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2022-03-31-accounts

North Devon Homes

North Devon Homes Financial Statements for the year ended 31 March 2022

Registered Company No. 03674687

Registered Charity No. 1164142

“... working together to create communities where people want to live”

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North Devon Homes

North Devon Homes

Financial Statements

for the year ended 31 March 2022

Contents

Board Members, Executive Officers, Advisors and Bankers ..................................................................3 Board of Management report for the year ended 31 March 2022 .......................................................3 Strategic Report .................................................................................................................................. 10 Statement of the Board of Management’s Responsibilities ................................................................ 31 Report of the Board on Internal Control.............................................................................................. 33 Independent Auditors’ report to the members of North Devon Homes ............................................. 35 Consolidated and Association Statements of Comprehensive Income for the year ended 31 March 2022 ..................................................................................................................................................... 40 Consolidated and Association Statements of Financial Position as at 31 March 2021 ....................... 41 Consolidated Statement of Cash Flows for the year ended 31 March 2021 ...................................... 42 Consolidated Statement of Changes in Reserves for the year ended 31 March 2021 ....................... 43 Association Statement of Changes in Reserves for the year ended 31 March 2021 .......................... 44 Notes to the Financial Statements for the year ended 31 March 2021 .............................................. 45

“... working together to create communities where people want to live”

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North Devon Homes

Board of Management report for the year ended 31 March 2022

The Board of Management

Mr Colin Dennis (Chair)(appointed 1 April 2022) Mr Asad Butt (Vice Chair) Mr James Barrah Dr Debbie Hay Ms Suzanne Ingman Ms Delyth Lloyd-Evans Mr Scott Murray Mr Paul Oldroyd Ms Suzanne Lowther Mr Simon Sanger-Anderson

Company Secretary

Iain Springate (appointed 31 January 2022)

Executive Directors

Mr Martyn Gimber (Chief Executive) Mr Marc Rostock (Director of Neighbourhoods) Mrs Philippa Butler (Finance Director)

Statutory Independent Auditors

Mazars LLP 90 Victoria Street Bristol BS1 6DP

Solicitors

Trowers & Hamlins LLP The Senate Southernhay Gardens Exeter Devon EX1 1UG

Tozers LLP Broadwalk House Southernhay West Exeter Devon EX1 1UA

Principal Funders

Lloyds Bank PLC 25 Gresham Street London EC2V 7HM

Funding Advisors

Aquila Treasury and Finance Solutions Ltd Tempus Wharf 29a Bermondsey Wall West London SE16 4SA

Bankers

NatWest plc 250 Bishopsgate London EC2M 4AA

North Devon Homes is a company limited by guarantee (Registered in England, Company Number 03674687), registered charity (charity number 1164142) and is registered with the Regulator of Social Housing (Registration Number LH4249).

The registered office is at: Westacott Road Barnstaple Devon EX32 8TA www.ndh-ltd.co.uk

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North Devon Homes

Board of Management report for the year ended 31 March 2022 (continued)

Strategic Report

The Board of Management presents its strategic report and audited financial statements for the year ended 31 March 2022.

Legal Structure

North Devon Homes (‘NDH’ or ‘the Association’) was incorporated in November 1998. NDH is an independent social business and registered charity. It has one wholly owned subsidiary Anchorwood Limited which is a development company.

NDH is registered with the Charity Commission as a charitable company and as a provider of social housing with the Regulator of Social Housing. It is also a company limited by guarantee, registered at Companies House. Anchorwood Limited is also registered at Companies House.

The Directors of the Association who have served during the year are listed below and the current directors up to the date of the signing of these financial statements are listed on pages 3 and 5.

Principal activities

The principal activity of the Association is to provide social housing. Any financial surpluses are reinvested into improving existing homes, communities and services and developing new homes.

The Group also consists of Anchorwood Limited a development company.

Review of the business

A review of the business is discussed in the Strategic Report on pages 9 to 30. This includes the Value for Money Statement 2022 and the Board’s arrangements for managing risk.

Results

The Group’s surplus after tax for the year was £1,208k (2021: £1,952k).

Going concern

The Board has a reasonable expectation that adequate resources will continue in existence for the foreseeable future and for this reason it continues to adopt the going concern basis in preparing the Financial Statements. Further details with regard to going concern are considered in Note 1 to the Financial Statements on page 44.

Constitution and Governance

The Board is skills-based and consists of up to ten independent members.

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North Devon Homes

Board of Management report for the year ended 31 March 2022 (continued)

For the year ending 31 March 2022 the following members served on the Board:

Mr Colin Dennis was appointed as the new Chair on 1 April 2022 following the resignation of Mr Stronge on 31 March 2022.

The governance structure for the Group is summarised below:

The Boards of North Devon Homes and its subsidiary company Anchorwood Limited are committed to upholding and maintaining the highest standard of governance, accountability and probity in effectively leading and managing the business. The Boards continue to work and challenge themselves to ensure that they have the necessary skills, experience, and where appropriate, the necessary external advice to support decision making and strategic planning.

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North Devon Homes

Board of Management report for the year ended 31 March 2022 (continued)

Compliance Statement

North Devon Homes (NDH) Group has adopted the NHF 2020 Code of Governance and strives to uphold the principles of good governance as defined by the Code. The Board regularly assesses compliance with the Code to gain assurance that the organisation remains compliant, identifying and implementing any areas for improvement. The Board confirms that NDH was compliant with the majority of the Code throughout the financial year ending 31March 2022. Work was undertaken and an action plan put in place during the year which was largely completed, but due to changes in staff resources some actions in a small number of areas were still to be fully completed as at 31 March and so will be finalised in early 2022/23 to ensure full compliance by 31 March 2023.

Each year our Regulator, the Regulator of Social Housing, requires us to assess our compliance with its Governance and Financial Viability Standard and provide assurance to customers and stakeholders that the specific expectations are being complied with.

During the year a new integrated housing management software system was implemented but the data protection module is still to be made available. Microsoft 365 was also implemented during the first half of 2022/23. These changes should enable full compliance with the General Data Protection Regulation (GDPR) legislation. Whilst NDH was not fully compliant with all aspects of the GDPR requirements during the year, any areas of non-compliance are not considered to be material.

The Board is pleased to confirm that during the year ended 31 March 2022 it considers that NDH has complied with all applicable outcomes and specific expectations of the Governance and Financial Viability Standard and its accompanying Code of Practice, together with the outcomes and requirements of all the other Economic and Consumer Standards.

Charity Commission compliance

The Board as Trustees can confirm that in respect of the Association as the registered charity, it has complied with Charity Commission’s requirements during the year and any fundraising activities in respect of its youth service (as the only area of fundraising activity) have been in accordance with the Charities (Protection and Social Investment) Act 2016.

Executive officers

The Board of Management has delegated authority for operational matters to a team of executive officers. The executive officers who held office during the year are:

Mr Martyn Gimber (Chief Executive) Mr Marc Rostock (Director of Neighbourhoods) Mrs Philippa Butler (Finance Director)

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North Devon Homes

Board of Management report for the year ended 31 March 2022 (continued)

Financial Risk Management Objectives and Policies

The Association’s operations expose it to a variety of financial risks that include the effects of credit risk, liquidity risk and interest rate risk. The Association has a formal risk management and assurance framework to mitigate the potential adverse effects that such risks may pose which are further detailed in the Strategic Report on pages 9 to 30.

Employees

The strength of the Group lies in the quality and commitment of its employees. Our strong Team NDH culture enables us to meet our objectives and deliver good quality services to our customers in an efficient manner. We value highly the continued dedication and professionalism of our employees.

The Group operates a continuous performance management review process which supports the delivery of corporate objectives by identifying any training and development needed to achieve those objectives.

Equal Opportunities

The Group is committed to ensuring equal opportunities for all. The Recruitment and Selection Policy ensures that non-discriminatory practices and processes are in place. It is our policy that those with a disability are automatically offered an interview so long as they meet the basic requirements of the role. Reasonable adjustments are also offered to remove any barriers to accessing the interview process.

Equality, Diversity & Inclusion

The Group is committed to championing equality, diversity and inclusion (EDI) in order to challenge inequality in the community served and has implemented its EDI strategy that sets out our aims as a community landlord and local employer for ensuring that we are truly representative of our community and that our staff, customers and contractors feel valued, respected, supported and are able to be themselves. We aim to deliver our business in a way that has the greatest impact we can on tackling inequalities. We take a zero-tolerance stance on discrimination of any kind.

Directors’ and officers’ liability insurance

The Group has maintained directors’ and officers’ liability insurance throughout the year.

Executive Officers’ remuneration

The remuneration of the Chief Executive, Director of Neighbourhoods and Finance Directo r is determined, when reviewed, by the Board with the aid of external professional advice. The Board members (who are also Trustees) are remunerated for their services, details of which are set out in note 7 to the Financial Statements.

Disclosure of information to the auditors

In the case of each person who was a Board member at the time this report was approved:

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North Devon Homes

Board of Management report for the year ended 31 March 2022 (continued)

This confirmation is given and should be interpreted in accordance with the provision of s418 of the Companies Act 2006.

By order of the Board

Colin Dennis Chair of the Board 5 September 2022

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North Devon Homes

Strategic Report

Background

North Devon Homes is a registered provider of social housing which was established to accept the transfer of 3,281 homes from North Devon Council in February 2000. At 31 March 2021, the Association owned 3,338 (2021: 3,337) affordable homes.

With the exception of two properties in the Torridge area, all of North Devon Homes’ housing stock is located within the local government district of North Devon. The Association operates in an area where there is an acute shortage of existing affordable homes and limited supply of new sites for new housing provision. In addition to this, the area has very low average wages coupled with high property prices.

An analysis of the Association’s property assets is as follows:

2022 2021
No. No.
North Devon Homes’ Affordable Housing Stock:
General Needs
Social rent 2278 2,277
Affordable rent 426 426
Older-persons Housing
Social rent 510 510
Affordable rent 31 31
Intermediate rent 18 18
Low-cost home ownership 75 75
Total 3,338 3,337
Other units not included above:
Market Rented 8 7
Leasehold Properties 89 89
Units managed on behalf of others 16 16
Garages 670 670
Commercial Properties 23 19
Total 806 801

Governance and Management

During 2021/22 the NDH Board met eight times to provide effective governance to the business. The Board is supported by its Group Audit and Risk Committee and also the Group Remuneration and People Committee. The Anchorwood Limited Board met five times during the year.

The NDH Board has formally adopted the National Housing Federation (NHF) Code of Governance 2020. This Code not only underpins the way the Board operates but also forms the basis of an ongoing commitment to governance excellence and continuous strengthening of North Devon Homes’ governance arrangements. During 2021/22 significant progress was made towards achieving full compliance with the Code. During 2022/23, the Board will be working through the final outstanding actions to ensure that full compliance with the new Code is achieved by 31 March 2023.

Further details are provided within the Board of Management Report on pages 4-8.

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North Devon Homes

Strategic Report (continued)

Regulatory Status

The Association is a Registered Provider (RP) of Social Housing and is regulated by the Regulator of Social Housing (the “Regulator”) under the Regulatory Framework for Social Housing in England.

In November 2021 following the annual stability check it was confirmed that the Association had maintained the highest Regulatory Rating for governance at G1 and that it was graded as V2 for Financial Viability due to its current exposure to the housing market. The ratings are defined as follows:

The provider meets the governance requirements.

Viability: V2

The provider meets the viability requirements and has the financial capacity to deal with a reasonable range of adverse scenarios, but needs to manage material risks to ensure continued compliance.

Corporate Priorities and Strategies

The Corporate Plan 2021-24 sets out the Association’s aspirations and targets. Key areas of focus for the 2021-24 Plan are tackling inequality, investing in customers’ homes to make them more energy efficient, delivery of new homes and using new technology to improve processes and deliver services more effectively and efficiently. The Plan also sets out the Association’s culture and the way the Association intends to deliver the Plan with objectives on: safety, compliance and responding to the emerging building-safety agenda; good governance; delivery of social value; and customer engagement. The year 2021/22 was the first year of the Corporate Plan 2021-24. The Plan is set out under four objectives, and a summary of performance against each heading is outlined below.

1. Me: putting customers at the heart of everything we do

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North Devon Homes

Strategic Report (continued)

2. My Home: giving customers a safe and warm place to live

3. My Neighbourhood: improving and supporting our communities

4. My Landlord: offering Value for Money with a low impact on the planet

Performance in the Year

Underpinning the Corporate Objectives, the following specific priorities were delivered in 2021/22:

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North Devon Homes

Strategic Report (continued)

Performance in the Year (continued)

• Deliver Welfare Reform Support

Universal Credit (UC) was rolled out in North Devon from July 2018, and by 31 March 2022 around 980 of our customers had transitioned to UC. Current tenant rent arrears figures continued to show excellent performance throughout the year with the year end result at 0.88% of the annual rent debit, only showing a small increase on the previous year (0.80%). The difficulties for customers on UC are demonstrated when looking deeper at the results: arrears for non-UC customers (0.54%) are significantly lower than arrears for those in receipt of UC (1.56%). During the year, we continued to work with customers to help them transition to UC, and to help them build up a rent credit to cover them across the gap in benefit when switching to Universal Credit. In light of the cost of living crisis, we have also set up a fund to support those Customers most impacted and looked at how we can enhance our support to Customers.

• Taw Wharf Development

During 2021/22, Anchorwood Limited completed the final sales of the second phase and commenced development of the third phase of Taw Wharf. Properties remained in demand throughout the year, and no completed properties remained unsold at the year end, with significant numbers of ‘early bird’ reservations against the third phase. The entire scheme will deliver 37 social rented homes to NDH, and gift aid to NDH of the profits arising from the sale of 135 open market sale units.

• IT Systems

Our three core IT systems – relating to tenancy management, repairs and asset management, were deemed to be at the end of their useful lives. As a consequence, following process reviews, requirements gathering and investigation of potential suppliers, we procured a new integrated housing management system to cover all three areas, which went live in June 2021. The system changes will reduce the risk related to IT, and are also a key part of our Value for Money (VfM) delivery. They should enable more on-line interaction with customers and deliver future efficiencies as we refine processes and take advantage of new IT capabilities.

• Improving our stock for customers

During 2021/22 we continued to look at projects to identify ways to improve the energy efficiency of our homes. In 2021/22 we have installed air-source heat pumps in a number of properties, alongside solar panels and batteries, and are assessing the resulting benefits for customers. We have also progressed a consortium bid for the Social Housing Decarbonisation Fund to secure funding to make our properties more energy efficient. In addition, we continue to identify and dispose of our worst performing properties when opportunities arise, using receipts to acquire or develop new affordable homes.

Performance Management Framework

The Company has a robust Performance Management Framework in place. The Corporate Objectives set by the Board as part of the Corporate Plan are cascaded into Service Excellence Plans (SEPs) for each service area. The SEP’s inform the personal objectives for each member of staff. The achievement of both the SEP’s and the staff objectives is regularly monitored.

Key Performance Indicators (KPIs)

The North Devon Homes Board and Executive Team monitor the Group’s KPIs through quarterly performance reporting, regular meetings of the Executive Team and of the Strategic Performance Group. Performance information is widely available in customer newsletters, on our website and in our offices.

A performance management process is in place to capture, monitor and manage performance and delivery across the business including delivery of our Corporate Plan and service excellence plans, with quarterly performance reports.

Performance across the organisation as at 31 March 2022 is summarised on the following page

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North Devon Homes

Strategic Report (continued)

Key Performance Indicators (KPIs) (continued)

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North Devon Homes

Strategic Report (continued)

Key Performance Indicators (KPIs) (continued)

Some further commentary on performance in the year is provided below:

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North Devon Homes

Strategic Report (continued)

Risk Management

The Group has a clear framework for managing risk and during the year an external review of Risk Management was carried out by Hargreaves Risk and Strategy, which concluded that the Risk Management remained ‘very good’.

The risks are recorded in the Risk Register and are assessed in terms of impact and probability, both in terms of inherent risk (i.e. if all controls failed / worst case scenario) and residual risk (i.e. controls in place and working as expected). Each risk has an underlying plan which includes details of controls in place, time-specific assurances against those controls, as well as actions planned to further improve controls. An Assurances report is being completed for each key risk, which sets out the critical assurances in place against the three lines of defence model. The full risk register is reviewed by the Group Audit and Risk Committee on a quarterly basis as well as every four to six weeks by the Strategic Performance Group.

The Board considers risk in all of its decision making and the Executive Team and the Board have an open dialogue regarding the key and emerging risks to the business. This ensures that the Board understands the risks and receives assurance regarding the systems of internal control. The Board has established a programme of internal audit work designed to provide additional assurance on the Group’s areas of greatest risk. The internal auditors provide an independent view on the design and operation of the Group’s controls, which informs the Board’s assessment.

Some of the key risks to successful achievement of the Group’s objectives are summarised below. These risks are actively monitored by the Board and the Executive Team.

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North Devon Homes

Strategic Report (continued) Risk Management (continued)

Risk Management
(continued)Risk		 Key controls
Failure to achieve
and deliver Value
for Money (VfM)		 Budgetary control policy and procedures in place.
Corporate Plan for 2021-2024 establishes VfM priorities.
The VfM Strategy 2021-24 outlines how value will be delivered and includes
key metrics to track progress.
Procurement strategy embedded in VfM Strategy.
VfM link through strategy, departmental service excellence plans,
performance and Board decision making.
Use of benchmarking tools to monitor performance and inform a
programme of continuous improvement activity.
Asset Management & Development strategy in place to ensure effective
use of and return on assets.
Annual submission of data to Housemark for benchmarking comparison.
Benchmarking undertaken annually against peer group to identify cost
savings and performance improvements, and monthly to identify
performance issues impactingVfM.
Higher arrears
than anticipated
as a result of
welfare reform		 Significant work continues with customers who have moved to UC, to
support them to manage finances and keep their arrears down.
Close arrears monitoring.
Income management service tailored to support customers.
Close monitoring of changes to the welfare system and communication with
customers. Identification of customers most at risk of higher arrears in order
to target interventions towards them.
Promotion of direct debits and basic bank accounts. Recurring card
payments implemented via Allpay. Wide range of payment facilities
available.
Whilst overall performance continues to be very good, as UC continues to
be rolled out this still remains a key risk due to the result of the significant
impact that UC has on customers. This has been exacerbated by the impact
of the pandemic, which has transitioned many onto UC. As circumstances
change and as the impacts of the costs of living crises deepen and with the
possible threat of recession, it is anticipated that even those who have
previously successfully transitioned to UC will struggle to keep rent payments
up to date.
Local authority relationship prioritised to strengthen dialogue about routes
and government funding to support customer hardship.
Chief Executive leads regional Credit Union sustainability project to support
provision of services to customers.
Failure to
effectively
monitor,
anticipate and
respond to
changes in the
economic
environment		 Interest rate exposures carefully monitored and Treasury Strategy regularly
reviewed.
Prudent business plan assumptions made around inflation and interest rates,
and sensitivity analysis carried out.
Stress testing carried out based on externally developed scenarios to ensure
Business Plan capacity is understood, the Board is prepared for changes in
the environment, and have identified triggers and recovery actions.
Regular review by senior management of external sources of information
and attendance at events.
Emerging risks discussed at Strategic Performance Group and Group Audit &
Risk Committee.
Where possible, contracts are put in place that stipulate agreed pricing
structures across the length of the contract.
Risk is regularly reviewed and will continue to be, as there is likely to be
ongoing uncertainty affecting the economic environment as a result of
Covid-19,the cost-of-livingcrisis and the longer-term outcomes of Brexit.

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North Devon Homes

Strategic Report (continued)

Risk Management (continued)

Risk Key controls
Failure to
effectively
monitor and
respond to
changes in the
external political
environment		 Key information sources monitored.
Key emerging / potential issues and their implications are discussed at
Strategic Performance Group.
Senior staff engaged with local political networks.
Environmental scanning to be aware of potential emerging issues.
Annual Risk Workshop/Board Awayday (usually led by an external facilitator)
includes discussion of potential changes to political/wider environment and
consideration of impacts, risks and opportunities.
Stress testing and business planning utilises scenarios incorporating external
intelligence (e.g. Hargreaves Risk and Strategy, Bank of England) about
potential political and wider economic changes.
Risk is regularly reviewed and will continue to be, as the political
environment remains extremely unpredictable, and some of the policies
being discussed (e.g. Right to Buy) or passing through to legislation (e.g.
Social Housing Regulation) could have a significant impact. This uncertainty
is exacerbated by the impacts of Covid-19, war in Ukraine, the cost of living
crisis and the longer-term outcomes of Brexit.
Non-Compliant
with General Data
Protection
Regulation		 Information Security Compliance Group (ISCG) in place to support
compliance and delivery of the action plan.
Finance Director appointed as Data Protection Officer (DPO) to ensure
compliance progress monitored at a senior level.
Head of Governance, Risk & Assurance and team in place to provide high
level support to DPO.
Ongoing specialist contract to enable quick access to support and advice.
Member of South West GDPR group, sharing resources and materials.
Programme of data protection e-learning and other awareness activities in
place for all staff.
GDPR compliance audit undertaken during 2018 by specialist advisors.
GDPR requirements included in specification for new housing-management
system.
Enhanced annual training programme implemented around GDPR and
managing information securely.
Internal review against ICO Self-Assessment tool for GDPR compliance,
implementation of ROPA and audit of all DPA’s and the DPIA process.
IT systems upgrades implementation completed by July 2022, providing
enhanced security arrangements.
Failure of the
Board to exercise
good governance		 Skills-based Board in place.
Assurance Framework developed and implemented to ensure the Board
receives information needed to govern effectively. Risk map kept up to
date and relevant for the needs of current and future business.
Board adheres to NHF Code of Governance standards.
Board attendance monitored through KPI’s.
Robust recruitment procedure for Board members.
Coaching, training and support available to Board members.
Skills mix of Board reviewed annually and / or when membership changes.

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North Devon Homes

Strategic Report (continued)

Risk Management (continued)

Risk Key controls
Failure of Group
subsidiary
Anchorwood Ltd to
deliver the outcomes
agreed in its
Corporate Plan		 Governance framework in place to define relationship between AL and
Parent Board with clearly stated roles and responsibilities and
accountabilities of both parties.
Business Plan for Group and separate plan in place for Anchorwood,
stress tested to understand break points and recovery actions identified.
Corporate plan targets and KPI performance framework sets out
expectations and whether targets are being achieved.
Ongoing review of sales activity by Project Group informed by local
estate agents and JV partners.
Local estate agents and valuers engaged to inform the development of
homes for sale, sales strategy, and pricing. External advice sought for key
decisions about development to add to the local intelligence.
Mitigation in place to address potential failure of contractor /
joint-venture-agreement partner.
Exit stages mapped out to ensure the Board has choices throughout the
development prior to committing to each build phase.
Contracts in place to set out responsibilities of contractors / partners and
to mitigate against cost increases.
Controls in place to ensure VfM and delivery against anticipated profit.
Controls in place to ensure Health and Safety on site.
Assumptions are continually reviewed to ensure the plan is realistic in the
current environment with the ongoing impacts of Covid-19, the cost of
living crisis and Brexit (i.e. risk of falling house prices, sales delays, rising
costs of borrowing and materials, lack of availability of materials).
Failure to develop
and implement an
informed Asset
Management
Strategy		 Asset Management Strategy in place aligned to Corporate Plan 2021-24.
Direct Labour Organisation – Home 2 Home – in place for response repairs
and planned works with external contractors for specialist services (e.g.
gas, electrical).
Planned Maintenance programme in place based on regular stock
condition surveys.
Programme of improvement planned to improve energy efficiency of
homes.
Ongoing review of poorly performing properties (i.e. energy efficiency,
repair costs), with disposal of the worst-performing properties when they
become void.
Annual Housemark benchmarking showing cost/quality of repairs services
compared with others.
20% of stock surveyed for condition surveys annually.
External environment monitored and responded to via professional
networks and resources including Advantage South West workshops and
trainingevents and HRS.

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North Devon Homes

Strategic Report (continued)

Risk Management (continued)

Risk Key controls
Failure to comply
with Health and
Safety (H&S)
obligations		 Permanent Building Safety Manager post in place with an allocated H&S
budget.
External expertise retained to provide support.
To mitigate the H&S risks as an employer: policy and procedures are in
place, reviewed regularly and communicated; monitoring of near misses,
incidents, and actions; training provided for all staff; regular briefings /
updates on H&S. Risk assessments and mitigations are reviewed and
updated to take account of significant events.
To mitigate the H&S risks in our stock we have robust policies and
procedures, which are monitored and regularly audited, in relation to
gas, fire safety, electrics, legionella, and asbestos; a cyclical
maintenance process / procedure is in place; and an overall compliance
register is maintained.
To mitigate risks as client and developer, there are procedures to ensure
Construction Design and Management regulations are followed. Our aim
is to specify works (i.e. design, materials) that anticipate emerging
building safety legislation to ensure developments are future-proofed and
meet customer and regulatory expectations.
We continue to prepare for legislative changes resulting from the Grenfell
Tower inquiry by investing in health and safety compliance and robust
monitoring arrangements.
IT systems and cyber
security. Failure to
comply with data
protection legislation		 Firewall and anti-virus software are in place and penetration testing is
carried out. Monthly monitoring of system security by an external
specialist, who also carries out regular penetration and phishing tests.
Non-public areas of the building are protected by security systems, and
devices are protected by passwords.
Training is provided for staff, alongside regular cyber-risk updates (e.g.
regarding ransomware threat).
An IT Strategy is in place, with appropriate budget in the business plan, to
ensure IT systems that meet business need are in place and maintained.
A programme is ongoing to upgrade end-of-life IT infrastructure including
a move to MS365.
Data protection policies and procedures are in place. Enhanced annual
refresher training is in place for GDPR and Managing Information
Securely.
All mobile devices have robust security controls enabled.

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North Devon Homes

Strategic Report (continued)

Risk Management (continued)

Risk Key controls
Risk that Social
Housing reform leads
to higher rate of
RTB/RTA sales
diminishing letting
stock and balance
sheet.		 RTB/RTA policies and vetting are in place to ensure legislative
compliance.
Management information and KPIs show sales in progress and completed
sales during the year.
The asset cover position is regularly reviewed and understood.
The Development pipeline is in place to ensure a supply of new
units/growth. A working partnership with the Local Authority is established
to help identify new development opportunities.
Statutory requirements for promoting RTB are understood and
implemented.
A close watch is kept on proposed government policies such as
extending Right to Buy, which could significantly impact all registered
providers.
Inability to attract
and retain key
staffing skills and
resources		 The Team NDH strategy is agreed and focused on how we develop our
culture further, setting actions relating to; leadership, pay, reward and
talent management, wellbeing and Equality Diversity and Inclusion.
A pay and reward policy is in place, posts evaluated against market
testing every 3 years and new posts evaluated on creation.
Exit interviews are carried out to identify issues and trends and reported to
Executive team for action where appropriate.
An agile recruitment process in place to react to changing recruitment
market.
Staff have opportunities to give their views across a variety of formats e.g.
staff forum, surveys and management reviews.
An HR team is able to support the business in all recruitment and retention
matters.

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North Devon Homes

Strategic Report (continued)

Risk Management (continued)

The key risks above were addressed throughout 2021/22. During the year the Covid-19 pandemic and associated restrictions continued to impact the operations of the company and its risk profile overall, but less so than in the previous year. There was continuation of the additional mitigations which had been put in the prior year, principally around staff, contractor and customer health and safety, aimed at ensuring that none of our activities contributed to the spreading of Covid-19. Throughout much of 2021 many staff continued to work from home, with a gradual return to the office in early 2022. A more flexible approach has been taken for many office-based staff with the introduction of hybrid working.

In an uncertain environment following the pandemic, the growing cost of living crisis and ongoing Brexit implications, a number of risks are being considered particularly carefully to ensure the continued financial viability and effectiveness of the Group:

A key mitigation for all these risks is the new Corporate Plan 2021-24, which has refocused our objectives and ambition, in light of the challenges faced by the Group and our Customers over the next few years, in order to ensure they are achievable.

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North Devon Homes

Strategic Report (continued)

Value for Money Statement 2022

As a community landlord, Value for Money (VfM) is a key driver of our culture and is integral in everything that we do, from setting strategies at Board level through to delivering good value services to our customers. Delivering VfM is one of the four main strategic objectives in our 20212024 Corporate Plan. We aim to deliver a high quality service as efficiently and effectively as we can, maximising the value of the services we provide within available resources.

This VfM statement outlines our key areas of achievement during the year as well as highlighting those areas where we could have performed better.

Benchmarked data is contained in the report to show how well we are performing compared to our peers and the sector as a whole. In line with the Regulator’s VfM Standard, our statement is focused on the seven key metrics that the Regulator of Social Housing (RSH) uses to compare providers. Wider benchmarked data for operational areas is used in addition to demonstrate the VfM we achieve.

Value for Money performance 2020/21

The latest benchmarked data for the seven metrics, as published in the Regulator’s Global Accounts data for 2020/21, is set out below. This shows the Association’s performance compared to the sector median for housing associations of a similar size (2,500 to 5000 units).

VfM Metrics 2020/21
North Devon Homes Sector Median
Reinvestment 2.4% 5.0% Performance:
New Supply - Social Housing Units 0.8% 1.2% Above median
New Supply - non-Social Housing Units 0.3% 0.0% Below median
Gearing 57.0% 41.8%
EBITDA MRI 154.4% 200.0%
Headline Social Housing Costper unit £2,880 £3,940
Operating Margin - Social Housing Lettings 28.6% 24.4%
Operating Margin - Overall 26.4% 24.2%
Return on Capital Employed(ROCE) 3.5% 3.5%

The table on the next page sets out the Association’s performance against the seven VfM metrics for 2021/22, comparing it to the target set out in the current VfM Strategy. The table also sets out the VfM targets for the next two years, which are included in the VfM Strategy 2021-24.

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Strategic Report (continued)

Value for Money Statement 2022

A summary commentary on performance over the last two years is provided below:

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Strategic Report (continued)

Value for Money Statement 2022 (continued)

In addition to the metrics used by the RSH, the table below shows VfM performance for 2020/21 compared to 2019/20 for different operational areas of NDH. This table utilises Housemark data. Where an area is flagged red, performance is below the median, or costs are higher; where an area is flagged green, the opposite is true.

This data (the latest comparative data available) takes into account the cost of the service and the performance of the service – giving a good indicator of VfM. The data has been benchmarked against our Housemark peer group of Southern Traditional Housing Associations, rather than the whole sector.

The data above suggests that for most areas where data is available, performance is unchanged, and remained good in 2020/21. The only change from 2019/20 related to the Cost Per Property (CPP) of Resident Involvement. In 2019/20, it was £91, and just above the Peer Group median of £88. In 2020/21, it fell by a small amount and is now below the Peer Group median, because that increased significantly to £110.

The only area where Cost Per Property (CPP) has remained above the peer group median is Community Investment. Our CPP has risen from £79 to £83, whilst others in the Peer Group have seen costs plummet (median fell from £50 to £15). The greater costs we have compared to the Peer Group median reflect the investment we continue to choose to make in our youth and support services. During the Pandemic, the falling Peer Group costs suggest that others curtailed their offer to customers; whilst we continued our support work through different means as best we were able, for example through online events.

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Strategic Report (continued)

Value for Money Targets

As noted above, the key VfM targets are against the seven VfM metrics set by the RSH. However, the Board has also outlined four other targets in its 2021-24 VfM strategy. These are set out in the table below:

Metric 2021/22 target 2022/23
target		 2023/24
target
%
Satisfaction
with
repairs
and
maintenance service		 85% 85% 85%
% of complaints resolved within agreed
timetable		 Stage 1 – 100%
Stage 2 – 100%		 Stage 1 – 100%
Stage 2 – 100%		 Stage 1 – 100%
Stage 2 – 100%
No. of changes as a result of customer
consultation/feedback		 50 50 50
Social Value delivered Evidence of
social value
delivered		 Evidence of
social value
delivered		 Evidence of
social value
delivered

In terms of performance against these targets for 2021/22:

Repairs and maintenance satisfaction

As noted above, satisfaction is above target at 88%. Any responses indicating dissatisfaction are followed up by repairs staff to understand what has happened, identify any learning, and where appropriate to resolve any outstanding issues.

Complaints resolution

The Housing Ombudsman Complaints Code requires that Landlords try to resolve stage 1 complaints within 10 working days of logging them and stage 2 complaints within 20 days. Additional time is allowed, provided there is a good reason and the end date is agreed with the customer. All complaints at both stages in the year were compliant with these expectations and for the year we achieved this for 70% of Stage 1 complaints and 67% of Stage 2 complaints.

Customer consultation / feedback

In the year, over a thousand changes were recorded as a direct result of consultation with, and feedback from, customers.

Social value

The social value that NDH provides to its customers includes a social return for the benefit of communities. In recognition of the changes to the external operating environment and the high levels of un-met community need we have restructured some of our front-line services to provide targeted specialist support in a more focussed way. This includes a programme of work that is focussed on supporting young people in our communities, which aims to break the cycle of deprivation, and support in helping our customers to continue to live independently throughout their tenancy and life. In addition we have organised and undertaken a range of community events to improve and enhance neighbourhoods and engage those who live in the communities in which we have a presence.

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Strategic Report (continued)

Customer Board Partnership, Customer Health and Safety Partnership, and Scrutiny Panel

As a community landlord, engaging with our customers is a core part of how we both improve and deliver VfM. As a result of customers volunteering their time through our customer groups such as our Customer Board Partnership (previously C90), Customer Health and Safety Partnership and our Scrutiny Panel capacity has been further developed this year to support meaningful and effective customer involvement. Of particular note is the further development of the Customer Health and Safety Partnership the members of which have received a structured programme of training supported with further awareness sessions to support meaningful engagement and contributions to our landlord compliance and customer safety agendas. This group has monitored and challenged how we deliver landlord compliance and customer safety, monitoring performance and developing and facilitating customer events to engage customers in our customer partnership safety agenda.

Our customer scrutiny group has also developed and undertaken an active programme of reviews which has researched, evaluated and scrutinised a number of areas and made recommendations for improvements in how we design, monitor, implement or review services.

Our customer Board Partnership has overseen our customer involvement work bringing customers, Board Members and Leaders and managers from the organisation together on a regular basis to understand, inform, challenge and improve what we do. Customers also attended and were engaged in the Board’s Strategic planning sessions including a Board Awayday which reviewed Value for Money, Equality, Diversity and Inclusion and reviewed our Customer Involvement Strategy.

Throughout the year customers were consulted on a number of initiatives including:

A number of policies and procedures have also been reviewed in the year leading to process efficiencies and better outcomes for both customers and the Association.

The chair of our Customer Board Partnership is also meeting with the Chair of our Board and the Chair of the Group Audit and Risk committee as part of our customer involvement and assurance work.

In addition customers have attended and contributed to a programme of external events organised by the Regulator for Social Housing, the Housing Ombudsman, TPAS and HQN.

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Strategic Report (continued)

Plans for the year ahead

In addition to focussing on the VfM targets outlined above, other key priorities for the year 2022/23 are:

Delivery of the VfM strategy will be a continued focus during the coming year for our Board through its decision making; for customers including our Customer Board Partnership, Customer Safety Partnership and Scrutiny Group; and for staff through our VfM culture and delivery of key proj ects delivering our corporate plan objectives. We continue to monitor and report performance against all of our targets and in our communications with customers and staff.

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Strategic Report (continued)

Operating and Financial Review

Financial Review

Income from social housing lettings increased in the year to 31 March 2022 by 2.5% (2021: 3.9% increase) from £15,540k in 2021 to £15,883k in 2021/22 (which included the 1.5% rent increase being applied to the majority of properties based on the CPI +1% formula). 9 general needs properties were lost through Right to Buy/Acquire and strategic disposals in the year. 10 new social housing properties were added, resulting in an overall increase in social housing lettings income.

There was a decrease in turnover within other social housing activities of £280k to £792k in 2021/22 (2021: £1,072k) as there were four less shared ownership property sales in the year, with five sales (2021: nine). Within non-social housing activity, turnover from open market sale activity was £2,339k a lower level to the previous year (2021: £4,614k) as a result of less completed properties available for sale during the year at the Taw Wharf schemes, through Anchorwood Limited (14 sales completed in the year with 23 properties being sold in the previous year).

The Group operating surplus for the year was £5,274k (2021: £6,335k), a decrease of £1,061k from the previous year. This included gains from disposals of property, plant and equipment of £785k (2021: £741k) as we continued to disinvest in our poorest performing assets. There was a decrease in Group turnover of £1,174k mainly arising from the lower level of sales activity in Anchorwood. Overall operating costs decreased by £69k from the previous year; operating costs for social housing lettings increased by £1,297k, mainly as a result of increased investment in major repairs and planned maintenance costs; this was offset by lower non social housing operating costs relating to lower Anchorwood sales activity. During the year £1,902k (2021: £1,316k) of major repairs expenditure was written off to the income and expenditure account and in addition £1,901k of works were capitalised (2021: £1,093k).

Surplus on property disposals was £785k, an increase of £44k from 2020/21 reflecting a similar level of activity for strategic disposals; there were two in the year compared to three the previous year, plus some disposals of land. Receipts from these disposals are reinvested in the development programme for the provision of new affordable homes in the area.

The Group’s surplus before tax was £1,208k (2021: £1,952k). There was an actuarial gain in the year of £1,652k (2021: £1,912k loss) in relation to the Devon County Council Pension Fund and SHPS pension scheme.

The Group’s surplus after tax and pension gains / losses for the year was £2,860k (2021: £40k). The surplus was credited to revenue reserves.

Debt Profile

There was no change to any fixed rate facilities during the year. In terms of variable rate facilities, the Lloyds £5m Revolving Credit Facility expired in December 2021 and was not renewed. The NatWest facility of £5.375m at the year end is a commercial facility with Anchorwood Limited to fund the ongoing Taw Wharf scheme. As at the year end £2.315m of this facility was drawn. The phase 2b facility of £1.53m was fully repaid in the year.

A summary of loan facilities as at the year end is below:

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Strategic Report (continued)

Operating and Financial Review

Financial Review (continued)

Lender 2022 2021 Description
£’000 £’000
Lloyds 51,300 51,300 Fixed
Lloyds revolving credit facility - 5,000 Variable
Affordable Housing Finance 8,000 8,000 Fixed
GB Social Housing 27,638 27,638 Fixed
MORhomes 12,500 12,500 Fixed
NatWest 5,375 6,261 Variable
TOTAL 104,813 110,699

Individual lenders specify their own covenant requirements. For Lloyds and GB Social Housing these are interest cover, asset cover and debt per unit. The two Affordable Housing Finance covenants are net annual income and asset cover. The MORhomes bond requires asset cover only. NatWest covenants are based on loan to gross development value and loan to development costs. There were no covenant breaches during the year.

At 31 March the debt profile (excluding any interest applied) was as follows:

Loan Facility 2022 2021
Fixed Rate Loans £’000 99,438k £99,438k
Variable Rate Loans £’000 2,315k £593k
Total Loans Drawn £’000 £101,753k £100,031k
% unhedged 2.3% 0.60%
Average cost of funds 4.65% 4.79%
Undrawn facility £’000 £3,060k £10,668k
Total Facility £’000 £104,813k £110,699k

The average maturity of net debt was over five years (see note 15).

Treasury operations are managed by the Finance Director within parameters set down by the Board of Management through its Treasury Management Strategy and Policy. This activity is regularly reported to and monitored by the Board. External advice is sought in relation to policy, strategy and training in this area.

Cash Flows

Cash inflows and outflows for the year under review are contained in the Consolidated Statement of Cash Flows on page 41. The main net cash inflows from operating activities are from housing management activities. The net cash outflow from investing activities is the net expenditure (after grant) on regeneration projects, development properties and planned maintenance improvements, including the replacement of components of housing properties.

Market value of land and buildings

The most recent valuation in respect of property charged to Lloyds was completed in June 2020 and the value of the charged stock at 31 March 2021 was £75.05m, valued at Existing Use Value – Social Housing (EUV-SH). The next valuation is due in 2023.

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Strategic Report (continued)

Operating and Financial Review (continued)

The value of stock charged to Affordable Housing Finance at 31 March 2022 was £10.110m at EUVSH, based on the valuation that was concluded in March 2020. The value of the stock charged to GB Social Housing was £36.2m valued at Market Value - Subject to Tenancies (MV-ST) at the year end. Based on the updated desktop valuation completed in May 2022, the MV-ST value of the MORhomes charged stock was £17.5m.

Devon County Council Pension Scheme

The Association has a potential unprovided liability for additional pension costs for the Devon County Council Pension Scheme of £1.521m. During 2017/18 a jointly controlled bank account was set up with Devon County Council as the administering authority, to provide an indemnity by way of a cash deposit. As at the year end the balance in this account was £1.52m.

Statement of compliance

The Board of Management confirms that the Strategic Report has been prepared in accordance with the principles set out in the SORP 2018.

By order of the Board

Colin Dennis Chair of the Board 5 September 2022

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Statement of the Board of Management’s Responsibilities

The Board is responsible for preparing the Board’s Report and the Financial Statements in accordance with applicable law and regulations.

Company law requires the Board to prepare financial statements for each financial year. Under those regulations the Board has elected to prepare the Financial Statements in accordance with UK Accounting Standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland .

The financial statements are required by law to give a true and fair view of the state of affairs of the Group and the Association and of the income and expenditure of the Group and the association for that period.

In preparing these Financial Statements, the Board is required to:

The Board is responsible for keeping proper books of accounts that disclose, with reasonable accuracy at any time, the financial position of the Association and enable it to ensure that the Association’s 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 2020. It is responsible for such internal control as it determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and has general responsibility for taking such steps as are reasonably open to it to safeguard the assets of the Association and to prevent and detect fraud and other irregularities.

The Board is responsible for the maintenance and integrity of the corporate and financial information included on the Association’s website. Legislation in the UK governing the preparation and dissemination of Financial Statements may differ from legislation in other jurisdictions.

The Report of the Board, the Strategic Report and the Financial Statements were approved by the Board on 5 September 2022 and signed on its behalf by:

By order of the Board

Colin Dennis Chair of the Board

5 September 2022

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Report of the Board on Internal Control

The Board acknowledges that it has overall responsibility for establishing and maintaining the internal control systems and for reviewing their effectiveness. This responsibility applies to all organisations within the Group and to ensure that this has operated effectively during the Coronavirus pandemic the Board formed a Covid-19 group which met fortnightly (initially weekly) during the year.

The internal control systems in place focus on:

The system of internal control is designed to manage, rather than eliminate, the risk of failure to achieve business objectives, and can only provide reasonable, and not absolute, assurance against material misstatement or loss. The ongoing Coronavirus pandemic has meant a change in working arrangements during the year with many office-based staff continuing to work remotely; whilst some controls have been further updated and strengthened to reflect remote-working arrangements the overall internal controls system has remained largely unchanged.

The Group’s assurance framework aligns the assurance monitoring process from Board and Customer Board Partnership, through to operational level and clearly sets out the reporting framework. This framework supports the robust culture of internal controls within the Group.

The process for identifying, evaluating and managing the risks faced by the Group is ongoing and part of its Risk Management Framework that has been in place throughout the year, up to the date of approval of the Annual Report and Financial Statements. The framework is externally reviewed at least annually. The Board receives an update on key risks facing the Group at each meeting and the Group Audit and Risk Committee receives a detailed report on risk at each quarterly meeting focussing not only on reviewing current risks but also emerging risks. The Committee also receives ‘deep-dive’ assurance reports for review at each meeting. Board agendas are structured so that key risk issues are discussed as early agenda items and are clearly identified at the start of reports. The Board had a dedicated virtual risk workshop in the year to review risk, the risk management framework and risk appetite.

As part of the ongoing management of the impact of the Covid pandemic the Incident Management Team consisting of the Executive Team and senior managers across the business has continued to meet at least weekly to raise and address any current or emerging risks in relation to customers and staff; to ensure that day-to-day operations were effectively managed; and that appropriate health and safety arrangements were maintained.

The Strategic Performance Group comprising senior members of management across all areas of the business, met regularly in the year to review the Group’s risk register, ensure that risk management continued to be embedded and operate effectively within the business, to identify emerging risks and review risk triggers. As a result of these controls and reviews of when controls have been effective, for example in the prevention of fraud, the risk register has been updated regularly throughout the year and risks realigned or developed in response to the many changes that the sector and indeed the world has faced.

As part of the risk management of the Taw Wharf scheme (which is the main Anchorwood Limited development), the Anchorwood project group has continued to meet weekly to review the project risk register as well as any new or emerging risks, and the project risk register is reviewed by the Anchorwood Board at each meeting. Discussions about the risks being managed by Anchorwood Ltd inform the scoring of Group Risk 67 “Failure of Anchorwood Ltd to deliver the outcomes agreed in its Corporate Plan (e.g. units, income) within budget and planned timescales”, which considers the flow of risk from Anchorwood Ltd to the Group.

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Report of the Board on Internal Control (continued)

Our customer involvement framework is now well embedded and, as part of this, the customer Scrutiny Panel undertakes a programme of regular reviews into a broad range of service areas. The outcomes are reported to the Customer Board Partnership and ultimately the Board. This approach provides further assurance over performance and key policies, which form a key part of the internal control environment.

The Group produces a three-year Corporate Plan and a 30-year financial business plan, which is updated on at least an annual basis and which is supported by detailed financial budgets and forecasts. The Plan identifies the threats and opportunities in the environment which may prevent the achievement of objectives; and sensitivity and scenario modelling is carried out to model different events and develop contingency plans. A key area of focus during the year has been scenario testing and the preparation and review of contingency plans in respect of the Taw Wharf scheme and the potential economic impacts on this scheme and the wider Group activities.

The day-to-day operation of internal control is delegated to the Executive Officers. The Group has a clearly defined organisational structure based upon an approved system of delegation and authorisation that includes members of the Board of Management and the Officers. The levels of authority are set out in the Group Standing Orders and Financial Regulations and are subject to periodic review.

Some of the key policies that are established to ensure effective internal control are shown below.

North Devon Homes has suitably qualified and experienced staff who are responsible for its business functions. Recruitment, induction and training processes are comprehensive and are designed to ensure that staff entering the organisation are both qualified and committed to working with the Group and the achievement of its objectives.

The Group has an ongoing internal audit plan and RSM were employed as internal auditors during the year. The Group also employs consultants, where necessary, who provide specialist support, advice and training where appropriate. Hargreaves Risk and Strategy consultants are also engaged to provide specialist advice on risk and Altair and Aquila Treasury and Finance Solutions are engaged to provide governance, funding and treasury advice.

The Group has an anti-fraud, bribery and corruption policy in place covering prevention, detection and reporting of fraud. The Board reviews the fraud register at each Board meeting and can confirm that there have been no frauds against the Group during the year that have resulted in any losses.

The Board cannot delegate ultimate responsibility for the system of internal control, but it can and has appointed a Group Audit and Risk Committee to oversee risk and internal control. A full report on Internal Controls Assurance was provided to the Group Audit and Risk Committee on 7 March 2022 and the results of the Board’s subsequent review of that report are the basis of this statement.

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Report of the Board on Internal Control (continued)

The Group Audit and Risk Committee approves an annual internal audit plan, reviews the effectiveness of internal control systems and has an active role in the promotion and monitoring of standards. The Group Audit and Risk Committee achieves this by considering risk reports, recommendations on internal audit reports and agreeing appropriate responses and actions with the Executive Officers; reviewing the external auditors’ management letter; and can undertake specialist reviews on areas such as health and safety. The internal and external auditors are guaranteed a right of direct access to the Board of Management and the Group Audit and Risk Committee should they identify any material internal control concerns.

By order of the Board

Colin Dennis Chair of the Board

5 September 2022

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Independent Auditors’ report to the members of North Devon Homes

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of North Devon Homes (the ‘parent association’) and its subsidiary (‘the group’) for the year ended 31st March 2022 which comprise the Consolidated and Association’s Statements of Comprehensive Income, the Consolidated and Association’s Statements of Financial Position, the Consolidated Statement of Cash Flows, Consolidated Statement of Changes in Reserves, Association Statement of Changes in Reserves and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

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

Conclusions relating to going concern

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

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and North Devon Homes’ 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 members with respect to going concern are described in the relevant sections of this report.

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Independent Auditors’ report to the members of North Devon Homes (continued)

Other information

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

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 course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether 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 light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors’ Report.

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:

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Independent Auditors’ report to the members of North Devon Homes (continued)

Responsibilities of the Board

As explained more fully in the Statement of the Board’s responsibilities set out on page 31, 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’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 association 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 the financial statements.

The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud.

Based on our understanding of the association and its industry, we considered that non-compliance with the following laws and regulations might have a material effect on the financial statements: employment regulation, health and safety regulation and anti-money laundering regulation.

To help us identify instances of non-compliance with these laws and regulations, and in identifying and assessing the risks of material misstatement in respect to non-compliance, our procedures included, but were not limited to:

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Independent Auditors’ report to the members of North Devon Homes (continued)

We also considered those laws and regulations that have a direct effect on the preparation of the financial statements, such as tax legislation, pension legislation, the Companies Act 2006, the Housing and Regeneration Act 2008 and the Accounting Direction for Private Registered Providers of Social Housing 2019.

In addition, we evaluated the board’s and management’s incentives and opportunities for fraudulent manipulation of the financial statements, including the risk of management override of controls, and determined that the principal risks related to: posting manual journal entries to manipulate financial performance, management bias through judgements and assumptions in significant accounting estimates, in particular in relation to carrying value of fixed assets and the capitalisation of costs, defined benefit pension scheme liability, the classification of loans as basic or other and revenue recognition (which we pinpointed to the cut-off assertion), and significant oneoff or unusual transactions.

Our audit procedures in relation to fraud included but were not limited to:

There are inherent limitations in the audit procedures described above and the primary responsibility for the prevention and detection of irregularities including fraud rests with management. As with any audit, there remained a risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal controls.

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

Use of the audit 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.

Richard Bott

For and on behalf of Mazars LLP

Chartered Accountants and Statutory Auditor 90 Victoria Street Bristol BS1 6DP 12 September 2022

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Consolidated and Association Statements of Comprehensive Income for the year ended 31 March 2022

Group Association Group Association
Note 2022 2022 2021 2021
£’000 £’000 £’000 £’000
Turnover 2 20,052 17,790 21,226 17,436
Operating Expenditure 2 (15,563) (13,320) (15,632) (12,235)
Gain on disposal of property, 3 785 785 741 741
plant and equipment
Operating Surplus 2 5,274 5,255 6,335 5,942
Share of operating loss in 11 - - (2) -
associate
Interest receivable 4 13 42 25 117
Interest and Financing Costs 5 (4,546) (4,546) (4,691) (4,691)
Surplus on revaluation of 10c 467 467 285 285
investment properties
Surplus before taxation 1,208 1,218 1,952 1,653
Taxation 9 - - - -
Surplus for the year 1,208 1,218 1,952 1,653
Actuarial gain/(loss) in respect of 21 1,652 1,652 (1,912) (1,912)
pension schemes
Total Comprehensive 2,860 2,870 40 (259)
Income/(expense) for the year

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Consolidated and Association Statements of Financial Position as at 31 March 2022 Registered number 03674687

Note Group Association Group Association
2022 2022 2021 2021
£’000 £’000 £’000 £’000
Fixed assets
Intangible Assets 10a 1,134 1,134 949 949
Tangible fixed assets – Housing 10b 158,207 158,982 158,855 159,631
Properties
Otherproperty,plant & equipment 10c 2,857 2,763 3,248 3,148
Total fixed assets 162,198 162,879 163,052 163,728
Investments
Investment Properties 10c 2,827 2,827 2,252 2,252
Investment in Subsidiary 11 - 2,300 - 2,300
Investment in Associates 11 101 5 100 5
Other investments 11 399 399 399 399
3,327 5,531 2,751 4,956
Debtors due after more than oneyear 12b 145 1,096 54 1,605
Total investments and debtors due after 3,472 6,627 2,805 6,561
more than one year
Current assets
Debtors 12a 3,763 2,497 2,595 2,309
Stock 13 5,588 71 5,518 257
Cash and cash equivalents 15,419 15,297 14,656 13,918
Total current assets 24,770 17,865 22,769 16,484
Creditors: amounts falling due within 14 (7,501) (3,674) (5,313) (3,344)
oneyear
Net current assets 17,269 14,191 17,456 13,140
Total assets less current liabilities 182,939 183,697 183,313 183,429
Creditors: amounts falling due after
more than one year 15 (117,864) (117,811) (118,933) (118,248)
Defined Benefitpension liability 21 (4,193) (4,193) (5,953) (5,953)
Net assets 60,882 61,693 58,427 59,228
Capital and Reserves
Income & Expenditure reserve 16,829 17,640 13,969 14,770
Revaluation reserve 44,053 44,053 44,458 44,458
60,882 61,693 58,427 59,228

These Financial Statements together with the associated notes on pages 44 to 80 were approved and authorised for issue by the Board on 5 September 2022 and were signed on its behalf by:

Colin Dennis Chair

Iain Springate

Company Secretary

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40

North Devon Homes

Consolidated Statement of Cash Flows for the year ended 31 March 2022

Note Group Group
2022 2021
£’000 £’000
Net cash generated from operating 16 8,897 12,160
activities
Cash flows from Investing Activities:
Purchase of tangible fixed assets (6,499) (6,443)
Proceeds from sale of tangible fixed assets 1,461 1,031
RTB Sharing Agreement (77) (310)
Grant received 4 81
Interest received 13 25
Net cash used in investing activities (5,098) (5,616)
Cash flows from Financing Activities:
Interest paid (4,623) (4,826)
New secured loans 2,730 1,986
Repayment of Borrowings (1,045) (1,464)
Capital element of and finance lease (7) (7)
rental payments
Investments (91) -
Net cash generated (used in)/from (3,036) (4,311)
financing activities
Net increase in cash and cash equivalents 16 763 2,233
Cash and cash equivalents at beginning 16 14,656 12,423
of year
Cash and cash equivalents at end of year 16 15,419 14,656

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North Devon Homes

Consolidated Statement of Changes in Reserves for the year ended 31 March 2022

Group Income and
Expenditure Revaluation
Reserve Reserve Total
£’000 £’000 £’000
Balance as at 1 April 2020 13,929 44,343 58,272
Surplus from Statement of Comprehensive 1,952 - 1,952
Income for the year
Unrealised surplus on revaluation of Fixed Assets - 115 115
Actuarial gain in respect of pension schemes (1,912) - (1,912)
Balance as at 31 March 2021 13,969 44,458 58,427
Surplus from Statement of Comprehensive 1,208 - 1,208
Income for the year
Reversal of unrealised surplus on revaluation of - (405) (405)
Fixed Assets
Actuarial gain in respect of pension schemes 1,652 - 1,652
Balance as at 31 March 2022 16,829 44,053 60,882

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North Devon Homes

Association Statement of Changes in Reserves for the year ended 31 March 2022

Association Income and
Expenditure Revaluation
Reserve Reserve Total
£’000 £’000 £’000
Balance as at 1 April 2020 15,029 44,343 59,372
Surplus from Statement of Comprehensive 1,653 - 1,653
Income for the year
Unrealised surplus on revaluation of Fixed Assets - 115 115
Actuarial gain in respect of pension schemes (1,912) - (1,912)
Balance as at 31 March 2021 14,770 44,458 59,228
Surplus from Statement of Comprehensive 1,218 - 1,218
Income for the year
Reversal of unrealised surplus on revaluation of - (405) (405)
Fixed Assets
Actuarial gain in respect of pension schemes 1,652 - 1,652
Balance as at 31 March 2022 17,640 44,053 61,693

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North Devon Homes

Notes to the Financial Statements for the year ended 31 March 2022

1 Accounting Policies

General Information

North Devon Homes is a registered charity and is a registered provider of social housing. It is a public benefit entity.

Significant accounting policies

The principal accounting policies applied in the preparation of these consolidated statements as required by statute, and separate Financial Statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

Basis of preparation

The Group’s Financial Statements have been prepared in accordance with UK Generally Accepted Accounting Practice (UK GAAP) including Financial Reporting Standard 102 (FRS102), the Housing and Regeneration Act 2008, the Statement of Recommended Practice for Registered Social Housing Providers 2018 (‘SORP 2018’) and comply with the Accounting Direction for Private Registered Providers of Social Housing 2019. The accounts are prepared under the historical cost convention.

North Devon Homes meets the definition of a qualifying entity under FRS102. The following exemptions available under FRS102 in respect of certain disclosures have been applied:

Basis of consolidation

The Group Financial Statements consolidate the Financial Statements of North Devon Homes (the “Association”) and its subsidiary undertaking Anchorwood Limited.

Going concern

The Financial Statements have been prepared on a going concern basis, which the Directors consider to be appropriate for the reasons below.

The Group prepares a 30-year business plan, which is updated and approved on an annual basis. The most recent business plan was approved in May 2022. As part of the business plan approval the Board updated its stress testing and multi-variate scenario testing against the base plan, and particularly considered impacts of a volatile economic environment with high inflation, the cost of living crisis and the impact of this on customers and staff and forecasts of a recession, as a result of the pandemic, Brexit and the war in Ukraine. The stress and scenario testing impacts were measured against loan covenants and cash facilities, with potential mitigating actions identified where these would be necessary.

The Board, after reviewing the Group 30-year business plan and budget for 2022/23, is of the opinion that, taking account of severe but plausible downsides, the Group and Association have adequate resources to continue in business for the foreseeable future.

The Board believes the Group and Association had sufficient funding in place and expects the Group to be able to comply with loan covenants, even with severe scenarios occurring, due to the recovery actions that it has identified and prioritised. The Board has set golden rules and a risk appetite against these in order to ensure that covenant compliance is maintained and early warnings of a downward movement in performance that impacts loan covenants are identified.

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44

North Devon Homes

Notes to the Financial Statements for the year ended 31 March 2022 (continued)

1 Accounting Policies (continued)

Going concern (continued)

Therefore, despite the current challenges of the operating environment, the Board continues to believe that the Group and Association are well placed to manage their business risks successfully and that the Group and Association have adequate financial resources based on current forecasts, to continue in operational existence for the foreseeable future. The Board has therefore continued to adopt the going concern basis in preparing its Financial Statements.

Significant judgements and key sources of estimation uncertainty

The preparation of Financial Statements in conforming with generally accepted accounting practice requires management to make judgements, estimates and assumptions that affect the reported amounts for assets and liabilities 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 Management Judgements have had the most significant effect on amounts recognised in the Financial Statements:

Development expenditure

The Group capitalises development expenditure in accordance with the accounting policy given below. Initial capitalisation of costs is based on management’s judgement that the development scheme is confirmed, usually when Board approval has taken place, including that there is 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.

Onerous contracts

Where construction contracts are loss-making, if management has assessed that the contract is onerous a provision is made based on forecast cost estimates. The provisions will be unwound over the remaining term of the contract.

Categorisation of housing properties

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

Impairment

The Group has undertaken an impairment assessment as part of its preparation of the Financial Statements and in light of the volatile and uncertain economic climate and cost of living crisis. In carrying out the assessment, management has considered the detailed criteria set out in the SORP.

Bank Loan

Where loan agreements contain two-way break clauses in respect of early repayment, these loans have been treated as basic financial instruments, within section 11 of FRS102.

Other key sources of estimation:

Tangible fixed assets

Other than investment properties, tangible fixed assets are depreciated over their useful lives, which 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.

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45

North Devon Homes

Notes to the Financial Statements for the year ended 31 March 2022 (continued)

1 Accounting Policies (continued)

Significant Judgements and key sources of estimation uncertainty (continued)

Defined benefit pension scheme

The Group has obligations to pay pension benefits to certain employees. The cost of these benefits and the present value of the obligation depend on a number of factors including life expectancy, salary increases, inflation, asset valuations and the discount rate applied. Management estimates these factors in determining the net pension obligation in the Statement of Financial Position. The assumptions reflect historical experience and current trends. Further details are given in Note 21.

Impairment of non-financial assets

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

The Group has assessed that the volatile and uncertain economic climate and cost of living crisis represents a trigger for impairment and has undertaken a review which has included the office property fixed asset and Anchorwood’s Taw Wharf scheme. The Group has carried out an assessment of impairment in accordance with the SORP and no impairment losses were identified in the reporting period.

Associates

An entity is treated as an associated undertaking where the Group has a participating interest and exercises significant influence over its operating and financial policies.

The consolidated income and expenditure account includes the Group’s share of the associate’s operating results and in the consolidated statement of financial position, the Group’s share of the Associate’s assets under the equity accounting method. In the results of the Association, associates are accounted for under the cost model.

Turnover

Turnover represents rental income and service charges receivable net of voids, fees and capital grants from local authorities and Homes England, recognised in income on a systematic basis; income from first tranche shared ownership sales and market sales; revenue grants and income receivable from other sources (excluding VAT).

Rental income is recognised on the basis of the amount receivable for the year. Rental income received in advance is disclosed within creditors in the statement of financial position.

Other income, including service charges, is accounted for on the basis of the value of goods or services supplied during the period. Income from first tranche shared ownership sales and properties developed for outright sale is recognised when legal completion occurs.

Surpluses on sales of housing accommodation comprise proceeds from property sales, which are recognised at the date of completion, less the following amounts:

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46

North Devon Homes

Notes to the Financial Statements for the year ended 31 March 2022 (continued)

1 Accounting Policies (continued)

Operating Surplus

Operating surplus is defined as turnover less operating expenses plus gains or losses on disposals prior to adjustments for share in associate profits or losses, finance income and costs, revaluation and fair value adjustments and taxation.

Shared ownership property sales

Shared ownership properties, including those under construction, are split between fixed assets and current assets. The split is determined by the percentage of the property to be sold under the first tranche sale which is shown on initial recognition as a current asset, with the remainder as a fixed asset within property, plant and equipment. Where this would result in a surplus on the disposal of the current asset that would exceed the anticipated overall surplus, the surplus on disposal of the first tranche is limited to the overall surplus by adjusting the costs allocated to current or fixed assets.

Proceeds from first tranche sales are accounted for as turnover in the Statement of Comprehensive Income for the period in which the sale occurs and the cost of sale is transferred from current assets to operating costs. Proceeds from subsequent tranche sales are treated as disposals of fixed assets.

Housing Properties

Tangible fixed assets are stated at cost, less accumulated depreciation. Development cost includes the cost of acquiring land and buildings, the cost of contracted works completed to date, directly attributable development costs and attributable interest charges incurred during the development period. Housing properties in the course of construction and those subject to shared ownership are stated at cost. All costs relating to capital expenditure incurred in the year are included in the Financial Statements at gross value before retentions.

Expenditure on items not separately identified as components is capitalised if the expenditure results in an increase in the net rental stream over the life of the property, over the standard originally assessed when the property was first acquired or constructed.

Capitalisation of development costs

Development costs which arise directly from the construction or acquisition of a property are capitalised to housing properties in the course of construction. Capital expenditure on schemes which are aborted is charged to the Statement of Comprehensive Income in the year in which it is recognised that the schemes will not be developed to completion.

Capitalised interest

Interest on borrowings, to the extent that the borrowings are financing developments, is capitalised up to the date of practical completion of the scheme.

Depreciation

Freehold land and housing properties under construction are not depreciated.

Housing properties

The Association separately identifies the major components which comprise its housing properties and depreciates components on a straight line basis over their individual useful economic lives. The components identified, with their respective economic lives are as follows:

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47

North Devon Homes

Notes to the Financial Statements for the year ended 31 March 2022 (continued)

1 Accounting Policies (continued)

Depreciation (continued)

Component Years Component Years
Structure 100 Pre-cast reinforced concrete
existingwall refurbishments		 20
Bathrooms 30 Electric heating 20
Kitchens 20 Gas heating 30
Doors 30 Solid fuel heating 25
Windows 30 Air andground source heating 20
Electrics/rewires 30 Lifts 25
Gas boilers 15 Roofs 75
Biomass boilers 25

Where a separately identified and depreciated component of an existing property is replaced, the carrying value of the component is expensed within accelerated depreciation and the cost of the replacement component capitalised.

Properties held on long leases are depreciated over the shorter of their estimated useful economic lives and the unexpired term of the lease.

Other tangible fixed assets

Depreciation on other fixed assets is provided for on the following straight line basis:

Asset Years
Freehold office buildings 50
Photovoltaicpanels 30
Freehold office improvements 15
Leasehold office improvements 15 years or over the unexpired term
of the lease
Plant and machinery 10
Furniture, equipment fixtures and
fittings		 5
Computer equipment 3
Motor vehicles 3

Social Housing and other Government Grants

Social Housing Grant (‘SHG’) or other government grant received to subsidise the cost of housing properties is included in creditors. Grants due or received in advance are included as a current asset or liability. SHG received in excess of the cost of housing properties in the course of construction is shown as SHG received in advance and included as a current liability. SHG may be repayable on the sale, change of use or demolition of housing properties. If there is no requirement to repay the grant on disposal, any unamortised grant remaining in creditors is released and recognised as income.

Government Grants received for housing properties are recognised in income over the useful life of the housing property structure. The unamortised element of the grant is recognised as deferred income in creditors.

Grants relating to revenue are recognised in the Statement of Comprehensive Income over the same period as the expenditure to which they relate. Until the revenue grants are recognised as income they are recorded as liabilities.

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48

North Devon Homes

Notes to the Financial Statements for the year ended 31 March 2022 (continued)

1. Accounting Policies (continued)

Non-Government Grants

Grants received from non-government sources are recognised under the performance model. If there are no specific performance requirements the grants are recognised when received or receivable. Where grant is received with specific performance requirements it is recognised as a liability until the conditions are met and then it is recognised as turnover. A grant received before the revenue recognition criteria are satisfied is recognised as a liability.

Impairment

Properties held for their social benefit are not held solely for the cash inflows they generate and are held for their service potential.

An assessment is made at each reporting date as to whether an indicator of impairment exists. If such an indicator exists, an impairment assessment is carried out and an estimate of the recoverable amount of the asset is made. Where the carrying amount of the asset exceeds its recoverable amount, an impairment loss is recognised in the Statement of Comprehensive Income. The recoverable amount of an asset is the higher of its value in use and fair value less costs to sell. Where assets are held for their service potential, value in use is determined using depreciated replacement cost.

An impairment loss is reversed if the reasons for the impairment loss have ceased to apply and included in the Statement of Comprehensive Income.

Following the assessment of the indicators of impairment, it was viewed that the Coronavirus pandemic was a trigger for impairment in relation to housing stock, Work in Progress (WIP) and investment property. An impairment review was undertaken for the following areas:

Following a detailed review, no impairment was identified and so no adjustment to carrying values was required.

Demolition

Where properties are demolished for development, the cost (net of depreciation) of the property, excluding land, is written off to operating costs. The cost of demolition is capitalised as part of the cost of redevelopment. An impairment review is carried out at the point a decision is made to demolish.

Valuation of Investments other than investment properties

Investments are shown at cost less any amounts written off. Provisions are made for reductions in value.

Investment properties

Investment property includes commercial and other properties not held for the social benefit of the Group. Investment property is measured at cost on initial recognition, which includes purchase costs and any directly attributable expenditure and subsequently at fair value at the reporting date. Fair value is determined annually by external valuers. No depreciation is provided. Changes in fair value are recognised in the Statement of Comprehensive Income.

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49

North Devon Homes

Notes to the Financial Statements for the year ended 31 March 2022 (continued)

1. Accounting Policies (continued)

Intangible assets

Intangible assets are stated at historic cost, less accumulated amortisation and any provision for impairment. Amortisation is provided on all intangible assets at rates calculated to write off the cost of each asset on a straight line basis over its expected useful life as follows:

Intangible assets in the process of development are not amortised.

Stock and work in progress

Stock and work in progress is stated at the lower of cost and net realisable value. Properties developed for outright sale and shared ownership first tranche sale are included in current assets as they are intended to be sold. At each reporting date stock and properties held for sale are assessed for impairment. Any impairment losses are recognised in the Statement of Comprehensive Income.

Long-term contracts

Where the substance of a contract is that the contractual obligations are performed gradually over time, revenue and costs are recognised as the contract activity progresses to reflect the partial performance of contractual obligations.

Operating Leases

Leases that do not transfer all the risks and rewards of ownership are classified as operating leases.

Payments under operating leases are charged to the Statement of Comprehensive Income on a straight line basis over the period of the lease.

Finance leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership of the leased asset to the Group.

Assets held under finance leases are recognised initially at the fair value of the leased asset (or, if lower the present value of minimum lease payments) at the inception of the lease. The corresponding liability is included in the statement of financial position within long-term creditors. Lease payments are apportioned between finance charges and reduction of the lease obligation using the effective interest method so as to achieve a constant rate of interest on the remaining balance of the liability.

Rental payments are charged as expenses in the periods in which they are incurred.

Corporation Tax

The Association is a registered charity and is not subject to Corporation Tax on its charitable activities but is subject to tax on any non-charitable activities. Anchorwood Limited is subject to Corporation Tax. The tax expense for the period comprises current and deferred tax.

Deferred taxation is recognised in respect of all timing differences that have originated but not reversed at the Statement of Financial Position date where transactions or events that result in an obligation to pay more tax in the future or a right to pay tax in the future have occurred at the Statement of Financial Position date. Timing differences are differences between the Group’s taxable surpluses and its results as stated in the Financial Statements.

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50

North Devon Homes

Notes to the Financial Statements for the year ended 31 March 2022 (continued)

1 Accounting Policies (continued)

Corporation Tax (continued)

Deferred tax is measured at the average tax rates that are expected to apply in the period in which the timing differences are expected to reverse, based on tax rates and laws that have been enacted or substantially enacted by the Statement of Financial Position date. Deferred tax is measured on a non-discounted basis.

A deferred tax asset is only recognised when it is more likely than not that the asset will be recoverable in the foreseeable future out of suitable taxable surpluses from which the underlying timing differences can be deducted.

Value Added Tax (‘VAT’)

The Association is registered for VAT but a large proportion of its income, including its rents, is exempt for VAT purposes. The majority of its expenditure is subject to VAT which cannot be reclaimed, and expenditure is therefore shown inclusive of irrecoverable VAT.

Anchorwood Limited is separately registered for VAT and is able to reclaim VAT. Its expenditure is shown exclusive of VAT.

Interest Received

Interest earned on short-term investments is accounted for when receivable.

Pensions

Retirement benefits to employees are provided by the Social Housing Pension Scheme (“SHPS”) defined contribution scheme and the Local Government Pension Scheme (“LGPS”) (administered by Devon County Council Pensions) defined benefit pension scheme, details of which are given in Note 21. Past service retirement benefits to employees are also provided by the SHPS defined benefit schemes, details of which are given in Note 21. Pension costs accounted for as defined benefit schemes are in accordance with FRS102 (section 28).

Defined contribution scheme

The Association participates in the SHPS defined contribution scheme where the amount charged to surplus or deficit in the Statement of Comprehensive Income in respect of pension costs and other post-retirement benefits is the contributions payable in the year.

Defined benefit schemes

SHPS

The Association also contributes to the SHPS defined benefit scheme for past service retirement benefits (as the scheme is closed to future accrual). The amounts charged to operating surplus are the costs arising from employee services previously rendered and the cost of benefit changes, settlements and curtailments. They are included as part of staff costs. The net interest cost on the net defined liability is charged to revenue and included within finance costs. Re-measurement, comprising actuarial gains and losses and the return on scheme assets (excluding amounts included in net interest on the net defined benefit liability) is recognised immediately in other comprehensive income.

LGPS

The Association participates in the LGPS which is a multi-employer defined benefit scheme. The amounts charged to operating surplus are the costs arising from employee services rendered during the period and the cost of plan introductions, benefit changes, settlements and curtailments. They are included as part of staff costs. The net interest cost on the net defined liability is charged to revenue and included within finance costs. Re-measurement, comprising actuarial gains and losses and the return on scheme assets (excluding amounts included in net

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North Devon Homes

Notes to the Financial Statements for the year ended 31 March 2022 (continued)

1 Accounting Policies (continued)

Pensions (continued)

interest on the net defined benefit liability) is recognised immediately in other comprehensive income.

Defined benefit schemes are funded, with the assets of the scheme held separately from those of the Association in separate trustee administered funds. Pension scheme assets are measured at fair value and liabilities are measured on an actuarial basis using the projected unit credit method. The actuarial valuations are obtained triennially and are updated at each Statement of Financial Position date.

Revaluation Reserve

The revaluation reserve represents the difference on transition where deemed cost transitional relief was taken, between the fair value of social housing properties and other assets, or those assets that are re-measured annually and the historical cost carrying value.

Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that a transfer of economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

Restricted Reserves

There are currently no restricted reserves.

Financial Instruments

Financial assets and financial liabilities are measured at transaction price initially plus directly attributable transaction costs and are recognised in the statement of financial position when the Association becomes a party to the contractual provisions of the instrument.

Trade and other debtors and creditors are classified as basic financial instruments and measured at initial recognition at transaction price.

Cash and cash equivalents are classified as basic financial instruments and comprise cash in hand and at bank, short-term bank deposits with an original maturity of three months or less and bank overdrafts.

Interest bearing bank loans, overdrafts and other loans which meet the criteria to be classified as basic financial instruments are initially recorded at the present value of cash payable to the bank, which is ordinarily equal to the proceeds received net of direct issue costs. These liabilities are subsequently measured at amortised cost, using the effective interest rate method.

The effective interest rate is the rate that exactly discounts estimated future cash flows through the expected life of the financial asset or liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

Non-basic financial instruments are recognised at fair value using a valuation technique with any gains or losses being reported in surplus or deficit.

Related parties

The Group discloses transactions with related parties which are not wholly owned subsidiaries.

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North Devon Homes

Notes to the Financial Statements for the year ended 31 March 2022 (continued)

2a)
Particulars of turnover,		 operating costs and operating surplus– Group operating surplus– Group
Income and expenditure
from general needs lettings		 2022 2021
TurnoverOperating
Costs		 Operating
Surplus

TurnoverOperating
Costs
Operating
Surplus
/(Deficit) /(Deficit)
£’000 £’000 £’000 £’000 £’000
£’000
Social Housing Lettings 15,883 (12,390) 3,493 15,540 (11,093) 4,447
(note 2b)
Other social housing
activities:
Shared ownership first 460 (278) 182 782 (345) 437
tranche sales
Charges for support 55 (275) (220) 58 (365) (307)
services
Other activities 277 - 277 232 - 232
Non-social housing
activities
Other activities 3,328 (2,620) 708 4,614 (3,829) 785
Other Grants 49 - 49 - - -
Total 20,052 (15,563) 4,489 21,226 (15,632) 5,594

2a) Particulars of turnover, operating costs and operating surplus – Association

Income and expenditure
from general needs lettings		 2022 2021
**Turnover ** Operating
Costs		 Operating
Surplus

Turnover		 Operating
Costs
Operating
Surplus
/(Deficit) /(Deficit)
£’000 £’000 £’000 £’000 £’000
£’000
Social Housing Lettings 15,883 (12,390) 3,493 15,540 (11,093) 4,447
(note 2b)
Other social housing
activities:
Shared ownership first 460 (278) 182 782 (345) 437
tranche sales
Charges for support 55 (275) (220) 58 (365) (307)
services
Other activities 277 - 277 232 - 232
Non-social housing
activities
Other activities 835 (377) 458 824 (432) 392
Gift Aid 231 - 231 - - -
Other Grants 49 - 49 - - -
Total 17,790 (13,320) 4,470 17,436 (12,235) 5,201

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North Devon Homes

Notes to the Financial Statements for the year ended 31 March 2022 (continued)

2b) Particulars of Income and Expenditure from social housing lettings– Group and Association

General Supported 2022 2021
needs Housing Total Total
£’000 £’000 £’000 £’000
Rent receivable net of identifiable service 12,904 2,216 15,120 14,755
charges
Service charge income 209 396 605 628
Amortised Government Grants 158 - 158 157
Turnover from social housing lettings 13,271 2,612 15,883 15,540
Expenditure on lettings:
Management (1,667) (338) (2,005) (1,621)
Service charge costs (447) (471) (918) (839)
Routine maintenance (2,727) (696) (3,423) (3,411)
Planned maintenance (1,072) (217) (1,289) (996)
Major repairs expenditure (1,595) (307) (1,902) (1,316)
Bad debts (31) (5) (36) (31)
Depreciation of housing properties (2,443) (374) (2,817) (2,879)
Operating expenditure on Social Housing (9,982) (2,408) (12,390) (11,093)
Lettings
Operating surplus/(deficit) on social 3,289 204 3,493 4,447
housing lettings
Void losses (53) (28) (81) (108)

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North Devon Homes

Notes to the Financial Statements for the year ended 31 March 2022 (continued)

3 Gain on disposal of property, plant and equipment

Group and Association Right to Right to Strategic Stair- 2022 2021
Buy Sales Acquire Sales casing Total Total
Sales Sales
£’000 £’000 £’000 £’000 £’000 £’000
Proceeds of sales (gross) 369 395 575 122 1,461 1,031
Less costs of sales (173) (129) (63) (63) (428) (215)
196 266 512 59 1,033 816
NDC sharing of proceeds (248) - - - (248) (75)
agreement
Surplus/(deficit) on (52) 266 512 59 785 741
disposal

4 Interest receivable

Group Association Group Association
2022 2022 2021 2021
£’000 £’000 £’000 £’000
Interest receivable 13 42 25 117

5 Interest and financing costs

Group and Association Group Association Group Association
2022 2022 2021 2021
£’000 £’000 £’000 £’000
Net Interest on defined benefit liability pension 118 118 95 95
(see Note 21)
Interest payable 4,349 4,325 4,611 4,513
Funding Management Charge 146 146 112 112
4,613 4,589 4,818 4,720
Borrowing costs capitalised (67) (43) (127) (29)
4,546 4,546 4,691 4,691

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55

North Devon Homes

Notes to the Financial Statements for the year ended 31 March 2022 (continued)

6 Surplus before taxation

Group Association Group Association
2022 2022 2021 2021
£’000 £’000 £’000 £’000
Surplus on ordinary activities before taxation is stated
after charging:
Depreciation of tangible fixed assets 2,965 2,959 3,038 3,033
Amortisation of intangible fixed assets 198 198 32 32
Auditors’ remuneration:
- Statutory Audit 37 29 32 23
- Taxation compliance services 6 4 5 3
- Other services 6 6 4 4
Other operating lease rentals 178 178 181 181

7 Directors’ remuneration and transactions

Group and Association

Key management personnel are the Executive Team who oversee the day-to-day operational running and, working with the Board (Non-Executive Directors) and wider colleagues, identify and execute the Group’s strategic direction. They are detailed on page 3 of these Financial Statements.

The remuneration paid to the Executive Team and the Non-Executive Directors during the year was as follows:

Group and Association

Other 2022 2021
Executive Team Salary emoluments Pension Total Total
£ £ £ £ £
Chief Executive 130,956 4,864 9,503 145,323 143,784
M Gimber
Director of Neighbourhoods 95,239 4,514 6,978 106,731 105,612
M Rostock
Finance Director 94,815 4,465 6,637 105,917 104,822
P Butler
Total 321,010 13,843 23,118 357,971 354,218

The values above include any accrued amounts as at 31 March 2022.

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Notes to the Financial Statements for the year ended 31 March 2022 (continued)

7 Directors’ remuneration and transactions (continued)

Non-Executive Directors

Non-Executive Directors
Group Association Group Association
2022 2022 2021 2021
£ £
£ £
R Stronge (Chair) 9,861 9,861 9,616 9,616
A Butt * 7,699 6,610 7,889 5,583
J Barrah 3,827 3,827 3,414 3,414
D Hay 3,827 3,827 3,414 3,414
S Ingman 3,827 3,827 3,414 3,414
D Lloyd-Evans* 4,915 3,827 5,720 3,414
S Lowther 3,827 3,827 3,414 3,414
S Murray* 3,827 3,827 5,720 3,414
P Oldroyd 6,065 6,065 5,533 5,533
S Sanger-Anderson* 6,221 5,133 5,720 3,414
C Dennis 1,595 1,595 - -
Total 55,491 52,226 53,854 44,630

*non-executive directors who were also non-executive directors of Anchorwood Limited.

Expenses paid during the year to Board Members amounted to £1,453 (2021: £1,442).

No Non-Executive Directors participate in the pension scheme. The three members of the Executive Team are ordinary members of the pension scheme. No enhanced or special terms apply.

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Notes to the Financial Statements for the year ended 31 March 2022 (continued)

8 Employee Information

Group and Association

The average number of persons employed during the year expressed in full-time equivalents was:

2022 2021
No. No.
Office staff 89 88
Maintenance staff 34 28
Wardens, caretakers and cleaners 9 11
132 127
Staff costs for the above employees 2022 2021
£’000 £’000
Wages and salaries 3,894 3,866
Social security costs 380 363
Pension costs 325 297
4,599 4,526

The number of employees during the year, expressed in full-time equivalents whose remuneration exceeded £60k:

exceeded £60k:
2022 2021
No. No.
Remuneration between £60k and £70k 4 4
Remuneration between £70k and £80k - -
Remuneration between £80k and £90k - -
Remuneration between £90k and £100k - -
Remuneration between £100k and £110k 2 2
Remuneration between £120k and £130k - -
Remuneration between £130k and £140k - -
Remuneration between £140k and £150k 1 1

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Notes to the Financial Statements for the year ended 31 March 2022 (continued)

9 Taxation

The tax charge comprises:

Group Association Group Association
2022 2022 2021 2021
£’000 £’000 £’000 £’000
Current tax - - - -
Adjustment in respect of previous - - - -
periods
Total tax per income statement - - - -

The charge for the year can be reconciled to the profit per the income statement as follows:

Group Association Group Association
2022 2022 2021 2021
£’000 £’000 £’000 £’000
Profit for the period 1,476 1,219 2,047 1,653
Tax on profit at standard UK tax
rate of 19% (2021: 19%)		 280 232 389 314
Effects of:
Expenses not deductible for tax 3,403 3,403 - -
purposes
Income not taxable for tax (3,635) (3,635) (314) (314)
purposes
Losses - - (69) -
Effects of group relief/other reliefs (47) - - -
Otherpermanent differences (1) - (6) -
Tax for the period - - - -

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Notes to the Financial Statements for the year ended 31 March 2022 (continued)

10a Intangible assets

Group and Association

Computer
Software
Under Computer
Development Software Total
£’000 £’000 £’000
Cost
As at 1 April 2021 866 159 1,025
Additions 383 - 383
Transfers (1,249) 1,249 -
As at 31 March 2022 - 1,408 1,408
Accumulated amortisation
As at 1 April 2021 - 76 76
Charge for the year - 198 198
As at 31 March 2022 - 274 274
Net book value as at 31 March 2022 - 1,134 1,134
Net book value as at 31 March 2021 866 83 949

Intangible assets are software projects which are amortised on completion in accordance with the accounting policy in Note 1 (page 50).

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Notes to the Financial Statements for the year ended 31 March 2022 (continued)

10b Tangible fixed assets - Housing Properties

Group

Social Shared
housing Ownership
Social Housing property for property Shared
property under letting under Ownership
construction completed construction completed Total
£’000 £’000 £’000 £’000 £’000
Cost or deemed cost
As at 1 April 2021 975 173,715 32 4,680 179,402
Additions 856 - 23 - 879
Component
additions/replacements		 - 1,905 - - 1,905
Disposals (109) (988) - (62) (1,159)
Transfers (840) 840 - - -
As at 31 March 2022 882 175,472 55 4,618 181,027
Accumulated
depreciation
As at 1 April 2021 - 20,390 - 156 20,546
Charge for the year - 2,784 - 33 2,817
(including accelerated
depreciation)
Disposals - (542) - (1) (543)
As at 31 March 2022 - 22,632 - 188 22,820
Net book value as at 31 882 152,840 55 4,430 158,207
March 2022
Net book value as at 31 974 153,326 32 4,524 158,856
March 2021

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Notes to the Financial Statements for the year ended 31 March 2022 (continued)

10b Tangible fixed assets - Housing Properties (continued)

Association

Social Shared
Housing Social Ownership
property housing Property Shared
under property for under Ownership
construction letting construction Completed Total
£’000 completed £’000 £’000 £’000
£’000
Cost or deemed cost
As at 1 April 2021 1,750 173,715 32 4,680 180,177
Additions 856 - 23 - 879
Component
additions/replacements		 - 1,905 - - 1,905
Disposals (109) (988) - (62) (1,159)
Transfers (840) 840 - - -
As at 31 March 2022 1,657 175,472 55 4,618 181,802
Accumulated depreciation
As at 1 April 2021 - 20,390 - 156 20,546
Charge for the year - 2,784 - 33 2,817
(including accelerated
depreciation)
Disposals - (542) - (1) (543)
As at 31 March 2022 - 22,632 - 188 22,820
Net book value as at 31
March 2022		 1,657 152,840 55 4,430 158,982
Net book value as at 31
March 2021		 1,750 153,326 32 4,524 159,632

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Notes to the Financial Statements for the year ended 31 March 2022 (continued)

10c Other Property, Plant & Equipment

Group

Other Fixtures
Investment Office land & and Motor
Properties £’000 buildings Fittings Vehicles Total
£’000 £’000 £’000 £’000 £’000
Cost or valuation
As at 1 April 2021 2,252 3,348 292 1,080 233 7,205
Additions 109 81 - 81 - 271
Revaluation 466 (405) - - - 61
As at 31 March 2022 2,827 3,024 292 1,161 233 7,537
Accumulated
depreciation
As at 1 April 2021 - 541 82 852 230 1,705
Charge for the year - 54 - 94 - 148
As at 31 March 2022 - 595 82 946 230 1,853
Net book value as at 2,827 2,429 210 215 3 5,684
31 March 2022
Net book value as 2,252 2,807 210 228 3 5,500
at 31 March 2021

The Investment Properties, which are all freehold, were valued to fair value at 31 March 2022 based on a valuation undertaken by Vickery Holman Limited, Property Consultants who are independent valuers with recent experience in the location and class of the investment property being valued. The valuations are not reported as being subject to material valuation uncertainty.

As a result of the valuation an adjustment was made to the unrealised surplus on revaluation of fixed assets held in the Revaluation Reserve.

The carrying value of the investment properties that would have been recognised had the assets been carried under the cost model is £1,956k (2021: £1,847k).

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Notes to the Financial Statements for the year ended 31 March 2022 (continued)

10c Other Property, Plant & Equipment (continued)

Association

Other Fixtures
Investment Office land & and Motor
Properties £’000 buildings Fittings Vehicles Total
£’000 £’000 £’000 £’000 £’000
Cost or valuation
As at 1 April 2021 2,252 3,348 292 961 233 7,086
Additions 108 81 - 81 - 270
Revaluation 467 (405) - - - 62
As at 31 March 2022 2,827 3,024 292 1,042 233 7,418
Accumulated
depreciation
As at 1 April 2021 - 541 82 833 230 1,686
Charge for the year - 54 - 88 - 142
As at 31 March 2022 - 595 82 921 230 1,828
Net book value as at 2,827 2,429 210 121 3 5,590
31 March 2022
Net book value as 2,252 2,807 210 128 3 5,400
at 31 March 2021

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Notes to the Financial Statements for the year ended 31 March 2022 (continued)

11 Investments

Group companies

The Group includes the following subsidiary, which is registered in England:

Name Incorporation and Regulated/non- Nature of business
ownership regulated
Anchorwood Limited Company 100% Non-regulated Property
Westacott Road development
Barnstaple
Devon EX32 8TA
Group Association Group Association
Investments 2022 2022 2021 2021
£’000 £’000 £’000 £’000
Investment in Advantage South West LLP 101 5 100 5
Investment in Anchorwood Limited - 2,300 - 2,300
Investment in MORHomes PLC 82 82 82 82
Investment in South West Mutual Ltd 5 5 5 5
Investment in Affordable Housing Finance PLC 312 312 312 312
500 2,704 499 2,704

Advantage South West LLP: The Group’s investment represents a 25% shareholding and capital contribution. The Group’s share of net assets at 31 March 2022 was £101k (2021: £100k) and share of profits for the year was £nil (2021: £2k loss).

Anchorwood Limited: The subsidiary company was established in June 2015. NDH has a 100% shareholding. The net assets at 31 March 2022 were £2,320k (2021: £2,294k) and profit before tax for the year ended 31 March 2022 was £251k (2021: £393k profit).

MORHomes PLC: The Group’s investment represents 82,500 ordinary shares of £0.10 each.

South West Mutual Ltd: The Group’s investment represents 333 of founders’ shares.

Registered office addresses for the investment companies are:

Advantage South West LLP, Collins House, Bishopstoke Road, Eastleigh, Hampshire, SO50 6AD

MORHomes PLC, Future Business Centre, Kings Hedges Road, Cambridge, CB4 2HY

South West Mutual Ltd, Devonport Guildhall, Ker Street, Plymouth, PL1 4EL

Affordable Housing Finance PLC, 3rd Floor, 17 St. Swithin’s Lane, London, EC4N 8AL

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Notes to the Financial Statements for the year ended 31 March 2022 (continued)

12a Debtors – amounts falling due within one year:

Group Association Group Association
2022 2022 2021 2021
£’000 £’000 £’000 £’000
Rental arrears 220 220 204 204
Less provisions for bad debts (165) (165) (165) (165)
55 55 39 39
Prepayments and accrued income 585 585 490 490
Amounts owed by subsidiary company - 107 - 26
Other debtors 3,123 1,750 2,066 1,754
3,763 2,497 2,595 2,309

Included in other debtors is £1.523m (2021: £1.521m) being the value of the Local Government Pension Scheme indemnity that is held in a jointly controlled bank account with Devon County Council as the administering authority.

12b Debtors – amounts falling due after one year:

Group Association Group Association
2022 2022 2021 2021
£’000 £’000 £’000 £’000
Amounts owed by subsidiary company - 951 - 1,551
Other debtors 145 145 54 54
145 1,096 54 1,605

Included in amounts owed by subsidiary company falling due after one year is £143k owed to the Association by Anchorwood Limited, relating to the purchase of photovoltaic panels on 31 March 2017, which is held as a long-term intercompany debt with no repayment date.

The intercompany loan balance at the end of the year was £0.808m (2021: £1.408m). The loan facility (excluding equity) at the end of the year was £4.877m (2021: £4.955m) and is repayable in July 2025. Interest payable during the year was initially at 3 month LIBOR which subsequently reverted to base rate plus 3.35% from 1 January 2022 (2021: LIBOR plus 3.35%).

Other debtors of £145k (2021: £54k) represents amounts placed as additional security with Lloyds Bank PLC in respect of properties released from charge.

13 Stock

Group Association Group Association
2022 2022 2021 2021
£’000 £’000 £’000 £’000
Properties held for sale 71 71 714 251
Work in progress 5,517 - 4,804 6
5,588 71 5,518 257

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Notes to the Financial Statements for the year ended 31 March 2022 (continued)

14 Creditors: amounts falling due within one year

Group Association Group Association
2022 2022 2021 2021
£’000 £’000 £’000 £’000
Rent and other receipts in advance 591 591 801 801
Trade creditors 909 771 216 178
Amounts due under Right to Buy sharing 246 246 76 76
agreement
Social Housing Grant received in advance 157 157 180 180
Other taxation and social security 89 89 78 78
Interest accruals 25 25 33 33
Other creditors 781 - 613 10
Loans 2,315 - 597 -
Accruals and deferred income 2,388 1,795 2,719 1,988
7,501 3,674 5,313 3,344

15 Creditors: amounts falling due after more than one year

Group and association

Group and association
Group Association Group Association
2022 2022 2021 2021
£’000 £’000 £’000 £’000
Loans 104,235 104,235 104,483 104,483
Social Housing Grant Received in advance 13,546 13,546 13,739 13,739
Recycled Capital Grant Fund 30 30 19 19
Finance Lease Liability - - 7 7
Other creditors 53 - 685 -
117,864 117,811 118,933 118,248
Defined Benefit Pension Schemes 4,193 4,193 5,953 5,953
122,057 122,004 124,886 124,201

Other creditors represent S106 public open space and education monies that are due to be paid in later years as sale units are completed.

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Notes to the Financial Statements for the year ended 31 March 2022 (continued)

15 Creditors: amounts falling due after more than one year (continued)

Debt Analysis

Debt Analysis
Group and association Group Association Group Association
2022 2022 2021 2021
Loans £’000 £’000 £’000 £’000
Expiring in 1 year or more but less than 2 years 15,000 15,000 15,000 15,000
Expiring in more than 5 years 89,235 89,235 89,483 89,483
104,235 104,235 104,483 104,483

The weighted average period for which interest rates are fixed is 22 years. All loans are repayable at the end of their fixed rate term. The weighted average total interest rate for all loans was 4.65% (2021: 4.79%). Loan values include £611k (2021£617k) of capitalised fees which are amortised on a straight line basis and £5,552k (2021: £6,791k) of loan premium amortised on a discounted cashflow basis.

The Group had one finance lease with ITEC printers, which was repaid in the year.

Group Association Group Association
2022 2022 2021 2021
Finance Lease Liability £’000 £’000 £’000 £’000
At 1 April 7 7 14 14
Depreciation (7) (7) (7) (7)
At 31 March - - 7 7
Group Association Group Association
2022 2022 2021 2021
Deferred Income – Government Grants £’000 £’000 £’000 £’000
At 1 April 13,916 13,916 13,992 13,992
Grants receivable 3 3 81 81
Transfer to recycled grant (38) (38) - -
Amortisation to comprehensive Income (156) (156) (157) (157)
At 31 March 13,725 13,725 13,916 13,916
Group Association Group Association
2022 2022 2021 2021
£’000 £’000 £’000 £’000
Amounts to be released within one year 157 157 158 158
Amounts to be released in more than one year 13,568 13,568 13,758 13,758
13,725 13,725 13,916 13,916

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Notes to the Financial Statements for the year ended 31 March 2022 (continued)

15a Recycled Capital Grant

Group and Association
2022 2021
£’000 £’000
At 1 April 19 27
Grants recycled in the year 11 -
Interest accrued - -
Withdrawals - -
30 27
Repayment ofgrant - (8)
At 31 March 30 19

Withdrawals from the recycled capital grant fund will be used for the purchase and development of new housing schemes for letting and for approved works to existing properties.

16 Statement of Cashflows Cashflow from operating activities

Group
Group
2022
£’000
2021
£’000
Surplus for the year
1,208
1,952
Adjustment for non-cash items:
Depreciation of tangible fixed assets
2,965
3,038
Amortisation of intangible assets
198
32
Decrease / (increase) in stock
(70)
3,723
(Increase) / decrease in trade and other debtors
(1,168)
(554)
Increase in trade and other creditors
2,996
1,329
Pensions costs less contributions payable
(109)
(145)
Abortive costs written off
-
11
Share of operating deficit/(surplus) in associate
-
2
Adjustments for investing or financing activities
Proceeds from sale of property, plant and equipment
(785)
(741)
Increase in fair value of investment property
(466)
(285)
Government Grants utilised in the year
(158)
(628)
Interest Paid
4,546
4,691
Interest Received
(13)
(25)
Loan Fee amortisation
(247)
(240)
Net cashgenerated from operating activities
8,897
12,160

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Notes to the Financial Statements for the year ended 31 March 2022 (continued)

Analysis of changes in net debt

Analysis of changes in net debt
At 31 March
2022
£’000		 Cashflows
At 31 March
£’000
2021
£’000
Cash and cash equivalents
15,419
Debt due after one year
(104,235)
Finance lease
-		 763
14,656
248
(104,483)
7
(7)
Net debt
(88,816)		 1,018
(89,834)

17 Financial Commitments

Capital commitments are as follows:

Group Association Group Association
2022 2022 2021 2021
£’000 £’000 £’000 £’000
Contracted for but not provided for in the Financial 4,828 3,384 3,296 1,942
Statements
Future expenditure approved by Directors but not 321 321 - -
contracted for at theyear end
5,149 3,705 3,296 1,942

Capital commitments will be funded by a mixture of loan facilities, grants and cash reserves.

Total future minimum lease payments under non-cancellable operating leases are as follows:

Group Association Group Association
2022 2022 2021 2021
£’000 £’000 £’000 £’000
Payments due:-
- Within one year 145 145 125 125
- Between one and five years 79 79 140 140
224 224 265 265

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Notes to the Financial Statements for the year ended 31 March 2022 (continued)

18 Financial Instruments

The Group’s financial instruments comprise debtors, creditors, cash and cash equivalents and loans. All the Financial Instruments are considered to be Basic under the criteria specified under FRS102.

The Association’s financial instruments comprise debtors, creditors, cash and cash equivalents and loans.

Financial Assets Group Association Group Association
Debt instruments measured at amortised cost 2022 2022 2021 2021
£’000 £’000 £’000 £’000
Cash & Cash equivalents 15,419 15,297 14,656 13,918
Debtors 3,178 1,912 2,105 1,819
18,592 17,209 16,761 15,737
Financial liabilities measured at
amortised cost:		 Group Association Group Association
2022 2022 2021 2021
£’000 £’000 £’000 £’000
Borrowings:
Housing Loans 104,235 104,235 104,483 104,483
Total Borrowings 104,235 104,235 104,483 104,483
Other financial liabilities:
Trade creditors 909 771 532 178
Accruals and other creditors 3,440 2,066 3,625 2,010
Finance leases - - 7 7
Total 4,349 2,837 4,164 2,195
Interest income and expense
Group Association Group Association
2022 2022 2021 2021
£’000 £’000 £’000 £’000
Total interest income for financial assets at amortised 13 42 25 117
cost
Total interest expense for financial liabilities at 4,546 4,546 4,691 4,691
amortised cost

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Notes to the Financial Statements for the year ended 31 March 2022 (continued)

19 Housing Stock

Group and Association

Group and Association
2022 2021
Units Units
Social housing
General needs housing:
•
social rent*		 2,278 2,277
•
affordable rent		 426 426
Housing for older people:
•
social rent		 510 510
•
affordable rent		 31 31
Intermediate rent 18 18
Low cost home ownership 75 75
Total owned 3,338 3,337
Accommodation managed for others 16 16
Total managed 3,354 3,353
Non-social housing
Accommodation let at market rent 8 7
Leasehold accommodation 89 89
Total owned and managed 3,451 3,449

*General needs housing - social rent includes 12 (2021: 10) properties owned but managed by others.

There were 2,840 (2021: 2,830) properties with a fixed charge as at 31 March 2022. The net book value of these properties was £100,722k (2021: £101,308k).

20 Related Party transactions

During the year one Executive Officer was a Board member of Advantage South West (“ASW”) in which the Association has a 25% shareholding. The Group’s share of the operating surplus in the year was £nil (2021: £2k deficit). The Association paid membership fees to ASW of £14k (2021: £13k) and there were no amounts owed to ASW at 31 March 2022 (2021: £nil).

The Association has an investment of £2,300k (2021: £2,300k) in the share capital of its non-regulated subsidiary Anchorwood Limited and £808k (2021: £1,408k) in loans. As Anchorwood Limited is a wholly owned subsidiary, the exemption available under Financial Reporting Standard 8 has been applied and details of inter-company transactions in the year have not been disclosed.

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Notes to the Financial Statements for the year ended 31 March 2022 (continued)

21 Pensions

Retirement benefits to employees are provided by the Social Housing Pension Scheme (SHPS) and the Local Government Pension Scheme (LGPS) which is administered by Devon County Council Pensions. The pension costs for the year were:

2022 2021
£’000 £’000
Devon County Council
Service cost 71 50
Administration Expenses 3 3
74 53
Social Housing Pension Scheme
Employer contributions 231 236
Administration Expenses 20 8
251 244
Total payments 325 297

The actuarial gains and losses in respect of the pension schemes for the year were:

2022 2021
£’000 £’000
Actuarial gain / (loss)
Devon County Council Pension Scheme 548 (463)
Social Housing Pension Scheme 1,104 (1,449)
1,652 (1,912)

Defined benefit pension liability in respect of the pension schemes for the year:

2022 2021
£’000 £’000
Devon County Council Pension Scheme 3,183 3,679
Social Housing Pension Scheme 998 2,263
SHPS deficit payment in advance 12 11
4,193 5,953

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Notes to the Financial Statements for the year ended 31 March 2022 (continued)

21 Pensions (continued)

Devon County Council Pension Scheme (DCCPS)

The DCCPS is a multi-employer scheme, administered in accordance with the Local Government Pension regulations, a defined benefit scheme. The most recent formal actuarial valuation was completed as at 31 March 2019 and rolled forward, allowing for the different financial assumptions required under FRS102, to 31 March 2022 by a qualified independent actuary.

The net defined benefit liability at the year ended 31 March 2022 is £3,183k (2021: £3,679k).

The employer's contributions to the DCCPS Fund by the association for the year ended 31 March 2022 were £93k (2021: £90k) at a contribution rate of 22.2% of pensionable salaries. The employer's contribution rate for the year ending 31 March 2023 has been set at 22.2%. Estimated employer's contributions to the DCCPS Fund during the accounting period commencing 1 April 2022 are £94k.

Statement of financial position

Net pension asset as at 2022 2021
£’000 £’000
Present value of the defined benefit obligation 7,896 8,226
Fair value of Fund assets (bid value) 4,747 4,583
Deficit 3,149 3,643
Present value of unfunded obligation 34 36
Net defined benefit liability 3,183 3,679
Reconciliation of opening and closing balances of the present 2022 2021
value of the defined benefit obligation £’000 £’000
Opening defined benefit obligation 8,262 7,001
Current service cost 71 50
Interest cost 159 162
Change in financial assumptions (298) 1,501
Change in demographic assumptions - (78)
Experience loss/(gain) on defined benefit obligation 13 (96)
Estimated benefits paid net of transfers in (284) (285)
Contributions by Scheme participants and other employers 9 9
Unfunded pension payments (2) (2)
Closing defined benefit obligation 7,930 8,262

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Notes to the Financial Statements for the year ended 31 March 2022 (continued)

21 Pensions (continued)

Devon County Council Pension Scheme (DCCPS) (continued)

Reconciliation of opening and closing balances of the fair value 31 Mar 2022 31 Mar 2021
of Fund assets £’000 £’000
Opening fair value of Fund assets 4,583 3,822
Interest on assets 88 88
Return on assets less interest 263 864
Administration expenses (3) (3)
Contributions by employer including unfunded 93 90
Contributions by Scheme participants and other employers 9 9
Estimated benefits paid plus unfunded net of transfers in (286) (287)
Closing fair value of Fund assets 4,747 4,583
Amounts recognised in statement of comprehensive income 31 Mar 2022 31 Mar 2021
£’000 £’000
Service cost 71 50
Administration expenses 3 3
Amounts charged to operating costs 74 53
Net interest (charged to other finance costs) 71 74
Total loss 145 127
Re-measurement of net assets / (defined liability) in other 31 Mar 2022 31 Mar 2021
comprehensive income £’000 £’000
Return on Fund assets in excess of interest 263 864
Change in financial assumptions 298 (1,501)
Change in demographic assumptions - 78
Experience gain/(loss) on defined benefit obligation (13) 96
Re-measurement of the net assets / (defined liability) 548 (463)

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Notes to the Financial Statements for the year ended 31 March 2022 (continued)

21 Pensions

Devon County Council Pension Scheme (DCCPS) (continued)

Principal actuarial assumptions:

Financial assumptions 31 Mar 2022 31 Mar 2021
**% pa ** % pa
Discount rate 2.60% 1.95
Future salary increases 4.35% 3.90
Future pension increases 3.35% 2.90
Inflation assumption (CPI) 3.35% 2.90

Mortality assumptions

The post-retirement mortality assumptions adopted to value the benefit obligation at March 2022 and March 2021 are based on the S2PA tables. The assumed life expectations on retirement at age 65 are:

31 Mar 2022 31 Mar 2021
no. ofyears no. ofyears
Males retiring today 22.7 22.6
Females retiring today 24.0 23.9
Males retiring in 20 years 24.0 24.0
Females retiring in 20 years 25.4 25.4

The estimated asset allocation for North Devon Homes as at 31 March 2022 is:

Asset breakdown 31 March 2022 31 March 2022 31 March 2021 31 March 2021
£000 % £000 %
Gilts 632 13 156 3
UK equities 423 9 508 11
Overseas equities 2,387 50 2,367 52
Property 447 9 368 8
Infrastructure 268 6 186 4
Target return 439 9 431 9
portfolio
Cash 56 1 47 1
Other bonds 97 2 205 4
Alternative assets (2) - 315 7
Total 4,747 100 4,583 100

The individual percentages shown are to the nearest percentage point for each asset class and may not sum to 100%.

“... working together to create communities where people want to live”

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North Devon Homes

Notes to the Financial Statements for the year ended 31 March 2022 (continued)

21 Pensions (continued)

Social Housing Pension Scheme (SHPS)

SHPS is a multi-employer, defined benefit scheme. The most recent formal actuarial valuation was completed as at 30 September 2020.

Under the defined benefit pension accounting approach, the SHPS net deficit as at 31 March 2022 is £998k (2021: £2,263k).

Statement of financial position

Net pension asset 31 Mar 2022 31 Mar 2021
£’000 £’000
Present value of defined benefit obligation 8,933 9,293
Fair value of plan assets 7,935 7,030
Net defined benefit liability (998) (2,263)

Reconciliation of opening and closing balances of the present value of scheme liabilities

£’000

Opening scheme liabilities as at 1 April 2021 9,293
Current service cost -
Expenses 8
Interest expense 204
Actuarial losses due to scheme experience 466
Actuarial (gains) due to changes in demographic assumptions (132)
Actuarial (gains) due to changes in financial assumptions (820)
Benefits paid and expenses (86)
Closing scheme liabilities as at 31 March 2022 8,933

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North Devon Homes

Notes to the Financial Statements for the year ended 31 March 2022 (continued)
21
Pensions (continued)
Social Housing Pension Scheme (SHPS) (continued)
Reconciliation of opening and closing balances of the fair value £’000
of plan assets
Opening fair value of plan assets as at 1 April 2021 7,030
Interest income 157
Experience on plan assets (excluding interest) 618
Contributions by employer 216
Benefits paid and expenses (86)
Closing fair value of plan assets as at 31 March 2022 7,935
Amounts recognised in statement of comprehensive income 2022
£’000
Expenses 8
Amounts charged to operating costs 8
Net interest 47
Amounts charged to other finance costs 47
Defined benefit costs recognised in statement of comprehensive income 55
Defined benefit costs recognised in other comprehensive 31 Mar 2022
income £’000
Experience on plan assets 618
Experience (losses) on the plan liabilities (466)
Effects of changes in the demographic assumptions 132
Effects of changes in the financial assumptions 820
Total amount recognised in other comprehensive income 1,104

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North Devon Homes

Notes to the Financial Statements for the year ended 31 March 2022 (continued)

21 Pensions (continued)

Social Housing Pension Scheme (continued)

Principal actuarial assumptions:

Financial assumptions 31 Mar 2022 31 Mar 2021
% pa % pa
Discount rate 2.78 2.21
Future Salary increases 4.14 3.87
Future Pension increases 3.17 2.91
Inflation assumption (RPI) 3.47 3.22
Inflation assumption (CPI) 3.14 2.87

Mortality assumptions

The mortality assumptions adopted at 31 March 2022 imply the following life expectancies:

31 Mar 2022
no. ofyears
Males retiring today 21.1
Females retiring today 23.7
Males retiring in 20 years 22.4
Females retiring in 20 years 25.2

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North Devon Homes

Notes to the Financial Statements for the year ended 31 March 2022 (continued)

21 Pensions (continued)

Social Housing Pension Scheme (continued)

Major categories of plan assets as a percentage of total plan assets

Asset breakdown 31 March 2022 31 March 2022 31 March 2021 31 March 2021
£000s % £000s %
Global equity 1,523 19 1,120 16
Absolute return 318 4 388 6
Distressed opportunities 284 4 203 3
Credit relative value 264 3 221 3
Alternative risk premia 262 3 265 4
Fund of hedge funds - - 1 -
Emerging markets debt 231 3 284 4
Risk sharing 261 3 256 4
Insurance-linked 185 2 169 2
securities
Property 214 3 146 2
Infrastructure 565 7 469 7
Private debt 203 3 168 2
Opportunistic illiquid 267 3 179 3
credit
High yield 68 1 210 3
Opportunistic credit 28 - 193 3
Cash 27 - - -
Corporate bond fund 529 7 415 6
Liquid credit - - 84 1
Long lease property 204 3 138 2
Secured income 296 4 292 4
Liability driven investment 2,215 28 1,786 25
Currency hedging (31) - - -
Net current assets 22 - 43 1
Total 7,935 100 7,030 100

The individual percentages shown are to the nearest percentage point for each asset class and may not sum to 100%.

22 Group Members North Devon Homes is the parent undertaking and has one subsidiary being Anchorwood Limited.

23 Legislative provision The Association is a company limited by guarantee and is registered with the Regulator of Social Housing under the Housing and Regeneration Act 2008.

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