by the regulator and sector collaboration, and those specifically identified by the EEH Board to reflect its strategic priorities. Reporting of this performance also allows for comparison against appropriate sector peer groups, allowing the Board to assess the effectiveness of its approach and to understand differences, in the context of operational structures and decisions. In the wider context of performance, the Board will also consider satisfaction data which communicates the perspectives of stakeholders on the services and outcomes being delivered.

The Finance & Audit Committee was updated in March 2023 on performance to date and projected full year performance on the key metrics identified by the regulator, and in addition, the Board’s chosen metrics for assessing its attainment of Value for Money.

Financial and Business Performance

The Board has reviewed the organisation’s performance against the key metrics identified by the regulator. Where applicable, they receive ongoing updates or projections against the metrics throughout the financial year based on anticipated yearend figures. This supports the Board to implement appropriate and timely actions where they consider it necessary.

In addition, the Board has identified its own key metrics for measuring performance in Value for Money, corresponding to key strategic objectives. These currently include tenant satisfaction with overall services; value for money satisfaction; and key indicators for the Integrated Asset Management Contract covering responsive repairs and void works. The table on the next page summarises East End Homes’ performance against these metrics and compares this performance against other landlords mainly operating in London, and to the national median. The cost metrics are calculated using the number of affordable rented homes (but excluding the leasehold and market rented properties in management).

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EAST END HOMES LIMITED

STRATEGIC REPORT OF THE BOARD OF MANAGEMENT FOR THE YEAR ENDED 31 MARCH 2023
East End **Adjusted *** East End

London		 All
Homes Homes
YEAR 2023 2023 2022 2022 2022
Homes in management at the year end 2,372 2,372 2,259 837,342 2,810,321
Reinvestment %: (Properties acquired + development of new homes +
work to existing homes + capitalised interest + schemes
completed)/GBV (Cost)		 9.93% 9.93% 10..07% 5.40% 6.43%
Metric
1
New supply delivered %: Total social housing units delivered ornewly
builtunits acquired/total housing unitsownedat period end(FVA will
show the split between owned and
managed)		 4.93% 4.93% 0.31% 1.0% 1.26%
Metric
2a
New supply delivered %: Total non-social housing unitsdelivered or
newly built units acquired(Total non-social rental units owned, non-
social leasehold units owned, new outright sale units developed or
acquired)/Total social and non-social
housing unitsownedat period end		 0% 0% 0% 0% 0.0%
Metric
2b
Metric Gearing %: (LT+ST Loans + Finance Leases- cash and cash
equivalents)/Tangible fixed assets: Housing properties at cost		 42.17% 42.17% 37.27% 43.10% 43.6%
3
EBITDA-MRI %: Operating surplus less amortised gov’t grant less grant
taken to income plus interest receivable less capitalised major repairs
plus total depreciation/interest payable and
financing costs less capitalised interest in housing properties		 100.14% 155.16% 13.25% 92% 146.8%
Metric
4
Metric Headline social housing cost per unit- Inc. owned and managed
butexc. leaseholdand fully staircased shared ownership homes		 £5,840 £5,034 £6,708 £5,420 £4,040
5
Management CPU £897 £897 £789 £1,290 £1,151
Service charge CPU £1,451 £1,451 £1,523 £942 £471
Maintenance CPU £1,825 £1,825 £1,595 £1,331 £1,323
Major repairs CPU £1,667 £861 £2,801 £943 £920
Other social housing CPU £0 £0 £0 £357 £175
Metric Alternative 6(a) Operating margin %: (Operating surplus from
social housing lettings / Turnover from social lettings		 18.69% 18.69% 21.66% 20.35% 22.94%
6a
Metric Alternative 6 (b) Operating margin %: (Operating surplus
(overall) / Turnover (overall))		 14.28% 14.28% 17.19% 15.05% 20.65%
6b
Return on capital employed %: Operating surplus overall plus gain/loss
of disposal of fixed assets plus share of operating
surplus from JVs or associates/Total assets less current liabilities		 1.87% 1.87% 1.80% 2.15% 3.11%
Metric
7
EEH Strategic Metrics
(Effectiveness)Tenant satisfaction with overall services:
Measured usingSTAR methodology (everytwoyears)		 76.99% 76.99% 73% 84.9%
EEH 1
(Effectiveness)Satisfaction with the quality of a repair:
Transactional survey on job completion		 94.15% 96.4% 84.2%
(2022
LBTH)		 85.0%
EEH 2
(Efficiency)Number of repairs completed per property:Both in-
dwelling and communal repairs, including repairs reported by
leasehold units		 4.38 4.38 N/A 3.3
EEH 3
(Efficiency)Void performance:average re-let time (days) 30.2 27.2 42
(2022
LBTH)		 47.0
EEH 4a
(Economy)Void performance:rent loss due to void properties as a
percentage of annual rent debit		 0.42% 0.57% 1.14% 0.94%
EEH 4b
(Effectiveness)Value for Money Satisfaction:Tenants believing that
rents represent value for money (STAR) (everytwoyears)		 73.93%
(2022)		 73.93% 76.0% 84.3%
EEH 5a

(Effectiveness)Value for Money Satisfaction:Leaseholders
believing that service charges represent value for money (STAR) (every
twoyears)		 29.84% 29.84% 30.2% 38%
EEH 5b

*Adjusted to exclude fire safety expenditure

15

EAST END HOMES LIMITED STRATEGIC REPORT OF THE BOARD OF MANAGEMENT FOR THE YEAR ENDED 31 MARCH 2023

East End Homes has continued to invest significant amounts in the existing housing stock and acquisition of new homes. In 2022/23, the value of investment compared to the asset base was 9.93% (2022: 10.07%) compared to the 2022 median for London RPs of 5.40% and the National median of 6.43%. This is a direct result of £19.82 million investment (2022: £18.5 million) made during the year. The investment in new homes in 2022/23 includes payments made towards the acquisition of new homes at Orchard Wharf, Toynbee Street and Gordon House infill schemes, which were completed and has provided 117 new homes for renting and for shared ownership sales. The Eric Street and Violet Road schemes are ongoing, with completion and handover of new homes scheduled between 2023 and 2024. These schemes will deliver an additional 96 new homes for rent and shared ownership sales.

East End Homes’ gearing ratio (which measures the proportion of its borrowing in relation to the value of the asset base) has increased from 37.27% to 42.17% but remains comparatively low relative to those of other Registered Providers of 43.6% and London of 43.1%. The increase is primarily due to the additional £15 million net loan borrowings during 2022/23 to support increased investment in the existing stock and the acquisition of new homes.

The Interest cover ratio has improved from 13.25% in 2021/22 to 100.14% in 2022/23 and although below the national median of 146.8%, compares favourably to the London median of 92%. The year-on-year improvement, in part reflects the benefit of refinancing the Barclays loan debt in 2022 which has improved the cost of borrowing and therefore interest payable. Excluding the one off ‘loan breakage fee’ and the fire safety costs, from the 2022 and 2023 computation, the ratio achieved has improved from 138.56% to 155.16%.

East End Homes’ operating expenditure has increased in 2023, fuelled by rising inflation and high energy costs and the impacts on cost-of-living increases and pension contributions. This has led to a reduction in the overall operating margin (a measure of profitability of operating assets) from 17.19% in 2022 to 14.28%, below the 15.05% for London RPs and the National median of 20.65%.

The headline social housing cost per unit has reduced from £6,708 in 2021/22 to £5,840 in 2022/23. This is higher than the 2022 London median costs of £5,420 and the National median of £4,040. The costs include major repairs costs per unit of £1,667 (2022: £2,801) reflecting year on year significant capital investments in the refurbishment of stock and on fire safety remediation works to existing blocks, in accordance with the Board’s identified objectives. Excluding expenditure relating to fire safety remediation, the overall cost per unit was £5,034, which compares favourably to the 2022 London median costs of £5,420 but remains significantly higher than the national average.

In addition to reporting against the nationwide sector metrics, the Board of East End Homes has identified a suite of performance measures to capture resident satisfaction and broader indicators of performance. These are shown above as the EeH Strategic metrics. Similarly, to the financial metrics, performance is given for the past two years and compared to the London and national median performance where available.

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STRATEGIC REPORT OF THE BOARD OF MANAGEMENT FOR THE YEAR ENDED 31 MARCH 2023

EAST END HOMES LIMITED

Analysis of turnover and operating costs

Activity Turnover and operating costs Turnover and operating costs Turnover and operating costs Turnover and operating costs Turnover and operating costs
2023/24(projected) 2022/23 2021/22 2020/21
Units Turnover Op. Costs Units Turnover Op. Costs Units Turnover Op. Costs Units Turnover Op. Costs
£000 £000 £000 £000 £000 £000 £000 £000
GN properties (tenant
rents and service charges)		 2396 18,638 (15,084) 2327 16,527 (13,716) 2259 15,339 (12,559) 2252 15,550 (11,589)
Shared Ownership (first
tranche sales & rent)		 28 3,080 (2,154) 6 737 (402) - - - - - -
Leaseholder service
Charges		 1489 2,913 (3,770) 1488 2,771 (4,608) 1484 2,167 (3,583) 1484 2,070 (3,534)
Miscellaneous Lets - 296 (202) - 489 (198) - 276 (198) - 288 (204)
Private rented properties 60 1,031 (350) 60 1,018 (342) 60 981 (289) 60 1,064 (286)
Commercial properties 82 1,551 (825) 82 1,606 (863) 82 1,545 (855) 82 1,124 (856)
Amortised grants - 590 - - 590 - - 588 - - 556 -
Government Grant - - - - - - - - - -
Overage receipts and
other miscellaneous
income		 - 239 (187) - 433 (188) - 451 (193) - 661 (192)
Total - 28,338 (22,572) 24,171 (20,317) 21,347 (17,677) 21,313 (16,661)

The above analysis of turnover and operating costs shows the turnover in 2022/23 was £24.171 million, £2.824 million higher than £21.347 million achieved in 2021/22, whilst operating costs increased by £2.640 million from £17.677 million to £20.317 million. The turnover for 2023/24 is forecast to increase by £4.167 million with projected first tranche sales receipts of £3.1 million from 22 shared ownership properties and £2.1 million additional rental income following the completion and letting of 71 new affordable homes from the East End Homes acquisition programme. There is some uncertainty as to the level of general needs income, due the current level of inflation which could lead to a cap of the level of rent increase in 2024/25. Operating expenditure is forecast to increase by £2.255 million mainly from circa £1.8 million on shared ownership sales.

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EAST END HOMES LIMITED STRATEGIC REPORT OF THE BOARD OF MANAGEMENT FOR THE YEAR ENDED 31 MARCH 2023

Income from commercial properties is projected at £1.551 million in 2023/24 a reduction from the high level if £1.606 million in 2022/23. Current inflation and costs of living crisis presents a very challenging operating environment for our shop owners and will undoubtedly impact on this area of income for East End Homes. East End Homes’ portfolio of 60 private rented properties contributed £1.018 million to the group’s turnover, with a surplus of £676k. Given the uncertainties around the London housing market, conservative assumptions have been made for rental income for these properties with marginal increase in turnover forecast for 2023/24.

Operating Costs Performance and Comparison

Cost per unit 2023/24 2022/23 2022/23 2021/22 2021/22 2020/21
Projected
(£)		 Actual (£) Projected
(£)		 **Actual (£) ** Projected
(£)		 Actual (£)
Management 928 897 801 789 765 773
Services 1,502 1,451 1,549 1,523 1,547 911
Routine maintenance 1,710 1,652 1,474 1,448 1,546 1,571
Planned maintenance 179 173 148 147 147 142
Operating Costs 4,319 4,173 3,972 3,907 4,005 3,397
Major repairs 180 174 115 113 156 157
Capitalised Major
Works expenditure		 1,637 687 1,331 1,422 2,314 2,536
Exceptional Fire
Safety Works		 2,682 806 1,668 1,266 110 -
Total Operating
Costs per unit		 8,817 5,840 7,086 6,708 6,584 6,090
Bad debts 73 129 21 100 18 212
Depreciation of costs
of Housing properties		 1,595 1,559 1,428 1,499 1,645 1,448
Total 10,485 7,528 8,535 8,307 8,201 7,750

Sources: East End Homes Financial Statements / Budget. Consolidated (group) figures The data above relates to East End Homes’ operating costs in relation to its affordable rented

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STRATEGIC REPORT OF THE BOARD OF MANAGEMENT FOR THE YEAR ENDED 31 MARCH 2023

EAST END HOMES LIMITED

properties only.

The Board regularly reviews East End Homes’ costs per unit and has identified the main cost drivers behind these. Some cost drivers such as being based in London are a consequence of our operating environment. Benchmarking of operating costs takes place including in the table within this report. Other factors reflect the Board’s corporate objectives, including continuing to make substantial investments in maintaining and improving the condition of the existing stock through a capital investment programme and , delivering fire safety remediations works and the commitment to operating a local office-based delivery structure which differentiates East End Homes from other, centralised RPs.

Value for Money Self-Assessment Conclusion

Completion of this review supports the Board in assessing its capacity to meet its funders’ covenants, regulatory requirements, and business plan targets, while maintaining a focus on delivering the identified corporate objectives. The Board aims to maintain its commitment to localised service delivery and high-quality service provision, and to investment in maintaining and improving the quality of its stock, whilst keeping careful control of costs in order to optimise outcomes. The assessment provides some comparative context for East End Homes looking at relative performance for London-based peers and national averages.

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EAST END HOMES LIMITED STRATEGIC REPORT OF THE BOARD OF MANAGEMENT FOR THE YEAR ENDED 31 MARCH 2023

The following table summarises our actions against the specific expectations of the Value for Money Standard:

Specific expectations of the RSH Summary of how East End Homes is meeting these
expectations
Registered providers must:
a. clearly articulate their strategic objectives
b. have an approach agreed by their Board to
achieving value for money in meeting these
objectives and demonstrate their delivery of
value for money to stakeholders
c. through their strategic objectives, articulate
their strategy for delivering homes that
meet a range of needs
d. ensure that optimal benefit is derived from
resources and assets and optimise economy,
efficiency and effectiveness in the delivery
of their strategic objectives		 The Board sets out its strategic objectives in its
Corporate Plan, currently covering the period of
2019-24. The Board has begun to consider the
development of its plan for the next cycle. The plan
sets out the scope of the organisation’s ambitions
including for the provision of new homes. The
approach to achieving value for money is set out in
the Board’s agreed Value for Money Strategy,
which covers the period 2020-25.
The Board seeks to pursue the most efficient use of
its resources and this is being embedded within
operational practice, such as the use of options
appraisals for units with potentially high
refurbishment costs.
Registeredproviders must demonstrate:
a. a robust approach to achieving value for
money – this must include a robust
approach to decision making and a rigorous
appraisal of potential options for improving
performance		 The Board has agreed an approach to achieving VFM
through its Value for Money Strategy 2020/25, which
includes a focus on considering and assessing options for
service delivery. All Board reports contain a standard
section assessing VFM implications of the report and the
recommended decision, and the Board appoints a VFM
champion from among its membership to provide focussed
challenge.
b. regular and appropriate consideration by
the Board of potential value for money gains
– this must include full consideration of
costs and benefits of alternative
commercial, organisational and delivery
structures		 Each report considered by the Board is required to identify
value for money considerations. The Board also looks at
possible alternative models of service delivery when
considering proposals. This included the review of the
report previously commissioned from the LSE which
looked at the effectiveness and efficiency of EEH’s service
deliverymodel.
c. consideration of value for money across
their whole business and where they invest
in non-social housing activity, they should
consider whether this generates returns
commensurate to the risk involved and
justification where this is not the case		 The Board receives as part of its performance information
distinct data on collection and arrears for non-core parts of
the business, such as non-social rented properties, the
commercial property portfolio, and updated on shared
ownership sales. The management accounts identify the
surplus generated by each part of the business.
d. that they have appropriate targets in place
for measuring performance in achieving
value for money in delivering their strategic
objectives, and that they regularly monitor
and report their performance against these
targets		 The performance information includes a range of agreed
targets against KPIs, covering both income recovery and
service delivery. The Board and its committees receive
quarterly updates against the key performance indicators,
in addition to financial reporting.
Registered providers must annually publish evidence in the statutory accounts to enable stakeholders to
understand theprovider’s:
a. performance against its own value for
money targets and any metrics set out by
the regulator, and how that performance
compares to peers		 EastendHomes calculates and reports its performance
against the Value for Money metrics specified by the RSH,
and in addition reports against a small number of strategic
VFM indicators which it has chosen to reflect its core
objectives.

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STRATEGIC REPORT OF THE BOARD OF MANAGEMENT FOR THE YEAR ENDED 31 MARCH 2023

Specific expectations of the RSH Summary of how East End Homes is meeting these
expectations
b. measurable plans to address any areas of
underperformance, including clearly stating
any areas where improvements would not
be appropriate and the rationale for this		 In identifying its strategic objectives, the Board also
identifies desired outcomes. Performance monitoring
includes identifying plans of action where the required
outputs are not being achieved. In limited circumstances
the Board may accept that EEH performances is ‘inferior’ to
the median of a benchmarked peer group. For example,
investment in stock improvement works is likely to mean
that EEH’s operating cost per unit will be higher than some
other organisations.

Risk Management

The East End Homes Board has an approach to risk management which involves tailored risk appetites reflecting the nature of each category of risk – for example there is a more risk-averse approach to risks associated with health and safety than to those associated with reputational damage. The Risk Register is reviewed quarterly by the Finance & Audit Committee with updates and discussions referred to the Board.

All risks are assessed using a methodology which considers the potential impact on the organisation, and the likelihood of the risk occurring. For each entry on the register mitigating controls are identified, and the residual risk is assessed using the same methodology. The scores are then graded on a RAG basis with thresholds determined by the theme’s risk appetite.

The 13 risks in the table below are those which currently have a ‘red’ assessment at the residual risk stage (as at September 2023), listed in no particular order. For each of these, further to the mitigating controls cited in the table below, the Board has agreed an assurance plan which sets out the measures being taken by the organisation with a view to further mitigating or reducing the risk, seeking either to reduce the potential impact of the risk on EEH’s ongoing viability or the likelihood of the risk scenario occurring. The issues identified the Risk Register influence the scenarios modelled in stress-testing exercises, and the Board’s mitigation planning as a result of these stress tests.

# Risk MitigatingControls
1 Non-Compliance with Code of
Governance and/or Regulatory
Standards Framework		 Annual Self Assessment exercises undertaken and agreed by
the EEH Board – most recent completion June 2022
Board to declare compliance with Code of Governance in
annual accounts.
Board agreed range of actions to take in response to
external governance review.
Regulatory Working Group set up to oversee governance
improvement plan.
Appointment of consultancy support from Savills.
Three co-options to strengthen Board/committee skills and
recruitment exercise underway to close identified skills
gaps.
2 Key Performance Indicators
ineffective in allowing proper
Board scrutiny:
- not sufficiently comprehensive
across all service areas
- Poorperformance not		 Robust Challenge by Board Members
Internal and external Audit provide scrutiny of
performance and report to F&A.
Regular reports to Service Review Committee and EeH

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STRATEGIC REPORT OF THE BOARD OF MANAGEMENT FOR THE YEAR ENDED 31 MARCH 2023

EAST END HOMES LIMITED

# Risk MitigatingControls
reported to the Board
- Inaccurate Performance
reported		 Board on performance against target on all KPIs.
Wider breadth of KPI reporting introduced including
health and safety.
Benchmarking of performance with other local RPs
through THHF sub-group.
Reviewing the Tenant Satisfaction Measures KPIs and
changing definitions to ensure reporting on a
benchmarkable basis and complying with regulatory
obligations
Develop reporting of social value outputs.
Expand programme of third-party assurance for key
service areas in line with risk appetites i.e. averse
approach to health & safety risks. Playground Ground,
Gas and Fire Safety in place.
Implement recommendations of internal audits and
regulator feedback e.g. data on Decent Homes
Standard performance; stock condition survey data;
legionella inspections
3 Delays in letting and completing
Major Works schemes.
Schemes over-running in next
financial year, possible impact on
stock condition including Decent
Homes Standard. Delay in collecting
Major Works service charges and
knock-on effect delaying other
schemes due.
Delays in letting Fire Safety schemes
causing leading to spend falling
outside of the loan covenant.		 Regular capital programme monitoring meetings and report
to F&A. ‘RAG’ rating highlights schemes which may be at
risk of not completing in scheduled financial year.
Regular site meetings
Reserve schemes worked up for letting.
Separation of capital programme between fire safety and
non-fire safety schemes.
Stay abreast of trends and constraints related to materials
or labour as a result of competing projects and logistics
Review assumptions on inflation, and review cost estimates
so that realistic expectations ahead of tender returns being
received.
Prioritisation of capital works programme to ensure critical
/ safety works are completed.
4 Rent / service charge collection
(from social housing tenants) below
business plan assumptions including
impact of welfare reforms and
recession arising from Covid-19
pandemic; global instability.		 Ongoing tracking of collection against projected
income by Finance team.
Collection reviewed quarterly within Board KPI report.
Staff receive training on HB changes, debt and
welfare advice
Partnership with Bromley by Bow Centre to provide
Financial Inclusion support to both tenants and
leaseholders
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STRATEGIC REPORT OF THE BOARD OF MANAGEMENT FOR THE YEAR ENDED 31 MARCH 2023

# Risk MitigatingControls
Impacts of welfare reform under review and impacts
incorporated into business plan assumptions
including collection rates, void losses, bad debt
provision and ancillary costs.
Welfare Reform Action Plan in place to optimise
payment collection and sustain tenancies.
Annual stress-testing of forecast assumptions within
Business Plan, plus ad hoc stress-testing in response
to events and new identified risk factors.
Internal audit completed during 2020/21 showing
substantial assurance.
5 Increase in Contract Costs in
committed schemes (major works)
- Cost above budgeted estimate
impacting cashflow
- Contractor Performance		 Capital Programme Monitoring ongoing – quarterly
updates to Finance & Audit Committee.
Adjust capital programme to accommodate any
overspends, prioritising safety-critical works.
Adjust the programme annually to account for inflation.
Robust Leasehold Rechargeprocess
6 Pensions:
- Increased employer contributions
- Increased scheme deficit		 Cost increases on pension contributions included in
revised business plan and budgets.
Annual provision for pension scheme deficits made
against reserves within Financial Statements.
EEH Board has chosen to close access to existing Defined
Benefit schemes for new staff members and introduce a
Defined Contribution scheme with lower employer costs.
7 Funding & Treasury Management:
- Failure to meet Covenant ratios		 Regularly reviewed in all Treasury reports to F&A
Regularly reviewed through updates and stress testing
of the business plan.
Annual certification of covenant compliance by external
auditors
NatWest and Barclays have agreed to ‘carve-out’ of
covenants through to 2026 to support funding of fire
safety works.
8 Inflation:
- Headline inflation rate
- Build cost inflation		 Ongoing monitoring to decide on whether changes to
assumptions required.
Stress testing of Business Plan with different inflation
rates.
Introduce fixed price contracts; and ongoing monitoring
of contractor performance and viability.
Deliver efficiency savings.
Used sector benchmarking for short-term inflation
expectations within business plan.

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EAST END HOMES LIMITED

STRATEGIC REPORT OF THE BOARD OF MANAGEMENT FOR THE YEAR ENDED 31 MARCH 2023

# Risk
MitigatingControls		 Risk
MitigatingControls
9 Shared Ownership Units
•
Failure to sell at anticipated
levels
Skillset to manage shared ownership
units not necessarily within existing
structure		 Pricing of units for shared ownership assessed to
promote affordability of units using independent
expertise to advise on demand and affordability.
Prudent assumptions for scheme dates allowing for
slippage.
Independent consultant appointed to manage sales
process.
New Project Officer being appointed via internal
secondment to oversee development schemes and
handover including shared ownership units.
Advice obtained from consultants on our units
compared to other shared ownership schemes in
the vicinity.
10 Corporate Manslaughter and
Corporate Homicide Act – failure to
comply with responsibilities relating
to fire safety, gas safety, asbestos,
electrical safety, water safety and / or
any other aspect of health and safety
including staff safety.

Programme of Fire Risk Assessments in place and
monitoring processes for actions arising from these. Gas
Servicing arrangements closely monitored, included
within KPIs along with other Health and Safety KPIs and
maintained at 100% on a continuous basis.
Health and Safety Policy in place, working group
established and meeting regularly and Policy reviewed
and agreed every two years by the Board.
Health and Safety responsibilities outlined at Board
Training.
Internal Audit compliance reviews.
Provision made in capital works programme for
identified remedial works at 7 blocks
11 Failure to comply with new
responsibilities arising from the
Building Safety Act and Fire Safety
Act		 Fire suppressant systems introduced to all high-risk
refuse areas.
Fire safety reports presented to Board.
Intrusive surveys completed for all (45) blocks identified
requiring an EWS1 under the RICS criteria, a further 43
blocks inspected.
Additional £15million budgetary provision for capital
expenditure on fire safety works.
EEH Health & Safety Consultant attended Board to
review new Fire Safety Act and obligations.
Discussions with Telford Homes over remedial works to
three blocks. Surveys completed and scope of works
beingagreed.
12 A Management Company associated
with an EeH estate fails to meet its
legal or health and safety
responsibilities.
-
causes death or injury
-
reputational damage		 Introduction of EeH Managing Agent Policy and
Procedure.
An expanded performance return identifying health and
safety – 6 monthly report to SRC and annual review
meeting.
Internal audit completed in January 2020 finding
adequate assurance, agreed recommendations are
being implemented.

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EAST END HOMES LIMITED

STRATEGIC REPORT OF THE BOARD OF MANAGEMENT FOR THE YEAR ENDED 31 MARCH 2023

# Risk MitigatingControls
13 Safety risk associated with
Community Buildings – not directly
managed		 Included within Fire Risk Assessment Plan and health
and safety audits
Health & Safety consultant inspects buildings for safety
issues.
Support provided in terms of tackling criminal activity.
Work ongoing to introduce lease agreements where
none currently exists. Emphasis on safety issues rather
than financial in discussions with users.

Pension commitments and associated issues

East End Homes participates in two defined benefit (DB) final salary schemes, the Local Government Pension Scheme through the London Borough of Tower Hamlets, and the Social Housing Pension Scheme (SHPS). Entry to both schemes is now closed. East End Homes also participates in a defined contribution (DC) scheme under the SHPS. Since the introduction of auto enrolment in May 2014, all new entrants are now automatically enrolled into the SHPS (DC) scheme unless they specifically opt out. From 2012 to date, the number of East End Homes staff enrolled in a pension scheme has grown from 62 to 99 (92% of staff). The deficits in the defined benefit schemes in previous years have meant that East End Homes has to set aside a significant provision to cover the pension liabilities.

Since 2018/19 information became available to enable the Group to account for the Social Housing Pension Scheme as a defined benefit scheme. At 31 March 2023 £0.678 million (2022: £0.652 million) has been provided or recognised through the statement of comprehensive income and Provision for liabilities and Charges as the Groups share of deficit on the Social Housing Pension Scheme.

At 31[st] March 2023 East End Homes were notified of a pension scheme surplus of £6.799 million on the LGPS scheme, compared to the 2021/22 surplus of £3.535 million. The changes in the fair values of plan assets, defined benefit obligation and Net Liability in the LGP scheme for yearend has been fully provided against the income and expenditure reserves under the heading of Provision for liabilities and Charges.

The table below shows East End Homes’ pension liabilities at the in each of the last three financial years, together with the levels of staff membership of the schemes in relation to the overall workforce.

2022/23 2022/23 2021/22 2021/22 2020/21 2020/21
№ of
members		 (Deficit)/
Surplus
£’000		 № of
members		 (Deficit)/
Surplus
£’000		 № of
members		 (Deficit)/
Surplus
£’000
LGPS 16 3,264 18 3,535 18 1,894
SHPS(DB) 34 (26) 34 (652) 37 (1,881)
SHPS(DC) 49 - 46 - 43 -
Total 99 3,238 98 2,883 98 13
Workforce 108 107 109

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EAST END HOMES LIMITED STRATEGIC REPORT OF THE BOARD OF MANAGEMENT FOR THE YEAR ENDED 31 MARCH 2023

Directors

The directors who have served during the year are disclosed in page 4.

No new Board Members were appointed during the year, although two have been appointed between the end of the 2022/23 financial year and the date of this report. Both Emma Palmer and Jacqui Bateson have been coopted onto the Board to strengthen the collective skills profile in light of regulatory engagement and expectations around governance expertise. In addition to governance strengths, these appointments strengthen the Board in other priority areas including asset management, and risk monitoring and mitigation.

The Board is mindful of the benefits of developing a diverse membership with a range of life experiences, who can contribute towards the skills and expertise the Board has identified in its adopted skills matrix. Board Members have been asked to complete audits of the diversity profile against protected characteristics. At the time of writing the reported composition of the Board was that there were:

The Board has refreshed its Skills and Competencies Matrix and its Appointment and Reappointment of Board Members Policy. A recruitment exercise is being conducted with a view to making additional appointments at the 2023 Annual General Meeting to further strengthen the collective skillset of the Board, and to ensure that the Board has the correct profile of skills and expertise to drive improvements and achieve the Board’s strategic objectives.

Internal controls

The Board is responsible for East End Homes’ system of internal control and for its review. The system of internal control is designed to manage rather than eliminate the risk of failure to meet corporate objectives. It can provide reasonable, but not absolute assurance against the possibility of material misstatement or loss.

In meeting its responsibilities, East End Homes has operated an ongoing process of risk management that enables it to identify, evaluate and manage the significant risks it faces. The Board is responsible for overseeing the process. The Board has adopted a process to review and provide assurance on the effectiveness of the system of internal control by the following means:

The system of internal controls established by the Board consists of:

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EAST END HOMES LIMITED STRATEGIC REPORT OF THE BOARD OF MANAGEMENT FOR THE YEAR ENDED 31 MARCH 2023

The Board of East End Homes annually reviews the organisation’s compliance with the Regulatory Standards published by the Regulator of Social Housing. The self-assessment was reported and agreed by the East End Homes Board on 14 June 2023. In completing this self-assessment, the Board agreed the aspects of the standards for which it was working towards compliance and set out the actions being taken to ensure compliance would be achieved. The Board also identified the actions to be taken to achieve compliance with the proposed Tenant Satisfaction Measures Standard.

Regulator of Social Housing

The RSH on 25th May 2023 published a Regulatory Judgement following an In-Depth Assessment which downgraded EeH previous assessment of the governance grade from G1 to G3 and confirmed its existing V2 grade for viability. This means that the RSH identified serious regulatory concerns and lacked assurance that adequate governance, risk management and control frameworks were in place.

During this period and prior to the start of the IDA the EeH Board had commissioned an external governance review. The outcome of this review has fed into the Governance Review Improvement Plan (GRIP) which is overseen by the Governance Recovery Working Party reporting to the Board.

During this period significant progress was made in completing the actions identified in the GRIP with a view to address the Regulatory concerns identified.

There are no other significant internal control issues that require disclosure in the annual financial statements.

Fraud

East End Homes complies with the Regulator of Social Housing’s requirements on fraud. We have an Anti-Fraud Policy which was approved by the Board in June 2018.

The policy requires a register to be maintained of all actual and attempted fraud. All such cases are reported to the Finance & Audit Committee and the Board. Currently, any fraud more than £5,000 must be reported to the Regulator of Social Housing, in the absence of which a ‘nil’ return will be submitted.

In the year to 31 March 2023, there were no actual or attempted fraud cases.

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STRATEGIC REPORT OF THE BOARD OF MANAGEMENT FOR THE YEAR ENDED 31 MARCH 2023

Statement of the Board’s responsibilities

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

The Companies Act 2006 and registered social housing legislation require the Board to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Group and Company and of the income and expenditure of the Group and Association for that period. In preparing these financial statements the Board is required to:

The Board is responsible for keeping proper accounting records, which disclose with reasonable accuracy at any time the financial position of the Group and Company and enable it 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 2022. It has general responsibility for taking reasonable steps to safeguard the assets of the Group and Company and to prevent and detect fraud and other irregularities.

We, the Board members, who are also the directors of the Company, who held office at the date of approval of these Financial Statements set out above, each confirm, so far as we are aware, that:

This confirmation is given and should be interpreted in accordance with the provisions of Section 418 of the Companies Act 2006. In approving the Strategic Report of the Board of Management, we also approve the Strategic Report included therein, in our capacity as company directors.

Going concern

After making enquiries the Board has a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. For this reason, it continues to adopt the going concern basis in the financial statements.

In considering the financial position of the group the Board has reviewed the short term cash flow forecast, available bank facilities and 30 year business plan.

28

STRATEGIC REPORT OF THE BOARD OF MANAGEMENT FOR THE YEAR ENDED 31 MARCH 2023

EAST END HOMES LIMITED

Annual general meeting

The annual general meeting will be held on 21 September 2023.

Auditors

Beever and Struthers Chartered Accountants have expressed their willingness to continue as external auditors and a resolution to re-appoint them shall be proposed at the annual general meeting.

Approved by the Board on 21 September 2023 and signed on its behalf by:

Kevin Moore Chair

John Kettlewell Member

Jahangir Mannan Member

29

EAST END HOMES LIMITED REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF EAST END HOMES LIMITED

Opinion

We have audited the financial statements of East End Homes Limited “the parent Company” and its subsidiary (“the Group”) for the year ended 31 March 2023 which comprise the Consolidated Statement of Comprehensive Income, the Association Statement of Comprehensive Income, the Consolidated Statement of Financial Position, the Association Statement of Financial Position, the Consolidated Statement of Changes in Reserves, the Association Statement of Changes in Reserves, the Consolidated Statement of Cash Flows, the Association Statement of Cash Flows and the related notes, including a summary of significant accounting policies in Note 1. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) including FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”.

In our opinion the financial statements:

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 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 Association’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.

30

EAST END HOMES LIMITED REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF EAST END HOMES LIMITED (continued)

Other information

The Board is responsible for the other information. The other information comprises the information included in the Strategic Report of the Board of Management, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

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 of the Board of Management.

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:

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:

31

EAST END HOMES LIMITED REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF EAST END HOMES LIMITED (continued)

Responsibilities of the Board

As explained more fully in the Statement of the Board’s responsibilities set out on page 26, 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 intends 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 and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

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:

32

EAST END HOMES LIMITED REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF EAST END HOMES LIMITED (continued)

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

Due to the inherent limitations of an audit, there is an unavoidable risk that we m ay 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 noncompliance with laws and regulations and cannot be expected to detect all fraud and non-compliance with laws and regulations.

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.

Michael Tourville FCA (Senior Statutory Auditor)

Date: 28 September 2023

For and on behalf of Beever and Struthers Chartered Accountants and Statutory Auditor 150 Minories London EC3N 1LS

33

EAST END HOMES LIMITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2023

Notes
Turnover
2
Cost of sales
2
Operating expenditure
2
Increase / (decrease) in valuation of investment properties
11
Gain / (loss) on disposal of property, plant and equipment
(fixed assets)
5
Operating surplus / (deficit)
2
Interest receivable and similar income
6
Interest and financing costs
7
Surplus / (deficit) for the year before taxation
8
Taxation
9
Surplus / (deficit) for the year
Actuarial loss/gain in respect of pension schemes
21
Total comprehensive income for the year
The results relate wholly to continuing activities.		 2023
£’000
2022
£’000
24,171
21,347
(402)
-
(20,317)
(17,677)
2,627
-
728
-
6,807
3,670
363
55
(3,479)
(4,829)
3,691
(1,104)
-
-
3,691
(1,104)
2,872
3,012
6,563
1,908

The financial statements were approved and authorised for issue by the Board on 21 September 2023 and were signed on its behalf by:

The notes on pages 41 to 69 form an integral part of these financial statements.

Kevin Moore Chair

John Kettlewell Member

Jahangir Mannan Member

34

EAST END HOMES LIMITED ASSOCIATION STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2023

Notes
Turnover
2
Cost of sales
2
Operating expenditure
2
Increase / (decrease) in valuation of investment properties
11
Gain / (loss) on disposal of property, plant and equipment (fixed
assets)
5
Operating surplus / (deficit)
2
Gift aid received from subsidiary
Interest receivable and similar income
6
Interest and financing costs
7
Surplus / (deficit) for the year before taxation
8
Taxation
9
Surplus / (deficit) for the year after taxation
Actuarial (loss) / gain in respect of pension schemes
19
Total comprehensive Income for the year		 2023
£’000
2022
£’000
23,905
21,073
(402) -
(20,297)
(17,650)
2,627
-
728
-
6,561
3,423
247 253
356
55
(3,479)
(4,829)
3,685
(1,098)
-
-
3,685
(1,098)
2,872 3,012
6,557
1,914

The results relate wholly to continuing activities

The financial statements were approved and authorised for issue by the Board on 21 September 2023 and were signed on its behalf by:

The notes on pages 41 to 69 form an integral part of these financial statements.

Kevin Moore John Kettlewell Chair Member

Jahangir Mannan Member

35

EAST END HOMES LIMITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2023 Company number 4516155

Notes
Fixed assets
Tangible fixed assets: housing properties
10
Investment properties
11
Tangible fixed assets: other fixed assets
12
Current assets
Stock
13
Trade and other debtors
- due within one year
14
- due after one year
14
Cash and cash equivalents
Less creditors:
Amounts falling due within one year
15
Net current assets / (liabilities)
Total assets less current liabilities
Creditors:
Amounts falling due after more than one year
16
Provision for liabilities and charges
21
Total net assets
Capital and reserves
Revaluation reserve
Income and expenditure reserve
Total Reserves		 2023
£’000
2022
£’000
199,591
183,105
20,204
17,577
1,064
1,125
220,859
201,807
2,471
3,250
7,547
4,530
503
503
8,977
10,129
19,498
18,412
(16,713)
(16,269)
2,785
2,143
223,644
203,950
(142,609)
(126,240)
6,121
2,883
87,156
80,593
4,421
1,794
82,735
78,799
87,156
80,593

The notes on pages 41 to 69 form an integral part of these financial statements

The financial statements were approved and authorised for issue by the Board on 21 September 2023 and signed on its behalf by:

Kevin Moore Chair

John Kettlewell Jahangir Mannan Member Member

36

EAST END HOMES LIMITED ASSOCIATION STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2023 Company number 4516155

Notes
Fixed assets
Tangible fixed assets: housing properties
10
Investment properties
11
Tangible fixed assets: other fixed assets
12
Current assets
Stock
13
Trade and other debtors
- due within one year
14
- due after one year
14
Cash and cash equivalents
Less creditors:
Amounts falling due within one year
15
Net current assets / (liabilities)
Total assets less current liabilities
Creditors:
Amounts falling due after more than one year
16
Provision for liabilities and charges
21
Total net assets
Capital and reserves
Revaluation reserve
Income and expenditure reserve
Total reserves		 2023
£’000
2022
£’000
199,591
183,105
20,204
17,577
1,064
1,125
220,859
201,807
2,471
3,250
7,533
4,502
503
503
8,702
9,836
19,209
18,091
(16,677)
(16,195)
2,532
1,896
223,391
203,703
(142,609)
(126,240)
6,121
2,883
86,903
80,346
4,421
1,794
82,482
78,552
86,903
80,346

The notes on pages 41 to 69 form an integral part of these financial statements The financial statements were approved and authorised for issue by the Board on 21 September 2023 and signed on its behalf by:

Kevin Moore John Kettlewell Jahangir Mannan Chair Member Member

37

EAST END HOMES LIMITED CONSOLIDATED STATEMENT OF CHANGES IN RESERVES

Balance at 1 April 2021
Surplus / (deficit) from Statement of Comprehensive Income
Transfer to/from revaluation reserve
Balance at 31 March 2022
Surplus / (deficit) from Statement of Comprehensive Income
Transfer to/from revaluation reserve
Balance at 31 March 2023
ASSOCIATION STATEMENT OF CHANGES IN RESERVES
Balance at 1 April 2021
Surplus / (deficit) from Statement of Comprehensive Income
Transfer to/from revaluation reserve
Balance at 31 March 2022
Surplus / (deficit) from Statement of Comprehensive Income
Transfer to/from revaluation reserve
Balance at 31 March 2023		 Group
Group
Group
Income and
expenditure
reserve
£’000
Revaluation
reserve
£’000
Total
reserves
£’000
76,891
1,794
78,685
1,908
-
1,908
-
-
-
78,799
1,794
80,593
6,563
-
6,563
(2,627)
2,627
-
82,735
4,421
87,156
Income and
expenditure
reserve
£’000
Revaluation
reserve
£’000
Total
reserves
£’000
76,638
1,794
78,432
1,914
-
1,914
-
-
-
78,552
1,794
80,346
6,557
-
6,557
(2,627)
2,627
-
82,482
4,421
86,903

The notes on pages 41 to 69 form an integral part of these financial statements.

38

EAST END HOMES LIMITED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2023

Net cash generated from operating activities (Note i) 2023
2022
£’000
£’000
£’000
£’000
4,652
6,370
-
-
(41)
(10)
(20,848)
(21,656)
1,121
-
205
53
2,185
-
(17,378)
(21,613)
(3,426)
(4,998)
20,000
43,500
(5,000)
(22,000)
11,574
16,502
(1,152)
1,259
10,129
8,870
8,977
10,129
8,977
10,129
6,563
1,908
3,801
3,575
(2,081)
482
437
(911)
(3,238)
(2,870)
392
-
(1,121)
-
3,479
4,829
(363)
(55)
(590)
(588)
(2,627)
-
4,652
6,370		 2023
2022
£’000
£’000
£’000
£’000
4,652
6,370
-
-
(41)
(10)
(20,848)
(21,656)
1,121
-
205
53
2,185
-
(17,378)
(21,613)
(3,426)
(4,998)
20,000
43,500
(5,000)
(22,000)
11,574
16,502
(1,152)
1,259
10,129
8,870
8,977
10,129
8,977
10,129
6,563
1,908
3,801
3,575
(2,081)
482
437
(911)
(3,238)
(2,870)
392
-
(1,121)
-
3,479
4,829
(363)
(55)
(590)
(588)
(2,627)
-
4,652
6,370		 2023
2022
£’000
£’000
£’000
£’000
4,652
6,370
-
-
(41)
(10)
(20,848)
(21,656)
1,121
-
205
53
2,185
-
(17,378)
(21,613)
(3,426)
(4,998)
20,000
43,500
(5,000)
(22,000)
11,574
16,502
(1,152)
1,259
10,129
8,870
8,977
10,129
8,977
10,129
6,563
1,908
3,801
3,575
(2,081)
482
437
(911)
(3,238)
(2,870)
392
-
(1,121)
-
3,479
4,829
(363)
(55)
(590)
(588)
(2,627)
-
4,652
6,370		 2023
2022
£’000
£’000
£’000
£’000
4,652
6,370
-
-
(41)
(10)
(20,848)
(21,656)
1,121
-
205
53
2,185
-
(17,378)
(21,613)
(3,426)
(4,998)
20,000
43,500
(5,000)
(22,000)
11,574
16,502
(1,152)
1,259
10,129
8,870
8,977
10,129
8,977
10,129
6,563
1,908
3,801
3,575
(2,081)
482
437
(911)
(3,238)
(2,870)
392
-
(1,121)
-
3,479
4,829
(363)
(55)
(590)
(588)
(2,627)
-
4,652
6,370		 2023
2022
£’000
£’000
£’000
£’000
4,652
6,370
-
-
(41)
(10)
(20,848)
(21,656)
1,121
-
205
53
2,185
-
(17,378)
(21,613)
(3,426)
(4,998)
20,000
43,500
(5,000)
(22,000)
11,574
16,502
(1,152)
1,259
10,129
8,870
8,977
10,129
8,977
10,129
6,563
1,908
3,801
3,575
(2,081)
482
437
(911)
(3,238)
(2,870)
392
-
(1,121)
-
3,479
4,829
(363)
(55)
(590)
(588)
(2,627)
-
4,652
6,370

Cash flow from investing activities
Purchase of investment properties
Purchase of tangible fixed assets
Acquisition and construction of housing properties
Proceeds from sale of tangible fixed assets
Interest Received
Grant Received
Cash flow from financing activities
Interest Paid
New loans secured
Repayment of borrowings
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year
Cash and cash equivalents comprise:
Cash at bank
Note i
Cash flow from operating activities
Surplus for the year
Adjustments for non-cash items:
Depreciation of tangible fixed assets
(Increase)/ decrease in trade and other debtors
(Decrease)/ increase in trade and other creditors
Increase/ (decrease) in provisions
Carrying amount of tangible fixed asset disposals
Adjustments for investing or financing activities:
Proceeds from the sale of tangible fixed assets
Interest payable
Interest received
Government grants amortised
Changes in value of Investment Properties
Net cash generated from operating activities
(3,426)
20,000
(5,000)		 (4,998)
43,500
(22,000)
8,977 10,129
8,977 10,129
6,563
3,801
(2,081)
437
(3,238)
392
(1,121)
3,479
(363)
(590)
(2,627)		 1,908
3,575
482
(911)
(2,870)
-
-
4,829
(55)
(588)
-
4,652 6,370

The notes on pages 41 to 69 form an integral part of these financial statements.

39

EAST END HOMES LIMITED ASSOCIATION STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2023

Net cash generated from operating activities (Note i) 2023
2022
£’000
£’000
£’000
£’000
4,680
6,394
-
-
(41)
(10)
(20,848)
(21,656)
1,121
-
195
53
2,185
-
(17,388)
(21,613)
(3,426)
(4,998)
20,000
43,500
(5,000)
(22,000)
11,574
16,502
(1,134)
1,283
9,836
8,553
8,702
9,836
8,702
9,836
6,557
1,914
3,801
3,575
(2,091)
502
474
(913)
(3,238)
(2,870)
392
-
(1,121)
-
3,479
4,829
(356)
(55)
(590)
(588)
(2,627)
4.680
6,394		 2023
2022
£’000
£’000
£’000
£’000
4,680
6,394
-
-
(41)
(10)
(20,848)
(21,656)
1,121
-
195
53
2,185
-
(17,388)
(21,613)
(3,426)
(4,998)
20,000
43,500
(5,000)
(22,000)
11,574
16,502
(1,134)
1,283
9,836
8,553
8,702
9,836
8,702
9,836
6,557
1,914
3,801
3,575
(2,091)
502
474
(913)
(3,238)
(2,870)
392
-
(1,121)
-
3,479
4,829
(356)
(55)
(590)
(588)
(2,627)
4.680
6,394		 2023
2022
£’000
£’000
£’000
£’000
4,680
6,394
-
-
(41)
(10)
(20,848)
(21,656)
1,121
-
195
53
2,185
-
(17,388)
(21,613)
(3,426)
(4,998)
20,000
43,500
(5,000)
(22,000)
11,574
16,502
(1,134)
1,283
9,836
8,553
8,702
9,836
8,702
9,836
6,557
1,914
3,801
3,575
(2,091)
502
474
(913)
(3,238)
(2,870)
392
-
(1,121)
-
3,479
4,829
(356)
(55)
(590)
(588)
(2,627)
4.680
6,394

Cash flow from investing activities
Purchase of investment properties
Purchase of tangible fixed assets
Acquisition and construction of housing properties
Proceeds from sale of tangible fixed assets
Interest Received
Grant Received
Cash flow from financing activities
Interest Paid
New loans secured
Repayment of borrowings
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year
Cash and cash equivalents comprise:
Cash at bank
Note i
Cash flow from operating activities
Surplus for the year
Adjustments for non-cash
items:
Depreciation of tangible fixed assets
(Increase)/ decrease in trade and other debtors
(Decrease)/ increase in trade and other creditors
Increase/ (decrease) in provisions
Carrying amount of tangible fixed asset disposals
Adjustments for investing or financing activities:
Proceeds from the sale of tangible fixed assets
Interest payable
Interest received
Government grants amortised
Changes in value of Investment Properties
Net cash generated from operating activities
(3,426)
20,000
(5,000)		 (4,998)
43,500
(22,000)
8,702
8,702
6,557
3,801
(2,091)
474
(3,238)
392
(1,121)
3,479
(356)
(590)
(2,627)
4.680

The notes on pages 41 to 69 form an integral part of these financial statements.

40

EAST END HOMES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2023

1. PRINCIPAL ACCOUNTING POLICIES

East End Homes Limited is a registered company limited by guarantee under the provisions of the Companies Act 2006 registered in England with registration number 4516155 and is registered as a charity in accordance with the Charities Act 2011 registration number 1107691. It is also registered with the Regulator of Social Housing as a Registered Provider of Social Housing under the provisions of the Housing and Regeneration Act 2008 registration number L4434. The registered office is 3 Resolution Plaza, London, E1 6PS.

The group comprises the following entities:

Name Incorporation Registered/Non-registered
East End Homes Limited Companies Act 2006 Registered
East End Homes (Community Companies Act 2006 Non-registered
Development) Limited

Basis of Accounting

The Group and Association’s financial statements have been prepared in accordance with applicable United Kingdom Accounting Generally Accepted Accounting Practice (UK GAAP), the Housing SORP 2018: Statement of Recommended Practice for Registered Social Housing Providers, the Companies Act 2006, the Charities Act 2011, the Housing and Regeneration Act 2008 and the Accounting Direction for Private Registered Providers of Social Housing 2022.

The financial statements are prepared on the historical cost basis of accounting as modified by investment properties and pension fund assets and liabilities held at fair value and are presented in sterling £’000.

The Group and Association’s financial statements have been prepared in compliance with FRS 102. As a public benefit entity, East End Homes Limited has applied the public benefit entity ‘PBE’ prefixed paragraphs of FRS 102.

Parent company disclosure exemptions

In preparing the separate financial statements of the parent company, advantage has been taken of the following disclosure exemptions available in FRS 102:

Basis of Consolidation

The consolidated financial statements incorporate the results of East End Homes Limited and its subsidiary undertaking East End Homes (Community Development) Limited, registered company number 05838745, as at 31 March 2023 using the acquisition method of accounting as required. Where the acquisition method is used, the results of subsidiary undertakings are included from the date of acquisition, being the date the Group obtains control. Intra-group transactions are eliminated on consolidation.

41

EAST END HOMES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2023 (continued)

Turnover

Turnover represents rental income receivable, amortised capital grant, service charges, revenue grants from local authorities, the Greater London Authority and Homes England, management fees receivable and other income and are recognised in relation to the period when the goods and services have been supplied.

Rental income is recognised when the property is available for let, net of voids. Income from property sales is recognised on legal completion. All income is recognised on a receivable basis and sales of property are recognised at completion. Income is recognised on delivery of service. Intra-group charges are on an arm’s length basis and are eliminated on consolidation.

Sale of properties developed for outright sale are included in Turnover and Cost of Sales

Housing properties

Housing properties are properties used in the provision of social benefit purposes or for wider community benefits. They include socially rented units.

East End Homes account for housing properties using the historical cost model. Housing properties are initially recognised at the cost of bringing them to their present condition. Such costs include the cost of acquiring land and the buildings, cost of construction, directly attributable administration costs and expenditure incurred in improving or reinvesting in existing properties.

Social housing properties during development are carried at their development costs to date less impairment.

Housing properties are stated in the Statement of Financial Position at cost less depreciation less impairment. Depreciation is charged on completed social housing properties, excluding freehold land on a straight-line basis over the useful economic life of the component from the date of practical completion.

Under SORP 2018, the costs of housing properties is split between their land and structure costs and a specific set of major components which require periodic refurbishment or replacement. The costs of refurbishment of or replacement of such components is capitalised and depreciated over the expected useful economic lives of the components as follows:

Component Useful economic life(years)
Land Not depreciated
Structure 100
Roof 30
Lift 50
Bathroom 30
Kitchen 25
Electrical 30
Heating Systems 20
Windows 30
Doors 30

Major repairs expenditure is capitalised where the works undertaken increase the future economic benefit to be derived from the property. An increase in the future economic benefit can arise through either an increase in the rental income or a reduction in future maintenance costs or a significant extension in the life of the property. Where the works are either routine repairs or replacements with no incremental benefit then the costs are charged to the statement of comprehensive income in the period in which they are incurred.

42

EAST END HOMES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2023 (continued)

Land and properties that are donated from local authorities or acquired at a discount to their fair values as a result of planning requirement under Section 106 Town and Country Planning Act 1990 are carried in the Statement of Financial Position at their fair value subject to the restrictions attached to those assets and not at the consideration paid by East End Homes. Donated land is also carried at the fair value at the time of the donation rather than at £nil value.

Sales of housing properties

Property sales are attributable to preserved Right to Buy or Right to Acquire sales. The gain or loss on disposal of housing properties is recognised in the Statement of Comprehensive Income at the date of transfer of title.

Other tangible fixed assets

Other tangible fixed assets are stated at cost less accumulated depreciation. Depreciation is provided to write the assets down to their residual values over their estimated useful economic lives, which are as follows:

Motor vehicles - 3 years
Office furniture and equipment - 5 years
Computer equipment - 3 years
Office buildings - 50 years

Stock and properties held for sale

Stocks of materials are stated at the lower of cost and net realisable value being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first in, first out basis. Work in progress and finished goods include labour and attributable overheads.

Properties developed for outright sale are included in current assets as they are intended to be sold at the lower of cost or estimated selling price less costs to complete and sell.

At each reporting date, stock and properties held for sale are assessed for impairment. If there is evidence of impairment, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in the Statement of Comprehensive Income.

Low cost home ownership properties

The costs of low cost home ownership properties are split between current and tangible fixed assets on the basis of the first tranche portion. The first tranche portion is accounted for as a current asset and the sale proceeds shown in turnover. The remaining element of the shared ownership property is accounted for as a tangible fixed asset and subsequent sales treated as sales of fixed assets/property sales in operating profit.

Loan interest costs

Loan interest costs are calculated using the effective interest method of the difference between the loan amounts at initial recognition and amount of maturity of the related loan.

Loan finance issue costs

These are amortised over the life of the related loan. Loans are stated in the Statement of Financial Position at the amount of the net proceeds after issue, plus increases to account for any subsequent amounts amortised. Where loans are redeemed during the year, any redemption penalty and any connected loan finance issue costs are recognised in the Statement of Comprehensive Income account in the year in which the redemption took place.

43

EAST END HOMES LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2023 (continued) VAT

East End Homes Limited and East End Homes (Community Development) Limited are registered as a VAT group. A large proportion of East End Homes’ income comprises rental income, which is exempt for VAT purposes and gives rise to a partial exemption calculation. Expenditure is therefore shown inclusive of VAT. Recoverable VAT arising from partially exempt activities is credited to the Statement of Comprehensive Income.

Taxation

The Association has charitable status and therefore is not subject to Corporation Tax on surpluses derived from charitable activities.

Operating leases

Rental paid under operating leases is charged to the Statement of Comprehensive Income as incurred.

Provisions

East End Homes only provides for contractual liabilities and pension commitments which exist at the Statement of Financial Position date.

Treasury management

East End Homes has adopted CIPFA’s Code of Practice for Treasury Management in the Public Services (2017) and the accompanying Guidance Notes for Registered Providers.

Rent Setting

East End Homes complies with the Regulator of Social Housing’s Rent Standard as a key component of the Regulatory Framework.

Going Concern

The Board has reviewed the group’s budget for the year to March 2024 and Business Plan for 2025 onwards and have also considered the continuing impact of ongoing economic crisis, including high inflation and high interest rates on its operations and the principal risks identified, increased rent arrears, the availability of cash resources and the impact of economic downturn. Having taken steps to mitigate where possible the impact of these risks, the Board have concluded that there is a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Therefore, the financial statements have been prepared on a going concern basis.

44

EAST END HOMES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2023 (continued)

Judgements and key sources of estimation uncertainty

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported for assets and liabilities as at the Statement of Financial Position date and the amounts reported for revenues and expenses during the year. However, the nature of estimation means that actual outcomes could differ from those estimates. The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements:

a. Development expenditure

The Group capitalises development expenditure in accordance with the accounting policy described on page 50. Initial capitalisation of costs is based on management’s judgement that development scheme is confirmed, usually when Board approval has taken place including access to the appropriate funding. In determining whether a project is likely to cease, management monitors the development and considers if changes have occurred that result in impairment.

b. Categorisation of housing properties

The Group has undertaken a detailed review of the intending use of all housing properties. In determining the intending use, the Group has considered if the asset is held for social benefit or to earn commercial rentals. The Group has determined that commercial properties are investment properties.

c. Impairment

The Group has undertaken an Impairment Review of non-financial assets.

Other key sources of estimation and assumptions:

a. Tangible fixed assets

Other than investment properties, tangible fixed assets are depreciated over their useful lives taking into account residual values, where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors. In re-assessing asset lives, factors such as technological innovation, product life cycles and maintenance programmes are taken into account. Residual value assessments consider issues such as future market conditions, the remaining life of the asset and projected disposal values.

b. Revaluation of investment properties

The Group and Association carries its investment properties at fair value, with changes in fair value being recognised in the Statement of Comprehensive Income. The Group and Association engaged independent valuation specialists to determine fair value at 31 March 2023. The valuer used a fair value technique as an estimate for which the asset should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction. The key assumptions used to determine the fair value of investment property are further explained in note 11.

45

EAST END HOMES LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2023 (continued) c. Pension and other post-employment benefits

East End Homes participates in two pension schemes namely; Social Housing Pension Scheme (SHPS) and LGPS with London Borough of Tower Hamlets (LBTH).

The full pension deficit liability for the Social Housing Pension Scheme (SHPS) is disclosed as a liability. The operating costs of providing retirement benefits to participating employees are recognised in the accounting periods in which the benefits are earned. The related finance costs, expected return on assets and any other changes in fair value of the assets and liabilities, are recognised in the accounting period in which they arise.

The full pension deficit liability for the London Borough of Tower Hamlets (LBTH) LGPS is disclosed as a liability. The operating costs of providing retirement benefits to participating employees are recognised in the accounting periods in which the benefits are earned. The related finance costs, expected return on assets and any other changes in fair value of the assets and liabilities, are recognised in the accounting period in which they arise.

The cost of providing retirement pensions and related benefits is charged to management expenses over the periods benefiting from the employees’ services. The disclosures in the financial statements follow the requirements of Section 28 of FRS 102 in relation to multi-employer funded schemes in which the Group has a participating interest.

The cost of defined benefit pension plans and other post-employment benefits are determined using actuarial valuations. The actuarial valuation involves making assumptions about discount rates, future salary increases, mortality rates and future pension increases. Due to the complexity of the valuation, the underlying assumptions and the long-term nature of these plans, such estimates are subject to significant uncertainty. In determining the appropriate discount rate, management considers the interest rates of corporate bonds in the respective currency with at least AA rating, with extrapolated maturities corresponding to the expected duration of the defined benefit obligation. The underlying bonds are further reviewed for quality, and those having excessive credit spreads are removed from the population bonds on which the discount rate is based, on the basis that they do not represent high quality bonds.

The mortality rate is based on publicly available mortality tables for the specific sector. Future salary increases and pension increases are based on expected future inflation rates for the respective sector.

Impairment of non-financial assets

Reviews for impairment of housing properties are carried out when a trigger has occurred and any impairment loss in a cash generating unit is recognised by a charge to the Statement of Comprehensive Income.

Impairment is recognised where the carrying value of a cash generating unit exceeds the higher of its net realisable value or its value in use. A cash generating unit is normally a group of properties at scheme level whose cash income can be separately identified.

Following a trigger for impairment, the Group and Association perform impairment tests based on fair value less costs to sell or a value in use calculation. The fair value less costs to sell calculation is based on available data from sales transactions in an arm’s length transaction on similar cash generating units (properties) or observable market prices less incremental costs for disposing of the properties. The value in use calculation is based on either a depreciated replacement cost or a discounted cash flow model. The depreciated replacement cost is based on available data of the cost of constructing or acquiring replacement properties to provide the same level of service potential to the Association as the existing property. The cash flows are derived from the business plan for the next 30 years and do not include significant future investments that will enhance the asset’s performance of the cash generating unit being tested. The recoverable amount is most sensitive to the discount rate used for the discounted cash flow model as well as the expected future cash flows and the growth rate used for extrapolation purposes.

46

EAST END HOMES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2023 (continued)

Following the assessment of impairment, no impairment losses were identified in the reporting period.

Non exchange transactions

Non exchange transactions such as donations, grants from non-government sources and legacies are recognised in the comprehensive income statement when received or receivable and do not impose future performance related conditions. Where there are performance conditions the non-exchange transactions are recognised as liabilities until the performed conditions have been discharged.

Service Charge

Service charges are set at a level which should recover the cost of providing services at the schemes. Where costs have either been under or over recovered, the resulting surplus of deficit is recovered or repaid in future years. The Group operates variable service charges on a scheme-by-scheme basis in full consultation with the residents. Where variable service charges are used, the charges will include an allowance for the surplus or deficit from prior years, with the surplus being returned to residents by a reduced charge and a deficit recovered by a higher charge. Until these are returned or recovered, they are held as creditors or debtors in the Statement of Financial Position.

Capitalisation of interest and administration costs

Interest on loans financing development is capitalised up to the date of the completion of the scheme and only when development activity is in progress.

Administration costs relating to development activities are capitalised only to the extent that they are incremental to the development process and directly attributable to bringing the property into their intended use.

Investment properties

Investment property includes commercial and other properties not held for the social benefit of the Group and are measured at cost on initial recognition, which includes purchase cost and any directly attributable expenditure. Investment properties are included in the Statement of Financial Position at their fair value; where, fair value is the amount that willing and informed parties are able to transact. The fair value is determined in accordance with the guidance notes on the valuation of assets issued by the Royal Institute of Chartered Surveyors. Movements in the fair values of investment properties are recognised in the Statement of Comprehensive Income. No depreciation is provided.

Short-term debtors and creditors

Debtors and creditors with no stated interest rate and receivable or payable within one year are recorded at transaction price. Any losses arising from impairment are recognised in the income statement in other operating expenses.

Social Housing and other government grants

Government grants are grants from government sources such as local authorities and Homes England and they are accounted for under the accruals model. Government grants relating to assets are amortised over 100 years, or if the grant is allocated to a component or a building with a lease then it is amortised over the corresponding life. The unamortised element is treated in the Statement of Financial Position as deferred income.

When Social Housing Grant (SHG) in respect of housing properties in the course of construction exceeds the total cost to date of those housing properties, the excess is shown as a current liability.

Grants relating to revenue are be recognised in income on a systematic basis over the period in which the social landlord recognises the related costs for which the grant is intended to compensate. Grants that becomes receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the entity with no future related costs are recognised as revenue in the period in which they become receivable.

47

EAST END HOMES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2023 (continued)

SHG must be recycled by the Group under certain conditions, if a property is sold, or if another relevant event takes place. In these cases, the SHG can be used for projects approved by the Homes England and Greater London Authority. However, SHG may have to be repaid if certain conditions are not met. If grant is not required to be recycled or repaid, any unamortised grant is recognised as Turnover. In certain circumstances, SHG may be repayable, and, in that event, is a subordinated unsecured repayable debt.

Other grants

Other grants are any grants other than government grants. They are held as deferred income and released to the Statement of Comprehensive Income in line with the revenue recognition criteria using the performance model. Revenue is recognised when the performance conditions attached to the other grants have been fully met.

Financial Instruments

Financial assets and financial liabilities are measured at transaction price initially, plus, in the case of a financial asset or financial liability not at fair value through the Statement of Comprehensive Income, transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability.

Financial instruments held by the Group are classified as follows:

All loans held by the Group are classified as basic financial instruments in accordance with FRS 102. They are measured at transaction price plus transaction costs initially, and subsequently at amortised cost using the effective interest rate method. Loans repayable within one year are not discounted.

Financial assets and financial liabilities at fair value are classified using the following fair value hierarchy:

48

EAST END HOMES LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2023 (continued)

2. GROUP –TURNOVER, OPERATING COSTS AND OPERATING SURPLUS

2023
2022
Turnover
Cost of Operating Operating
Turnover Operating Operating
Sales
Costs
Surplus
Costs
Surplus
£’000
£’000
£’000
£’000
£’000
£’000
Income from social housing
lettings
General Needs &
Intermediate Rent
17,606
- (14,315)
3,291
16,203 (12,693)
3,510
First tranche low cost home
ownership sales
737
(402)
-
335
-
-
-
Income from non-social
housing activities


Leasehold
2,771
-
(4,609)
(1,838)
2,167
(3,647)
(1,480)
Commercial lettings
1,606
-
(863)
743
1,545
(855)
690
Overage receipts and other
income
433
-
(188)
245
451
(193)
258
Private rented properties
1,018
-
(342)
676
981
(289)
692
Increase /(decrease) in fair value of
investment properties

2,627
-
Surplus on disposal of fixed
assets


728
-
24,171
(402) (20,317)
6,807
21,347(17,677)
3,670
2023
2022
Total
Total
Turnover
£’000
£’000
Income from social housing lettings
Rent receivable net of identifiable service charge
15,896
14,605
Service charge income
1,046
979
Other income from social housing lettings
74
31
Government grants taken to income
-
-
Amortised government grants
590
588
Total turnover from social housing lettings
17,606
16,203
Operating expenditure on social housing lettings
Management
(2,128)
(1,780)
Service charge costs
(3,442)
(3,441)
Routine maintenance
(3,919)
(3,271)
Planned maintenance
(410)
(332)
Major repairs expenditure
(412)
(256)
Bad debts
(305)
(227)
Depreciation of housing
Properties
(3,699)
(3,386)
Total operating expenditure on
social housing lettings
(14,315)
(12,693)
Operating surplus on social housing
lettings –General Needs
3,291
3,510
Void losses
153
197		 2023
2022
Turnover
Cost of Operating Operating
Turnover Operating Operating
Sales
Costs
Surplus
Costs
Surplus
£’000
£’000
£’000
£’000
£’000
£’000
17,606
- (14,315)
3,291
16,203 (12,693)
3,510
737
(402)
-
335
-
-
-


2,771
-
(4,609)
(1,838)
2,167
(3,647)
(1,480)
1,606
-
(863)
743
1,545
(855)
690
433
-
(188)
245
451
(193)
258
1,018
-
(342)
676
981
(289)
692

2,627
-


728
-		 2023
2022
Turnover
Cost of Operating Operating
Turnover Operating Operating
Sales
Costs
Surplus
Costs
Surplus
£’000
£’000
£’000
£’000
£’000
£’000
17,606
- (14,315)
3,291
16,203 (12,693)
3,510
737
(402)
-
335
-
-
-


2,771
-
(4,609)
(1,838)
2,167
(3,647)
(1,480)
1,606
-
(863)
743
1,545
(855)
690
433
-
(188)
245
451
(193)
258
1,018
-
(342)
676
981
(289)
692

2,627
-


728
-		 2023
2022
Turnover
Cost of Operating Operating
Turnover Operating Operating
Sales
Costs
Surplus
Costs
Surplus
£’000
£’000
£’000
£’000
£’000
£’000
17,606
- (14,315)
3,291
16,203 (12,693)
3,510
737
(402)
-
335
-
-
-


2,771
-
(4,609)
(1,838)
2,167
(3,647)
(1,480)
1,606
-
(863)
743
1,545
(855)
690
433
-
(188)
245
451
(193)
258
1,018
-
(342)
676
981
(289)
692

2,627
-


728
-
24,171
(402) (20,317)
6,807
21,347(17,677)
3,670
2023
Total
£’000
15,896
1,046
74
-
590
17,606
(2,128)
(3,442)
(3,919)
(410)
(412)
(305)
(3,699)
(14,315)
3,291
153		 2022
Total
£’000
14,605
979
31
-
588
16,203
(1,780)
(3,441)
(3,271)
(332)
(256)
(227)
(3,386)
(12,693)
3,510
197

49

EAST END HOMES LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2023 (continued)

2. ASSOCIATION -TURNOVER, OPERATING COSTS AND OPERATING SURPLUS

2023 2023 2022
Turnover Cost of Operating Operating Turnover Operating Operating
Sales Costs Surplus Costs
Surplus
£’000 £’000
£’000		 £’000 £’000 £’000
£’000
Income from social housing
lettings
General Needs & Intermediate 16,203 (12,693) 3,510
Rent 17,606 - (14,315) 3,291
First tranche low cost home
-
-		 -
ownership sales 737 (402) - 335
Income from non-social housing
activities
Leaseholders 2,771 - (4,608) (1,837) 2,167 (3,647) (1,480)
Commercial lettings 1,495 - (864) 631 1,435 (853) 582
Overage receipts and other
income		 278 - (168) 110 287 (168) 119
Private rented properties 1,018 - (342) 676 981 (289) 692
Increase /(decrease) in fair value
of investment properties 2,627 -
Surplus on disposal of fixed assets 728 -
23,905 (402) (20,297) 6,561 21,073 (17,650) 3,423
2023 2022
Total Total
£'000 £'000
Income from social housing lettings-General needs
Rent receivable net of identifiable
service charge		 15,896 14,605
Service charge income 1,046 979
Other income from social
housing lettings 74 31
Government grants taken to income - -
Amortised government grants 590 588
Total turnover from social housing lettings 17,606 16,203
Operating expenditure on social housing lettings
Management (2,128) (1,780)
Service charge costs (3,442) (3,441)
Routine maintenance (3,919) (3,271)
Planned maintenance (410) (332)
Major repairs expenditure (412) (256)
Bad debts (305) (227)
Depreciation of housing properties (3,699) (3,386)
Total operating expenditure on social housing lettings (14,315) (12,693)
Operating surplus on social housing lettings –General Needs 3,291 3,510
Void losses 153 197

50

EAST END HOMES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2023 (continued)

3. DIRECTORS’ EMOLUMENTS – GROUP AND ASSOCIATION

The emoluments of the Chief Executive, Managing Director and Executive Management Team were £697,101 (2022: £605,924) of which the emoluments (excluding pension contributions) of the Managing Director was £130,803 (2022: £121,993).

The Managing Director is an ordinary member of London Borough of Tower Hamlets pension scheme. No enhanced or special terms apply.

None of the Members of the Board received any emoluments during the year and reimbursed expenses during the year amounted to £2,606 (2022: £2,750).

4. EMPLOYEE INFORMATION

The average number of persons employed during the year expressed in full time equivalents (35 hours per week) was:

Full time
Part time
Staff costs (for the above persons)
Wages and salaries
Social security costs
Other pension costs		 2023
82
11
93
GROUP
2023
£’000
4,141
462
927
5,530		 2022
86
10
96
GROUP
2022
£’000
3,827
403
692
4,922

51

EAST END HOMES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2023 (continued)

Aggregate number of full time equivalent staff whose
remuneration exceeded £60,000 in the period: 2023 2022
£60,000 - £69,999 14 8
£70,000 - £79,999 1 1
£80,000 - £89,999 2 4
£90,000 - £99,999 1 -
£100,000 - £109,999 2 1
£110,000 - £119,999 - -
£120,000 - £129,999 1 -
£130,000 - £139,999 - -
£140,000 - £149,999 - 1
£150,000 - £159,999 - -
£160,000- £169,000 - 1
£170,000- £179,000 1

5. GAIN ON DISPOSAL OF PROPERTY, PLANT AND EQUIPMENT (FIXED ASSETS)

Proceeds of sales
Less: Costs of sales
Surplus		 GROUP
ASSOCIATION
2023
2022
2023
2022
£’000
£’000
£’000
£’000
1,121
-
1,121
-
(393)
-
(393)
-
728
-
728
-

6. INTEREST RECEIVABLE AND SIMILAR INCOME

On loan to subsidiary company – East End Homes
(Community Development) Ltd
Deposit interest receivable from short-term investment
of surplus cash balances		 GROUP
ASSOCIATION
2023
2022
2023
2022
£’000
£’000
£’000
£’000
-
-
-
-
363
55
356
55
363
55
356
55

7. INTEREST PAYABLE AND SIMILAR CHARGES

Interest Payable
Loan Amortisation		 GROUP
ASSOCIATION
2023
2022
2023
2022
£’000
£’000
£’000
£’000
3,358
2,426
3,358
2,426
121
2,403
121
2,403
3,479
4,829
3,479
4,829

52

EAST END HOMES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2023 (continued)

8. SURPLUS ON ORDINARY ACTIVITIES

GROUP ASSOCIATION ASSOCIATION
2023 2022 2023 2022
£’000 £’000 £’000 £’000
Surplus on ordinary activities is stated
after charging:
Auditors remuneration excluding VAT
- in their capacity as auditors 30 27 28 26
- in respect of other services 3 3 3 3
Operating lease rentals:
- Land and Building - - - -
- Office Equipment 24 21 24 21
Depreciation
Depreciation of housing properties 3,699 3,386 3,699 3,386
Depreciation of other tangible fixed assets 103 189 103 189

9. TAXATION

The Association has charitable status on income and gains falling within section 478 of the Corporation Tax Act 2010 to the extent that these are applied to its charitable objects and therefore has no liability to corporation tax for the year. Taxable profits of the subsidiary company are gift aided to the charitable parent to minimise the corporation tax liability for the group.

GROUP ASSOCIATION ASSOCIATION
2023 2022 2023 2022
£’000 £’000 £’000 £’000
UK corporation tax - - - -

53

EAST END HOMES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2023 (continued)

10. TANGIBLE FIXED ASSETS – HOUSING PROPERTIES – GROUP & ASSOCIATION

Housing
properties
completed
Housing
properties
Under
development
Housing
Property
Refurbishment
programme
uncompleted
Shared
ownership
properties
under
development
Shared
ownership
properties
Completed
Total
£’000
£’000
£’000
£000
£’000
£’000
Cost
At 1 April 2022
170,627
25,612
10,162
9,753
-
216,154
Additions –
Refurbishment
-
-
1,629
-
-
1,629
Additions – New
Build
-
16,278
-
-
-
16,278
Fire Safety Works
-
-
1,914
-
-
1,914
Disposals
(99)
-
-
-
-
(99)
Transfer from
Stock
37
376
-
413
Completed inyear
23,389
(15,157)
(8,232)
(8,359)
8,359
-
At 31 March 2023
193,917
26,770 5,473
1,770
8,359
236,289
Depreciation
At 1 April 2022
(33,049)
-
-
-
-
(33,049)
Charged in year
(3,624)
-
-
-
(75)
(3,699)
Released on
disposals
50
-
-
-
-
50
At 31 March 2023
(36,623)
-
-
-
(75)
(36,698)
Net Book Value
At 1 April 2022
137,578
25,612
10,162
9,753
-
183,105
At 31 March 2023
157,294
26,770
5,473
1,770
8,284
199,591

54

EAST END HOMES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2023 (continued)

10. TANGIBLE FIXED ASSETS – HOUSING PROPERTIES – GROUP & ASSOCIATION (CONTD)

2023 2022
£’000 £’000
Housing properties at cost comprise:
Freeholds 236,289 216,154

The cost of housing properties completed includes £2.8 million transfer value of properties on the Island Gardens estate

Additions to housing properties during the year of £19.8 million (2022: £18.4 million) relate to the capitalised costs towards acquisition of new affordable social housing units, and refurbishment works on existing stock including fees, capitalised salaries and incremental overheads

At 31 March 2023 the Board estimated the vacant possession open market value of East End Homes housing properties to be £709.8 million (2022: £709.8 million).

11. INVESTMENT PROPERTIES

At start of year
Additions
Gain (Loss) from adjustment in
Value
At end of year		 Group
Association
2023
2022
2023
2022
£’000
£’000
£’000
£’000
17,577
17,577
17,577
17,577
-
-
-
-
2,627
-
2,627
-
20,204
17,577
20,204
17,577

East End Homes has to date invested in 60 (2022: 60) properties for private rent, which generate additional surpluses for reinvestment into the core business activities. These properties are treated as investment properties and recognised at their market values. Investment properties were valued at 31 March 2022 by HCH Surveyors Ltd, a firm of professionally qualified surveyors. The valuation of properties was undertaken in accordance with the Royal Institute of Chartered Surveyors Valuation Standards. The Directors have considered that the value remains representative of the investment properties as at 31 March 2023.

At 31 March 2023 there were no contractual obligations in respect of the investment properties (2022: none).

55

EAST END HOMES LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2023 (continued)

12. OTHER TANGIBLE FIXED ASSETS – ASSOCIATION & GROUP

Cost
At 1 April 2022
Additions
Disposals
At 31 March 2023
Depreciation
At 1 April 2022
Charge for the year
Disposals
At 31 March 2023
Net book value
At 1 April 2022
At 31 March 2023		 Office
Computer
Office
Furniture &
Motor
Total
Association
Buildings
Equipment
Equipment
Vehicles
and Group
£’000
£’000
£’000
£’000
£’000
1,367
1,237
708
159
3,471
-
2
10
30
42
-
-
-
(11)
(11)
1,367
1,239
718
178
3,502
(357)
(1,163)
(676)
(150)
(2,346)
(27)
(48)
(12)
(16)
(103)
-
-
-
11
11
(384)
(1,211)
(688)
(155)
(2,438)
1,010
74
32
9
1,125
983
28
30
23
1,064

56

EAST END HOMES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2023 (continued)

13. STOCK

Stock
Shared Ownership Properties
- Work in Progress
14. DEBTORS
Amounts falling due within one year:
Rental debtors
Provision for bad and doubtful debts
Shop rental debtors
Provision for bad and doubtful debts
Leasehold debtors
Provision for bad and doubtful debts
Other debtors
Prepayments and accrued income
Amounts due from other group entities
Amounts due within one year
Amounts falling due after more than one year:
LBTH pension debtor		 2023
2022
£’000
£’000
2,471
3,250
GROUP
2023
2022
£’000
£’000
1,040
853
(487)
(397)
553
456
275
626
(80)
(387)
195
239
2,667
3,037
(328)
(348)
2,339
2,689
3,705
732
755
414
-
-
4,460
1,146
7,547
4,530
503
503
8,050
5,033		 2023
2022
£’000
£’000
2,471
3,250
ASSOCIATION
2023
2022
£’000
£’000
1,040
853
(487)
(397)
553
456
275
626
(80)
(387)
195
239
2,667
3,037
(328)
(348)
2,339
2,689
3,705
738
707
353
34
27
4,446
1,118
7,533
4,502
503
503
8,036
5,005

57

EAST END HOMES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2023 (continued)

15. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

Housing Loans
Trade creditors
Other creditors including other taxes social
security and pensions
Rents and service charges received in advance
Accruals and deferred income
Deferred capital grant
Amount owed to group entity		 GROUP
ASSOCIATION
2023
2022
2023
2022
£’000
£’000
£’000
£’000
10,000
10,000
10,000
10,000
161
-
161
-
1,413
1,782
1,413
1,782
953
1,071
953
1,071
3,596
2,829
3,560
2,755
590
587
590
587
-
-
-
-
16,713
16,269
16,677
16,195

16. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR

Pension creditor
Deferred Capital Grant
Housing Loans
Loan Arrangement Fees		 GROUP
ASSOCIATION
2023
2022
2023
2022
£’000
£’000
£’000
£’000
-
-
-
-
59,462
57,872
59,462
57,872
85,000
70,000
85,000
70,000
(1,853)
(1,632)
(1,853)
(1,632)
142,609
126,240
142,609
126,240

To date East End Homes has received £13.0 million DLUHC gap funding to finance refurbishment works to the Glamis stock (£2.1 million), Holland & Denning stock (£1.2 million), and the St George’s stock (£9.7 million). All gap funding received are recognised under deferred capital grant and released as income over the lives of the housing properties structures that the funds were used to refurbish.

58

EAST END HOMES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2023 (continued) 17. DEFERRED CAPITAL GRANT AND FINANCIAL ASSISTANCE – GROUP & ASSOCIATION

Balance at 1 April
Grant received in the year
Released to income in the year
Balance at 31 March
Amount due to be released < 1 year (Note 14)
Amount due to be released > 1 year (Note 15)
The total accumulated government grant and financial
assistance received or receivable at 31 March including
through the transfer of assets:
18. HOUSING LOANS		 2023
£’000
58,459
2,183
(590)
60,052
590
59,462
60,052		 2022
£’000
58,461
586
(588)
58,459
587
57,872
58,459
Repayable;
Within one year or on demand
Between one and two years
Between two and three years
Between three and four years
Between four and five years
After more than five years
Loan Arrangement Fees		 GROUP
ASSOCIATION
2023
2022
2023
2022
£’000
£’000
£’000
£’000
10,000
10,000
10,000
10,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
85,000
70,000
85,000
70,000
95,000
80,000
95,000
80,000
(1,852)
(1,632)
(1,852)
(1,632)

The Association has an existing £115.0 million loan facility, comprising £50.0 million with NatWest Bank, 45.0 million with M&G Investments and £20 million with Barclays bank plc. At 31 March 2023, £95 million (2022: £80.0 million) loans has been drawn down at an average rate of interest (plus margin) of 3.899% (2022:2.96%). The facility includes revolving credit facilities for £30.0 million. All loans are secured against the group’s assets.

59

EAST END HOMES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2023 (continued)

19. CAPITAL COMMITMENTS – GROUP & ASSOCIATION

2023 2022
£’000 £’000
Capital expenditure contracted for but not provided in the
financial statements		 16,245 27,853
Capital expenditure authorised by the Board but not yet 34,211 36,245
contracted for

Capital expenditure authorised by the Board relates to the acquisition of new build properties and the 5- year capital investment programme (2023-2028) including fire safety works and development agreements with London Borough of Tower Hamlets for refurbishment works to be carried out on properties transferred to East End Homes.

Capital commitments are projected to be funded from mainly from loan borrowings and internally generated resources.

20. OTHER FINANCIAL COMMITMENTS – GROUP & ASSOCIATION

At 31 March 2023 the group and association had an annual commitment under the lease of office equipment of £14,863 (2022: £22,039) expiring within the next 12 months.

60

EAST END HOMES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2023 (continued)

21. PENSION OBLIGATIONS – GROUP & ASSOCIATION

East End Homes participates in two defined benefit final salary schemes, the London Borough of Tower Hamlets Pension Scheme and the Social Housing Pension Scheme (SHPS) and a defined contribution scheme within the Social Housing Pension Scheme. The pension contributions, as shown in note 4, represent contributions payable by East End Homes to these schemes.

The disclosures required by the accounting requirements of FRS 102 relating to retirement benefits are as follows:

London Borough of Tower Hamlets Pension Scheme (LGPS)

The LGPS is a defined benefit statutory scheme, administered by the London Borough of Tower Hamlets in accordance with the Local Government Pension Scheme regulations 1997, as amended. It is contracted out of the state second pension.

Valuation Method Contributions to the scheme are determined by a qualified actuary on the basis of valuations, using the projected unit credit method. The last formal valuation of the Fund for the purpose of setting employers’ actual contributions was at 31 March 2019.

Financial Assumptions

The financial assumptions used for the purposes of the FRS 102 calculations as at 31 March 2023 and 31 March 2022 are shown in the table below.

Assumption as at 31 March 2023
%p.a.		 31 March 2022
%p.a.
Pension Increase Rate (CPI) 3.00 3.20
Salary Increases 3.00 3.40
Discount Rate 4.75 2.70

Expected Return on Assets

The expected return on assets is based on the long-term future expected investment return for each asset class as at the beginning of the period (i.e. as at 31 March 2022 for the year to 31 March 2023). The assets of the scheme as a whole and the expected returns as at 31 March 2023 and 31 March 2022 are shown in the table below:

Assets
Main Fund		 Value at
31 March 2023
£(000)

Value at
31 March 2022
£(000)
Equities 20,325 21,896
Bonds 1,196 1,303
Property 1,913 2,607
Cash 478 261
Total value of scheme assets 23,912 26,067

There is no provision for unitising the assets of a fund under the LGPS. The above assets as a whole are allocated to participating bodies on a consistent and reasonable basis.

61

EAST END HOMES LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2023 (continued) The present value of the above assets and liabilities attributable to East End Homes at 31 March 2023 and 31 March 2022 was:

Net Pension Liability as at 31 March 2023
£(000)		 31 March 2022
£(000)
Fair Value of Employer Assets 23,912 26,067
Present Value of Funded Liabilities (17,113) (22,532)
Net Underfunding in Funded Plans 6,799 3,535

In accordance with the accounting requirements of FRS 102 relating to retirement benefits, the following items have been recognised in the financial statements of East End Homes :

Impact on Statement of Financial Position

31 March 2023
£(000)		 31 March 2022
£(000)
Fair Value of Employer Assets 23,912 26,067
Present Value of Funded Liabilities (17,113) (22,532)
Net Liability provided for in the Financial Statements 6,799 3,535

The movement in the deficit in the scheme during the year is as follows:

Year to 31 March
2023
£(000)		 Year to 31 March
2022
£(000)
Surplus at beginning of theyear 3,535 1,894
Actuarialgains\ (Losses) during theyear 3,264 1,641
Surplus at end ofyear 6,799 3,535

Pensions Obligations Note - Social Housing Pension Scheme (SHPS)

East End Homes participates in the Social Housing Pension Scheme (the Scheme), a multi-employer 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.

The last triennial valuation of the scheme for funding purposes was carried out as at 30 September 2017. This valuation revealed a deficit of £1,522m. A Recovery Plan has been put in place with the aim of removing this deficit by 30 September 2026.

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.

62

EAST END HOMES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2023 (continued)

For accounting purposes, two actuarial valuations for the scheme were carried out with effective dates of 31 March 2018 and 30 September 2018. The liability figures from each valuation are rolled forward to the relevant accounting dates, if applicable, and are used in conjunction with the company’s fair share of the Scheme’s total assets to calculate the company’s net deficit or surplus at the accounting period start and end.

PRESENT VALUES OF DEFINED BENEFIT OBLIGATION, FAIR VALUE OF ASSETS AND DEFINED BENEFIT ASSET (LIABILITY)

31 March 2023 31 March 2022 31 March 2023 31 March 2022
(£000s) (£000s)
Fair value of plan assets 3,391
 5,953
Present value of defined benefit obligation 4,069
 6,605
Surplus (deficit) in plan (678) (652)
Unrecognised surplus -
 -
Defined benefit asset (liability) to be recognised (678) (652)
Deferred tax - -
Net defined benefit asset (liability) to be recognised (678) (652)

RECONCILIATION OF THE IMPACT OF THE ASSET CEILING

Year ended Year ended
**31 March 2023 ** 31 March 2022
(£000s) (£000s)
Impact of asset ceiling at start of period - -
Effect of the asset ceiling included in net interest cost - -
Actuarial losses (gains) on asset ceiling - -
Impact of asset ceiling at end of period - -

63

EAST END HOMES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2023 (continued)

RECONCILIATION OF OPENING AND CLOSING BALANCES OF THE DEFINED BENEFIT OBLIGATION

Year ended
31 March 2023
(£000s)
Defined benefit obligation at start of period 6,605
Current service cost 289
Expenses 6
Interest expense 186
Contributions by plan participants 67
Actuarial losses (gains) due to scheme experience (633)
Actuarial losses (gains) due to changes in demographic assumptions (7)
Actuarial losses (gains) due to changes in financial assumptions (2,322)
Benefits paid and expenses (122)
Liabilities acquired in a business combination -
Liabilities extinguished on settlements -
Losses (gains) on curtailments -
Losses (gains) due to benefit changes -
Exchange rate changes -
Defined benefit obligation at end of period 4,069

64

EAST END HOMES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2023 (continued)

RECONCILIATION OF OPENING AND CLOSING BALANCES OF THE FAIR VALUE OF PLAN ASSETS

RECONCILIATION OF OPENING AND CLOSING BALANCES OF THE FAIR VALUE OF
PLAN ASSETS
Year ended
31 March 2023
(£000s)
Fair value of plan assets at start of period 5,953
Interest income 173
Experience on plan assets (excluding amounts included in interest income)
- gain (loss)		 (3,317)
Contributions by the employer 637
Contributions by plan participants 67
Benefits paid and expenses (122)
Assets acquired in a business combination -
Assets distributed on settlements -
Exchange rate changes -
Fair value of plan assets at end of period 3,391

The actual return on plan assets (including any changes in share of assets) over the period from 31 March 2022 to 31 March 2023 was (£3,144,000).

DEFINED BENEFIT COSTS RECOGNISED IN STATEMENT OF COMPREHENSIVE INCOME (SOCI)

Period from
31 March 2022 to
31 March 2023
(£000s)
Current service cost 289
Expenses 6
Net interest expense 13
Losses (gains) on business combinations -
Losses (gains) on settlements -
Losses (gains) on curtailments -
Losses (gains) due to benefit changes -
Defined benefit costs recognised in statement of comprehensive income (SoCI) 308

65

EAST END HOMES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2023 (continued)

DEFINED BENEFIT COSTS RECOGNISED IN OTHER COMPREHENSIVE INCOME

Year ended
31 March 2023
(£000s)
Experience on plan assets (excluding amounts included in net interest cost) -
gain (loss)
(3,317)
Experience gains and losses arising on the plan liabilities - gain (loss)
633
Effects of changes in the demographic assumptions underlying the present
value of the defined benefit obligation - gain (loss)
7
Effects of changes in the financial assumptions underlying the present value of
the defined benefit obligation - gain (loss)
2,322
Total actuarial gains and losses (before restriction due to some of the surplus
not being recognisable) - gain (loss)
(355)
Effects of changes in the amount of surplus that is not recoverable (excluding
amounts included in net interest cost) - gain (loss)
-
Total amount recognised in other comprehensive income -gain(loss)
(355)		 Year ended
31 March 2023
(£000s)
Experience on plan assets (excluding amounts included in net interest cost) -
gain (loss)
(3,317)
Experience gains and losses arising on the plan liabilities - gain (loss)
633
Effects of changes in the demographic assumptions underlying the present
value of the defined benefit obligation - gain (loss)
7
Effects of changes in the financial assumptions underlying the present value of
the defined benefit obligation - gain (loss)
2,322
Total actuarial gains and losses (before restriction due to some of the surplus
not being recognisable) - gain (loss)
(355)
Effects of changes in the amount of surplus that is not recoverable (excluding
amounts included in net interest cost) - gain (loss)
-
Total amount recognised in other comprehensive income -gain(loss)
(355)
ASSETS 31 March 2023
31 March 2022
(£000s)
(£000s)
Global Equity 63
1,142
Absolute Return 37
239
Distressed Opportunities 103
213
Credit Relative Value 128
198
Alternative Risk Premia 6
196
Fund of Hedge Funds -
-
Emerging Markets Debt 18
173
Risk Sharing 250
196
Insurance-Linked Securities 86
139
Property 146
161
Infrastructure 387
424
Private Debt 151
153
Opportunistic Illiquid Credit 145
200
High Yield 12
51
Opportunistic Credit -
21
Cash 24
20
Corporate Bond Fund -
397
Liquid Credit -
-
Long Lease Property 102
153
Secured Income 156
222

66

EAST END HOMES LIMITED

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2023 (continued)

Over 15 Year Gilts - -
Index Linked All Stock Gilts - -
Liability Driven Investment 1,561 1,661
Currency Hedging 7 (23)
Net Current Assets 9 17
Total assets 3,391 5,953

None of the fair values of the assets shown above include any direct investments in the employer’s own financial instruments or any property occupied by, or other assets used by, the employer.

KEY ASSUMPTIONS

31 March 2023 31 March 2022
%per annum % per annum
Discount Rate 4.83% 2.77%
Inflation (RPI) 3.16% 3.39%
Inflation (CPI) 2.82% 3.11%
Salary Growth 3.82% 4.11%
Allowance for commutation of pension for cash 75% of maximum allowance 75% of maximum allowance
at retirement

The mortality assumptions adopted at 31 March 2023 imply the following life expectancies:

Life expectancy at age 65
(Years)
Male retiring in 2023 21.0
Female retiring in 2023 23.4
Male retiring in 2043 22.2
Female retiring in 2043 24.9

22. NUMBER OF HOMES IN MANAGEMENT – GROUP & ASSOCIATION

The number of homes in management at the yearend was:

At 31 March At 31 March
2023 2022
Rented general needs accommodation 2,239 2,243
Intermediate Rented Properties 88 16
Leasehold properties 1,488 1,484
Low cost home ownership 45 -
Private rented properties 60 60
3,920 3,803

67

EAST END HOMES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2023 (continued)

23. RELATED PARTY TRANSACTIONS – GROUP & ASSOCIATION

As at 31 March 2023, four Board members were tenants or leaseholders of the association. Their tenancy agreements or leases have been granted on the same terms as for all other tenants and housing management procedures, including those relating to management of arrears, have been applied consistently to these tenants and leaseholders Board members. Rents, Service Charges and Major Works charged to the tenant or leasehold Board members was £17,709 (2022: £18,696). There were arrears on the charges raised at 31 March 2023 of £77 (2022: £497). The level of tenant or leaseholder Board member arrears is not materially different from other tenants and leaseholders.

As at 31 March 2023 one Board director was nominated by the London Borough of Tower Hamlets and a serving Councillor. Some services were purchased from LBTH during the period. All agency services are covered by an arm’s length contract, which was negotiated to ensure neither party subordinated its own separate interests; the Board members concerned are not able to use their position to their advantage. LBTH pays tenant Housing Benefit under the terms of current legislation and this is generally paid directly to East End Homes. There are no other related party transactions requiring disclosure.

24. SUBSIDIARY UNDERTAKING

As at 31 March 2023 East End Homes held 100% share (1 share of £1) in East End Homes (Community Development) Limited. Its principal activity is to generate funds from development opportunities in order to support East End Homes’ core activities of regenerating neighbourhoods.

Transactions with registered and non-registered elements of the business

The Association provides management services and other services to its subsidiary. There is a cost sharing agreement between East End Homes Limited and East End Homes (Community Development) Limited.

Transactions with non-registered entities

During the year East End Homes Limited had intra-group transactions with East End Homes (Community Development) Limited, a non-regulated entity, of £0.1 million (2022: £0.1 million) relating to management services on behalf of East End Homes (Community Development) Limited.

The balance outstanding at 31 March 2023 was £0.1 million. This balance was unsecured. During the year East End Homes (Community Development) Limited gifted £247k (2022: £253k).

25. CONTROLLING PARTY

East End Homes is controlled by members in general meeting who elect the Board of Management.

68

EAST END HOMES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2023 (continued)

26. FINANCIAL INSTRUMENTS – GROUP

Financial Assets
Financial assets at cost of transaction amount
Financial assets at amortised cost of transaction
Amount
Financial Liabilities
Financial liabilities at amortised cost		 GROUP
ASSOCIATION
2023
2022
2023
2022
£’000
£’000
£’000
£’000
8,977
10,129
8,702
9,836
8,051
5,032
8,037
5,004
17,028
15,161
16,739
14,840
90,962
84,682
90,923
84,608

Financial assets measured at cost comprise cash at bank and in hand.

Financial assets measured at amortised cost comprise trade debtors, other debtors, amounts owed by the association’s undertakings, and the LBTH pension debtor.

Financial liabilities measured at amortised cost comprise bank loans, trade creditors, and other creditors.

27. NET DEBT

Analysis of changes in net debt:

GROUP At 31 March Cashflow At 31 March
2022 2023
£000 £000 £000
Cash and cash equivalents 10,129 (1,152) 8,977
Housing loans due in one year (10,000) - (10,000)
Housing loans due after one year (70,000) (15,000) (85,000)
(69,871) (16,152) (86,023)
ASSOCIATION At 31 March Cashflow At 31 March
2022 2023
£000 £000 £000
Cash and cash equivalents 9,836 (1,134) 8,702
Housing loans due in one year (10,000) - (10,000)
Housing loans due after one year (70,000) (15,000) (85,000)
(70,164) (16,134) (86,298)

28. CONTINGENT LIABILITY – SOCIAL HOUSING PENSION SCHEME

EEH has been notified by the Trustee of the Scheme that it has performed a review of the changes made to the Scheme’s benefits over the years and the result is that there is uncertainty surrounding some of these changes. The Trustee has been advised to seek clarification from the Court on these items. This process is ongoing, and the matter is unlikely to be resolved before the end of 2024 at the earliest. It is recognised that this could potentially impact the value of Scheme liabilities, but until Court directions are received, it is not possible to calculate the impact of this issue, particularly on an individual employer basis, with any accuracy at this time. No adjustment has been made in these financial statements in respect of this potential issue.

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