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2023-09-30-accounts

ABILITY HOUSING ASSOCIATION

Report and Financial Statements For the year ended 30[th] September 2023 Registered Company No. 01261380

ABILITY HOUSING ASSOCIATION

Report and Financial Statements for the year ended 30 September 2023

Contents

CONTENTS PAGE
Company Information 3
Report of the Board 4
Operating and financial review and strategic report 7
Statement of the responsibilities of the Board for the report and 18
financial statements
Independent Auditor’s Report 20
Statement of comprehensive income 24
Statement of changes equity (reserves) 25
Statement of financial position 26
Statement of cash flows 27
Notes to the financial statements 28

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ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2023

Company Information

Company registraton number: 01261380
Regulator of Social Housing registraton number: LH2174
Charity number: 271547
Registered ofce and principal address: The Coach House
Gresham Road
Staines Upon Thames
Middlesex
TW18 2AE
The Board: Sally Reay (Chair)
Dominic Wallace
Jai Dosanjh
Dritan Uka
Tim Jennings
Vimal Gaglani
Mandy Dunstan
Lynsey van Aswegen
Kimberley Ellis (appointed 22ndMarch 2023)
Rinat Abdrasilov (appointed 22ndMarch 2023)
Senior Management Team:
Chief Executve Jefrey Skipp
Director of Finance Marcus Andrews (appointed 15thDecember 2022)
Director of Resources Peter Gardiner (lef 31stJanuary 2023)
Director of Operatons (Housing) Lucy Sivasundram
Company Secretary: Marcus Andrews
Bankers: Barclays
1 Churchill Place
London
E14 5HP
Solicitors: Devonshires
30 Finsbury Circus
London
EC2M 7DT
Auditors: Beever and Struthers
Statutory Auditor
The Colmore Building
20 Colmore Circus Queensway
Birmingham
B4 6AT

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ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2023

Report of the Board

The Board presents its report and audited financial statements for Ability Housing Association (‘The Association’) for the year ended 30 September 2023.

The financial statements have been drawn up under United Kingdom Generally Accepted Accounting Practice, including FRS 102 (‘the financial reporting standard applicable in the UK and Republic of Ireland’). The Association is registered under the Companies Act 2006 as a company limited by guarantee incorporated in England. It is registered with both the Charity Commission and the Regulator of Social Housing (formerly the Homes and Communities Agency) as a Registered Provider.

Principal activities and public benefit

The Association’s principal activities are the provision, by construction or conversion, and the management of housing for people with disabilities and others in housing need and the provision of care and support to those individuals.

The Association is classified as a public benefit entity. The Board confirms that it has referred to the guidance contained in the Charity Commission’s general guidance on public benefit when reviewing the Association’s aims and objectives and in formulating future plans.

Business review and future development

Details of the Association’s performance for the year and future plans are set out in the Operating and Financial Review that follows this report.

Employees

The Association is accredited as an Investor in People. Salary levels are set in relation to the market and meet or exceed the requirements of the National Living Wage.

We are committed to equality of opportunity for all employees, and we monitor our recruitment processes to ensure that a diverse workforce is recruited and nurtured.

The Association shares information on its objectives, progress and activities through regular office and departmental meetings.

Health and safety

The Board is aware of its responsibilities on all matters relating to health and safety. The Association has employed an external advisor to prepare detailed health and safety policies, ongoing support and provides staff training and education on health and safety matters.

Board members and executive directors

The present Board members and the executive directors of the Association are set out on page 3. The Board members are drawn from a wide background bringing together professional, commercial and local experience.

The executive directors are the chief executive and the other members of the Association’s senior management team. They hold no interest in the Association’s shares and act as executives within the authority delegated by the Board. The executive directors are employed on the same terms as other staff, their notice periods being six months.

Insurance policies indemnify Board members and officers against liability when acting for the Association.

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ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2023

Report of the Board

Pensions

The Association contributes to the Social Housing Pension Scheme defined contribution pension for all staff not enrolled in a defined benefit scheme or opted out. This is Ability’s auto-enrolment pension scheme. A small number of staff are members of Local Government Pension Scheme, a defined benefit final salary pension scheme. A number of former staff members are enrolled in the defined benefit final salary element of the Social Housing Pension Scheme.

NHF Code of Governance

The NHF Code of Governance 2020 was adopted during 2022-23 following a full review and update of the Articles of Association and the key operating policies of the company to ensure compliance with the new code. Ability complies with the principal recommendations of the NHF Code of Governance with the exception that terms of office may be extended beyond six years by consent of the Board.

At the AGM held on 22[nd] March 2023, Kimberley Ellis and Rinat Abdrasilov were appointed to the Board.

Fraud

There were no frauds in the year.

Internal controls assurance

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

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

The process for identifying, evaluating and managing the significant risks faced by the Association is continuing, and has been in place throughout the period commencing 1[st] October 2022 up to the date of approval of the annual report and financial statements. The Board receives and considers reports from management on these risk management and control arrangements at each meeting during the year.

Key elements of the control framework include:

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ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2023

Report of the Board

The Board cannot delegate ultimate responsibility for the system of internal control, but it can, and has, delegated authority to the Audit, Finance & Risk Committee (‘The Committee’) to review the effectiveness of the system of internal control on a regular basis. The Board receives reports from the Committee together with minutes of meetings.

The means by which the Audit, Finance & Risk Committee reviews the effectiveness of the system of internal control include considering risk reports, internal audit reports, management assurances, the external audit findings report and specialist reviews on areas such as support service contracts, health and safety and housing services. The Committee has received reports from the internal auditor and has reported its findings to the Board. The Board receives regular reviews from the Chief Executive of the effectiveness of the system of internal control for the Association and in turn conducts its own reviews through the year of the effectiveness of the system of internal control.

A fraud register is maintained and is reviewed by the Audit, Finance & Risk Committee at least twice a year.

The Board is therefore satisfied that the systems of internal control are sufficiently robust and have been operating throughout the year.

Statement of compliance

The Board confirms that the Strategic Report has been prepared in accordance with the principles set out in paragraph 4.7 of the 2018 SORP for Registered Social Housing Providers.

Post balance sheet events

As far as the Board is aware, there have been no significant post-balance sheet events.

The Report of the Board was approved by the Board on 28[th] February 2024 and signed on its behalf by:

Sally Reay Chair

Dominic Wallace Board Member

Marcus Andrews Secretary

Page 6 of 53

ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2023

Operating and Financial Review and Strategic Report

Overview of the Financial Year

The Social Housing (Regulation Act) received Royal assent in July 2023 and is the most significant piece of legislation affecting social landlords for many years. The purpose of the act is to “reform the regulatory regime to drive significant change in Landlord behaviour”, which fundamentally alters the landscape of social housing, placing greater expectations on social landlords and increasing the rights of tenants. During the year we have focused on how we can improve our tenant offer and ensure our services meet and exceed the requirements of the Act. We have particularly focussed on tenant engagement and how we can meaningfully engage at an individual, estate, and corporate level. During the coming financial year we will be working with Tpas (previously known as tenant participation advisory service) to co-produce our engagement strategy with our residents and key stakeholders.

We have reviewed our housing management offer and particularly the support we offer to tenants to sustain their tenancy and remain valued members of their community. To achieve this, we have enhanced our housing support plans providing targeted housing support to individuals, maximising the independence of each tenant.

During the year we experienced a drop in performance with a significant repairs contractor due to recruitment and retention issues, particularly relating to skilled tradespeople which impacted on the completion times for repairs and void turnaround times. To ensure residents received the requisite quality of service, we commissioned additional contractors during the year to ensure repairs and void works were completed on time. We have addressed this matter through both robust contract management and streamlining of processes with our main contractor, to ensure that repairs are being delivered to the required standard, although this has resulted in a significant increase in repairs spend in the year. We continue to monitor the performance of the contractor closely to ensure a good quality service is delivered to residents.

Our care and support services have delivered high quality care and support services as judged by the Care Quality Commission and via local authority contract monitoring outcomes. Our customer satisfaction survey demonstrated satisfaction with our services is in excess of 90%. We have been accepted onto a number of local authority framework agreements over the year and will continue to seek opportunities to develop and increase our organisational reach over the coming year.

Housing, Property and Asset Management

Ability Housing owns and manages 650 properties (plus some office accommodation) across 31 local authority areas in London and the South East, from Hastings to Bournemouth and Essex to Oxfordshire. We provide accessible housing for people who want to live more independently and focus our service delivery and improvement plans on achieving this.

Housing

There are five key commitments made in the Customer Strategy that are as follows;

  1. We will communicate well and resolve problems

  2. We will ensure the good state of your home

  3. We will provide a supportive, proactive, and responsive Housing Management service

  4. We will have meaningful engagement with our customers

  5. We will provide a supportive and personalised service to our customers

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ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2023

Operating and Financial Review and Strategic Report

The year to 30 September 2023 was year two of the implementation of the Customer Strategy, and the focus has been on further enhancing our Intensive Housing Management Offer to customers with access to the revision of a Hardship Policy in response to the ‘cost of living’ challenges known to be impacting customers.

In order to deliver this revised Intensive Housing Management Offer we have focused on ensuring that every Ability customer has the opportunity to access our IHM support through the agreeing of an Intensive Housing Management Support Plan. 100% of our customers were therefore offered an IHM visit, following which the frequency of contact and level of support was agreed by our Housing and Support Officers with individual customers.

We also completed a programme of tenancy audit visits on 83% of our properties where the property condition is also checked to ensure that any repairs issues can be addressed, or property condition concerns managed via an Intensive Housing Management Support Plan.

App based technology have also been introduced for use within the housing team which allows for efficiencies to be made in the completion of routine inspections such as estate and property inspections, and in the recording of the inspections. This in turn has further enhanced the data we hold on our properties.

With the Contact Centre in its second year focus was also given to implementing processes to improve the quality of the service provided to customers and reducing customer effort.

Reporting on performance within the contact centre has included the monitoring of call waiting times, and the number of abandoned calls with a target set of answering all calls within 30 seconds. In addition, we have also introduced a wider offer to customers in how they contact us through options such as requesting automatic call backs, and reviewing how customers can contact us via the Ability website.

We have also changed our structure within the Housing team to ensure that there is a focused resource on managing rent arrears, and our customers are supported to access the financial support they are entitled to in paying their rent and service charges.

An Asset Management Strategy was also launched in the year. This strategy has been developed to provide clarity on what is needed to ensure we deliver high quality homes and levels of service to our customers, in the right locations and that are affordable to the organisation.

It focuses on the next five years and as such concentrates on what are considered the fundamentals for delivery in asset management over this period:

For this financial year this meant identifying those homes where they had an EPC C or lower and developing a plan to improve that rating as soon as possible.

We also reviewed our repairs offer to customers, ensuring that it allowed us to maintain our homes to Decent Homes Standard whilst also considering how we can respond to the individual needs of our customers where the need is outside of this offer.

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ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2023

Operating and Financial Review and Strategic Report

The principles of how customer engagement can work for Ability on an individual, local and corporate level were also explored with a view to relaunching a customer engagement strategy in the next financial year.

This has included how we can deliver the Tenant Satisfaction Measures Perception Survey in a way that is accessible to our customers and provide us with the information required to shape our services and continuously improve.

Property

With the introduction of a new repairs and maintenance contractor in the previous financial year, this year has been focused on refining processes to ensure our delivery of these services continues to improve both in terms of quality and on target. Within this we have reviewed and changed the skillsets required of the job roles within the contact centre team to support the accuracy of diagnosis and triaging of repairs together with further embedding partnership working with our contractors.

Our response to cases of damp and mould has also been reviewed with roles and responsibilities in the management of these cases being refined, with a greater role for housing frontline staff to support in the management and review of these cases.

With the launch of our Asset Management Strategy to customers and the defining of our approach in working towards the 2030 EPC C, and 2050 net zero target.

A five-year planned maintenance programme was also introduced which will see us investing circa £850k into our homes.

In addition, within our planned maintenance programme for this financial year we also completed four kitchen and two bathroom replacements, four complete windows and doors replacements, three full heating system upgrade and thirty four boiler replacements.

The Asset Management Strategy has also defined our core geographical operating areas and details under which circumstances we would consider the disposal of some of our properties. With these disposals we will seek to re-provide these units within our core areas by recycling grant wherever possible to develop additional supported housing units. As part of this strategy, we also committed to considering the viability of all our housing schemes for conversion to Ability Care and Support schemes.

Quality Management

As part of our commitment to delivering value for money by finding efficiencies in methods of working, an app-based system has been introduced on which Housing and Support Officers can complete Estate Inspections. This ensures consistency in how estate inspections are conducted, whilst providing immediate access to systems to measure the quality of these services.

In addition to estate inspections, property-based inspections are now completed on this system, which again creates efficiencies to allow for post completions to be conducted on voids, and repairs.

IHM Support Plans are also now reviewed routinely as part of the 1-2-1 process to ensure identified needs are being effectively met.

Monthly KPI’s are produced by both the Housing and Property team. These KPI’s are submitted by officers and verified by the appropriate operational manager before being discussed with the Operations Director. This meeting allows any concerns or trends to be identified in the data, and responsive action taken as a result before the figures are then presented to SMT monthly, and Board quarterly for review and discussion.

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ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2023

Operating and Financial Review and Strategic Report

The introduction of a monthly directorate review of complaints learnings to ensure these learnings are embedded in service delivery.

Finally, a fortnightly voids and lettings meeting is also held where the voids process and lettings process is scrutinised by operational leads within Ability. This ensures the sourcing of applicants, and progression of letting a void has clear oversight and has seen an improvement in our void turnaround performance as a result.

Staffing

The success of our service delivery within housing is reliant on recruiting the right people with the skills, knowledge and values that align with our service delivery ambitions.

We have therefore continued to review and adapt our approach to recruitment to ensure that we are recruiting the right people to the organisation.

In addition, we have also reviewed the induction process within housing to ensure that the retention of these people, providing them with the right level of support to be successful in their roles.

We have also continued to review our training offer which ensures that the opportunities for personal development are promoted to colleagues, and there are windows within the financial year for employees to make applications for professional training to support their development.

Ability knows that the right people being recruited and retained within the business is the key to our success in delivering our services to customers and we will therefore continue to support and develop our people to the highest standard.

Care and Support

Ability Care and support delivers services in four local authority areas in the south-east of England, supporting our customers to live independently in the community. We provide supported living and community support in people’s homes for people with a learning disability, physical disabilities, and mental health needs.

Delivering high quality Support Services

Our annual care and support customer satisfaction survey showed over 95% of customers were satisfied with the service they received. Results were as follows:

Q1 Ability staff help me feel safe in my home 95.92%
Q2 There is some flexibility in the way I receive my support as
sometimes I don't want to stick to a fixed plan		 97.96%
Q3 I feel that staff listen to me and I feel comfortable discussing and
planning my support with them		 97.96%
Q4 If I am not happy I know who to talk to 95.92%
Q5 Staff know what is important to me and how I like to live my life 97.28%

(Of the 228 surveys sent Ability received 147 responses, equating to a 64.47% return rate)

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ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2023

Operating and Financial Review and Strategic Report

Based upon the views of customers at each of our services, we have developed service specific development plans which seek to improve the service customers receive and increase the quality of support provided at each service.

All our services have delivered high performing services during the year as measured by our performance indicators and quarterly quality audits. Our high performance has been validated by local authority quality monitoring and all of our services registered with the Care Quality Commission have retained ratings of Good.

During the year we have further focused our services on delivering outcome focused support, seeking to maximise the control and choice each customer has over their lives. We have further developed our personcentred planning tools, ensuring customers are at the centre of the service they receive. We have rolled out training across care and support services in strength based approaches to support, focusing on the persons strengths and talents, ensuring the things most important to our customers are our focus and utilising community facilities and assets to meet their aspirations.

To recruit, retain and develop an engaged workforce

Only by recruiting, retaining, and developing an engaged workforce, can we deliver great services. During the year we have reviewed our recruitment and retention processes and focused on re-launching our ‘refer a friend’ scheme. We have increased the number of manager and staff engagement events, communicating and involving staff across the organisation in the development and continual improvement of our services. We have sought to promote recruitment and retention through a number of initiatives these include:

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ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2023

Operating and Financial Review and Strategic Report

We have continued to invest significantly in training and development across the organisation. All our managers and senior support workers have completed “Lead to Succeed” our management development programme alongside rolling out new training and development opportunities to all staff, ensuring they have the skills and knowledge to excel in their role.

To grow our services and increase our reach

We focussed developing our services through organic growth and new contracted business. We have achieved organic growth through allocating accommodation to people with higher support needs in our existing services. This has supported people who in the past would have lived in other more institutionalised settings to live independent lives with the necessary support in our supported living accommodation.

Our new business activity has focussed on applying to be included on local authority framework agreements and direct purchasing systems (DPS). We have been accepted as an approved provider by a number of councils and have other applications pending. As a result of being accepted on We expect to increase our growth and reach through extending our services into new areas in the South East of England in the coming year.

To maintain financial sustainability

The most significant challenge to maintaining financial sustainability in care and support is securing adequate local authority fee increases particularly during a period of high inflation alongside significant increases to the National Living Wage hourly rate. Ability supports the increase to the national living wage and seek to pay our care and support workers above these rates, this can only be sustained if local authority annual inflationary increases match both wage and broader inflationary increases. Whilst we acknowledge the financial pressures facing local authorities in England without ongoing sustainable inflationary increase Ability and all other care and support providers will struggle to sustain the viability of the care and support services they provide.

Ability’s Plans for the future

The board approved Ability Housing associations new corporate plan - Better Together which sets out our key objectives to September 2026. Our key objectives for this period are as follows:

Ability’s service approach is based on the principles of personalisation and co-production. As an organisation we focus on each individual, providing customised services that give people choice, control and autonomy over their lives. This means we tailor the support we deliver to the needs and wishes of each individual, seeking to understand their aspirations and tailoring our support to maximise their opportunities to achieve these.

Over the next three years our corporate plan focuses on the following key objectives:

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ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2023

Operating and Financial Review and Strategic Report

Provide Good Quality Homes and Neighbourhoods

Ability seeks to maintain all its properties to a high standard and deliver a responsive and high-quality repairs service to our residents. We know there have been issues with this service and we have not always delivered to the expected standard. We are actively working with our contractors to improve performance with an improvement plan already in place, we will see ongoing improvements throughout the implementation of this plan, leading to the delivery of a timely and qualitive responsive repairs service to all our residents.

Over the next three years, we will invest significantly in our existing homes, we will bring our most energy inefficient homes up to EPC C or above, saving tenants money on utility costs and ensuring Ability minimises its carbon footprint as an organisation. We will also invest £850K in planned maintenance over the next three years, ensuring our homes are well maintained and provide good living environments for our residents.

Our Housing & Support officers (HSOs) will undertake a property MOT every year and for those residents who require more support, offer ongoing visits to ensure any repair needs are reported and fixed quickly. HSOs carry out estate inspections every six weeks ensuring landlord health and safety compliance and to review the general condition of the estate. Moving forward, HSOs will invite residents to accompany and participate in estate visits so these maybe carried out jointly - providing opportunities to engage and discuss any ideas or issues residents wish to raise which will enhance the estate and neighbourhood in which they live.

Deliver high quality Housing Management & Support Services

Involving and listening to our residents is key to delivering excellent services and ultimately the successful delivery of our corporate plan. We are committed to meaningful engagement with our residents individually, at a scheme and estate level as well as organisationally. We will ensure residents are fully involved in shaping the service they receive and that they will have opportunities to be involved with future planning and the direction of Ability Housing.

To Recruit, Retain and Develop an Engaged Workforce

We know that only by having great staff can we deliver great services. Since the Covid-19 pandemic we have experienced increased challenges in recruiting and retaining staff in both our Housing, and Care & Support services. Within the first 12 months of this plan, we will be reviewing and publishing a people strategy.

To grow our services and increase our reach

Owing to less favourable grant terms available to develop new Supported Housing units, and the challenging financial environment in which Supported Housing operates, it has not been viable for Ability to have an active housing development programme in recent years. However, during the course of this plan we will be looking to dispose of properties when they become void if they do not meet Ability’s accessibility standards or the costs of achieving EPC C or above are financially unviable. With the opportunities offered by such stock rationalisation Ability will be seeking to complete small scale developments to maintain the number of Supported Housing units we offer over the period of this plan. We will seek to reinvest such monies in Supported Housing schemes for people who require housing, and/or care and support.

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ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2023

Operating and Financial Review and Strategic Report

Ability Housing Association’s Care & Support services operate in a challenging economic environment, and with low financial margins economy of scale is important. We have seen the volume of our Care & Support services decrease over the last two years, primarily due to decisions to exit unviable contracts where local authorities are unable or unwilling to raise fees to a level that constitutes Full Cost Recovery (FCR) and being unsuccessful when re-tendering for an existing contract. We are committed to growing our Care & Support services, increasing our reach, and supporting greater numbers of disabled people alongside increasing turnover and generating greater economies of scale.

To maintain financial sustainability and deliver value for money

To successfully deliver our corporate plan and deliver on our objectives by 2026, strong financial management and a focus on value for money (VfM) in everything we do will be key. With plans to improve our homes, offer excellent customer services and develop our people we will require significant investment over the period of this plan. The current operating environment is uncertain with economic pressures such as high inflation and rising interest rates at unprecedented levels in recent times.

Better Together

By 2026 Ability Housing Association will be able to demonstrate that:

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ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2023

Operating and Financial Review and Strategic Report

Financial Review

Ability’s overall turnover increased by 3.4% in 2022/23 to £9,987k (2022: £9,660k). Income from social housing activities increased by 8.8% to £5,404k (2022: £4,965k), whilst income from non-social housing activities reduced by 2.4% to £4,583k (2022: £4,695k).

As the above graph shows, an increasing percentage coming from social housing activities. This is due to the closure of a care home in 2022 as well as a small loss of Local Authority contract income in 2023. The volume of housing activity is relatively static, with no change to number of properties, but rents have increased in line with inflation (although increases in 2023 were capped by the UK government).

Operating costs increased by 4.8% to £9,763k (2022: £9,312k). The increase was mainly due to increased costs of routine maintenance, driven by high levels of inflation on materials.

The graph shows that the portion of operating costs attributable to social housing activity has increased this year. This is largely due to the increased spend on repairs from use of additional contractors in order to ensure continued delivery of repairs to our customers.

Ability’s operating surplus was £224k (2022: £296k), which represents 2.2% of turnover (2022: 3.1%). The year’s result was significantly impacted by the increased costs of routine maintenance as described above.

Interest receivable was £120k (2022: £16k) due to higher interest rates and a healthy cash balance for the year.

Capital structure and treasury policy

Ability had strong liquidity during the year, with £4,657k cash at 30 September 2023 (2022: £4,735k). The cash balance equates to 5-6 months of operating expenditure.

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ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2023

Operating and Financial Review and Strategic Report

At the end of the year, borrowings amounted to £6,132k (2022: £6,550k) of which £442k falls due to be paid within the next year (2022: £418k). At 30[th] September 2023, 100% of the Association’s borrowings were at fixed rates of interest (2022: 100%). The rates of interest range from 1.65% to 10.69%, although the majority of the debt (£5,972k) is fixed at either 1.65% or 6.69%, with only £160k of the outstanding balance fixed at the higher rate of 10.69%. The situation is reviewed regularly with lenders and with the Board, but it is felt that the current position is positive as variable rate risk has been eliminated, giving certainty over future interest payments. The Association borrows and lends only in Sterling and so is not exposed to currency risk.

Ability was compliant with all lenders’ covenants in 2023.

Reserves

At the year-end reserves amounted to £17,288k (2022: £17,276k). Ability does not have any restricted reserves earmarked for specific purposes. All reserves have been generated via Ability’s principal activities and are solely for the provision and management of housing and support services in the future.

Value for Money

The Association has a Value for Money strategy which seeks to ensure that we make best use of the various forms of capital that we have at our disposal. As a small housing association, we have limited resources, and operate in challenging areas with high levels of demand for our services. Ability aims to maximise its social value by ensuring that its resources are used effectively to deliver the right balance of cost, performance and quality of services.

For the year to 30 September 2023 we have calculated VFM metrics in accordance with the Regulator of Social Housing ‘Value for Money Metrics Technical Guidance Note May 2022’. The results are as follows:

METRIC 2023 2022 Peer Group
Average
1.
Reinvestment %		 0.38% 0.20% 5.68%
2A. New Supply Delivered (Social Housing Units) - - 2.24%
2B. New Supply Delivered (Non-Social Housing Units) - - -
3.
Gearing %		 5.42% 6.00% 3.51%
4.
Earnings before Interest, Tax, Depreciation,
Amortisation, Major Repairs Included (EBITDA MRI)
Interest Cover %		 286.09% 294.72% 328.15%
5.
Headline Social Housing cost per Unit		 £ 7,260 £ 5,994 £ 17,560
6A. Operating Margin (Social Housing Lettings only) -4.61% 2.67% 7.45%
6B. Operating Margin (overall) 2.24% 3.60% 2.45%
7.
Return on Capital Employed (ROCE) %		 0.41% 0.53% 1.66%

The specialist nature of the services delivered by Ability makes it difficult to benchmarking our VFM metrics. In order to provide a peer group analysis we have used the VFM metrics extracted from the published accounts of three other social housing providers of a similar nature to Ability, but factors such as the number of properties, geographic location, customer groups, and the fact that Ability has predominantly self-contained units means that the majority of social housing providers are not directly comparable.

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ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2023

Operating and Financial Review and Strategic Report

The slight growth in the reinvestment % (metric 1) is because Ability spent more on improvements to its existing properties in 2023 than in the prior year, but it is still below the peer group average. However, future years’ spend will be supported by our asset management strategy, which is underpinned by a full stock condition survey, ensuring that we are investing where investment is necessary.

Ability has not delivered any additional housing units in the year (metrics 2A and 2B), and is currently not developing.

Gearing (metric 3) as the balance outstanding in respect of fixed term loans has reduced following further repayments in the year. Although Ability’s gearing level is slightly higher than the peer group, gearing is expected to reduce over time as loans are repaid.

The significant increases to our repairs and maintenance costs experienced in the year has worsened our performance against metrics 4 to 7. We expect these costs to reduce in future years.

EBITDA MRI (metric 4) has slightly reduced in the year. However, despite this small reduction, Ability has met its loan covenants and is projected to do so in future years, so this measure is not of significant concern.

Headline social housing cost per unit (metric 5) has increased significantly in the year due to the increase in repair costs. Compared to the peer group average, Ability’s costs are relatively low, although this is partly due to the difficulty of establishing a reasonable peer group average cost, given the variety of operating models in the specialist housing sector. Despite a positive result, Ability will seek to reduce costs per unit in future years through better procurement and management of existing resources.

Ability’s operating margin on social housing (metric 6A) was negative in the year, due to the increased spend on repairs. Whilst disappointing, the expenditure was necessary to deliver a quality service to our customers, but this is not expected to continue into the future.

Operating margin overall (metric 6B) is 1.36% lower than last year, but only 0.21% lower than the peer group average. This demonstrates that Ability is not significantly behind other organisations, despite a challenging year.

Statement of compliance

In preparing this Operating and Financial Review, the Board has followed the principles set out in the Housing SORP 2018: Statement of Recommended Practice for Registered Social Housing Providers.

The Board also confirms compliance with The Regulator of Social Housing’s Governance and Financial Viability standard.

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ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2023

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

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

Company law requires the Board to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including FRS 102 ‘The financial reporting standard applicable in the UK and Republic of Ireland’. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs and surplus or deficit of the Association for that period. In preparing these financial statements the directors are required to:

The Board are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Association and enable it to ensure that the financial statements comply with the Companies Act 2006, the Housing and Regeneration Act 2008 and the Accounting Direction for Private Registered Providers of Social Housing 2022. It is also responsible for safeguarding the assets of the Association and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Disclosure of information to auditors

The Board members confirm that:

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

Annual general meeting

The annual general meeting will be held on 20[th] March 2024.

External auditors

A proposal will be made at the AGM to re-appoint Beever and Struthers as auditors for the financial year 2024-25.

Page 18 of 53

ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2023

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

The Operating and Financial Review and Strategic Report were approved by the Board on 28[th] February 2024 and signed on its behalf by:

Sally Reay Chair

Page 19 of 53

ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2023

REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF ABILITY HOUSING ASSOCIATION FOR THE YEAR ENDED 30 SEPTEMBER 2023

Opinion

We have audited the financial statements of Ability Housing Association (the ‘Association’) for the year ended 30 September 2023 which comprise the Statement of Comprehensive Income, the Statement of Changes in Equity (Reserves), the Statement of Financial Position, the Statement of Cash Flows and the notes to the financial statements, including a summary of significant accounting policies in note 1. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, 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 Association’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

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

Other information

The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. The Board is responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information

Page 20 of 53

ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2023

REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF ABILITY HOUSING ASSOCIATION FOR THE YEAR ENDED 30 SEPTEMBER 2023

and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

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

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

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

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the Association and its environment obtained in the course of the audit, we have not identified material misstatements in the Report of the Board and the Operating and Financial review and Strategic 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:

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

Responsibilities of the Board

As explained more fully in the Statement of the Responsibilities of the Board set out on page 18, 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.

Page 21 of 53

ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2023

REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF ABILITY HOUSING ASSOCIATION FOR THE YEAR ENDED 30 SEPTEMBER 2023

In preparing the financial statements, the Board is responsible for assessing the Association’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 Association or to cease operations, or has no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

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

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

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

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

Page 22 of 53

ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2023

REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF ABILITY HOUSING ASSOCIATION FOR THE YEAR ENDED 30 SEPTEMBER 2023

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

Use of our report

This report is made solely to the Association’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 Association and the Association’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Lee Cartwright Senior Statutory Auditor For and on behalf of Beever and Struthers

Statutory Auditor The Colmore Building 20 Colmore Circus Queensway Birmingham B4 6AT Date: 08 March 2024

Page 23 of 53

Report and Financial Statements for the year ended 30 September 2023

ABILITY HOUSING ASSOCIATION

Statement of Comprehensive Income
Note
Turnover
2
Operating costs
2
Gain / (Loss) on disposal of property, plant & equipment
6
Operating surplus
5
Interest receivable
7
Interest payable and similar charges
8
Surplus on ordinary activities before taxation
Tax on surplus for the year
Surplus prior to transfer to reserves
Other Comprehensive Income
Actuarial losses in respect of pension scheme
Total comprehensive income for the year		 2023
£’000
9,987
(9,763)
-
224
120
(266)
78
-
78
(66)
12		 2022
£’000
9,660
(9,312)
(52)
296
16
(284)
28
-
28
(126)
(98)

The notes on pages 28 to 53 form part of these financial statements.

The financial statements on pages 24 to 53 were authorised and approved for issue by the Directors on 28[th] February 2024 and were signed on its behalf by:

Sally Reay Chair

Dominic Wallace Board Member

Marcus Andrews Secretary

Page 24 of 53

ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2023

Statement of Changes in Equity (Reserves)

Income and Expenditure Reserve
Balance at 30thSeptember 2021
Restatement of prior period tangible fxed assets – property (Note 11)
Balance at 30thSeptember 2021 (restated)
Surplus for the year
Actuarial losses in respect of pension scheme
Balance at 30thSeptember 2022
Surplus for the year
Actuarial (losses) in respect of pension scheme
Balance at 30thSeptember 2023		 £’000
17,640
(266)
17,374
28
(126)
17,276
78
(66)
17,288

The notes on pages 28 to 53 form part of these financial statements.

Page 25 of 53

ABILITY HOUSING ASSOCIATION

Report and Financial Statements for the year ended 30 September 2023

Statement of Financial Position at 30[th] September 2023

Note
Tangible fixed assets
Housing properties
11
Other tangible fixed assets
12
Current assets
Trade and other debtors
13
Cash and cash equivalents
Creditors: amounts falling due within one year
14
Net current assets
Total assets less current liabilities
Creditors: amounts falling due after more than one year
15
Pension provision
19
Total Net Assets
Capital and reserves
Income and Expenditure reserve
Total Reserves		 2023
£’000
51,427
486
51,913
781
4,657
5,438
(2,575)
2,863
54,776
(37,258)
(230)
17,288
17,288
17,288		 2022
(Restated)
£’000
52,222
476
52,698
612
4,735
5,347
(2,475)
2,872
55,570
(38,084)
(210)
17,276
17,276
17,276

Company registration number: 01261380

The notes on pages 28 to 53 form part of these financial statements.

The financial statements on pages 24 to 53 were authorised and approved for issue by the Directors on 28[th] February 2024 and were signed on its behalf by:

Sally Reay Chair

Dominic Wallace Board Member

Marcus Andrews Secretary

Page 26 of 53

ABILITY HOUSING ASSOCIATION

Report and Financial Statements for the year ended 30 September 2023

Statement of Cash Flows

Note
Net cash generated from operating activities
i
Cash flow from investing activities
Interest Received
Purchase of tangible fixed assets
Cash flow from financing activities
Repayment of borrowings
Interest Paid
Net change in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at end of the year
Note i
Cash flow from operating activities
Operating surplus / (deficit) for the year
Adjustments for non-cash items
Depreciation and impairment of tangible fixed assets
Grant amortisation
Decrease / (Increase) in trade and other debtors
Increase / (Decrease) in trade and other creditors
Pension movements
(Gain) / loss on pension investments
Adjustments for investing or financing activities
(Gain) / loss on disposal of tangible fixed assets
Net cash generated from operating activities		 2023
£’000
748
120
(262)
(142)
(418)
(266)
(684)
(78)
4,735
4,657
2023
£’000
224
997
(384)
(169)
76
20
(66)
50
748		 2022
£’000
590
16
(146)
(130)
(396)
(284)
(680)
(220)
4,955
4,735
2022
£’000
296
928
(388)
17
(224)
34
(126)
53
590

The notes on pages 28 to 53 form part of these financial statements.

Page 27 of 53

ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2023

Notes to the financial statements

Legal Status

The Association is registered under the Companies Act 2006 as a company limited by guarantee. It is registered with both the Charity Commission and the Regulator of Social Housing as a Registered Provider. The principal activity of the Association is disclosed in the Report of the Board. The registered address is The Coach House, Gresham Road, Staines Upon Thames, Middlesex, TW18 2AE.

1. Accounting policies

Basis of accounting

The financial statements of the Association are prepared in accordance with UK Generally Accepted Accounting Practice (UK GAAP) including Financial Reporting Standard 102 (‘FRS 102’) and the Housing SORP 2018: Statement of Recommended Practice for Registered Social Housing Providers and comply with the Companies Act 2006, the Housing and Regeneration Act 2008 and the Accounting Direction for Private Registered Providers of Social Housing 2022. The financial statements are prepared on the historical cost basis of accounting. As a public benefit entity, the Association has applied the public benefit entity ‘PBE’ prefixed paragraphs of FRS 102.

The financial statements are presented in Sterling (£), the functional and presentational currency of the Association. The figures are presented in £’000 (thousands).

Going concern

The Association’s business activities, its current financial position and factors likely to affect its future development are set out within the Operating and Financial Review and Strategic Report. The Association is able to meet its commitments in respect of long-term debt facilities used to finance reinvestment and development programmes, along with the Association’s day to day operations. The Association’s financial plan (updated in January 2024) shows that it is able to service these debt facilities whilst continuing to comply with lenders’ covenants. On this basis, the Board has a reasonable expectation that the Association has adequate resources to continue in operational existence for the foreseeable future, being a period of at least twelve months after the date on which the report and financial statements are signed. For this reason, it continues to adopt the going concern basis in the financial statements.

Turnover

Turnover comprises rental and service charge income receivable in the year, and other services included at the invoiced value of goods and services supplied in the year and grants receivable in the year. Service charge income is calculated on a variable charge basis.

Rental income is recognised from the point when properties under development reach practical completion or otherwise become available for letting, net of any voids. Charges for support services funded under Care and Support are recognised as they fall due under the contractual arrangements with Administering Authorities.

Value added tax

The Association is not registered for VAT, and therefore all amounts are inclusive of VAT.

Page 28 of 53

ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2023

Notes to the financial statements

Corporation tax

The Association is recognised by HMRC as a charity. During the current year the Association is claiming exemptions from corporation tax on its income and gains. All of the Association’s income and gains will be applied to its charitable purposes.

Interest payable

Interest payable is charged to the statement of comprehensive income in the year. No interest is capitalised.

Financial instruments

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

At the end of each reporting period, financial instruments are measured as follows, without any deduction for transaction costs the entity may incur on sale or other disposal:

Debt instruments that meet the conditions in paragraph 11.8(b) of FRS 102 are measured at amortised cost using the effective interest method, except where the arrangement constitutes a financing transaction. In this case the debt instrument is measured at the present value of the future payments discounted at a market rate of interest for a similar debt.

Commitments to receive or make a loan to another entity which meet the conditions in paragraph 11.8(c) of FRS 102 are measured at cost less impairment.

Financial instruments held by the Association are classified as follows:

Debtors

Short term debtors are measured at transaction price, less any impairment. Where deferral of payment terms have been agreed at below market rate, and where material, the balance is shown at the present value, discounted at a market rate

Creditors

Short term trade creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured at amortised cost, net of transaction costs.

Employee Benefits

Short-term employee benefits and contributions to defined contribution plans are recognised as an expense in the period in which they are incurred.

Page 29 of 53

ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2023

Notes to the financial statements

Retirement benefits

The cost of providing retirement pensions and related benefits is charged to management expenses over the periods benefiting from the employees’ services.

Consistent with the guidance in FRED 71 paragraph 4 (FRS 102 paragraph 28.11B), the difference between the deficit funding liability and the net defined benefit deficit for the Social Housing Pension Scheme was recognised in Other Comprehensive Income for the year ending 30 September 2019.

The detailed pensions policy can be seen at the beginning of note 19.

Housing properties

Housing properties are principally properties held for the provision of social housing or otherwise to provide social benefit and are stated at cost less depreciation. Cost includes the cost of acquiring land and buildings, and expenditure incurred in respect of improvements. Donated land / assets or assets acquired at below market value are initially recognised at fair value in the Statement of Financial Position, and depreciated by component on a straight-line basis over the estimated UELs of the component categories.

Works to existing properties are works which replace a component that has been treated separately for depreciation purposes along with those works which result in an increase in the net rental income, such as a reduction in future maintenance costs, or result in a significant extension of the useful economic life of the property in the business are capitalised as improvements.

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

Government Grants

Government grants include grants receivable from Homes England, local authorities, and other government organisations. Government grants received for housing properties are recognised in income over the useful life of the housing property structure (excluding land) under the accruals model.

Grants relating to revenue are recognised in the statement of comprehensive income over the same period as the expenditure to which they relate once reasonable assurance has been gained that the entity will comply with the conditions and that the funds will be received. Grants due from government organisations or received in advance are included as current assets or liabilities.

Government grants received for housing properties are subordinated to the repayment of loans by agreement with the Regulator of Social Housing in England and Wales. Government grants released on sale of a property may be repayable but are normally available to be recycled and are credited to a Recycled Capital Grant Fund and included in the statement of financial position in creditors.

If there is no requirement to recycle or repay the grant on disposal of the asset, any unamortised grant remaining within creditors is released and recognised as income in income and expenditure.

Where individual components are disposed of and this does not create a relevant event for recycling purposes, any grant which has been allocated to the component is released to the statement of comprehensive income. Upon disposal of the associated property, the Association is required to recycle these proceeds and recognise them as a liability.

Page 30 of 53

ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2023

Notes to the financial statements

Other grants

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

Depreciation of housing properties

Freehold land is not depreciated. Properties held on leases are amortised over the life of the lease or their estimated useful economic lives in the business, if shorter.

The Association separately identifies the major components which comprise its housing properties and charges depreciation so as to write down the cost of each component to its estimated residual value, on a straight-line basis, over its estimated useful economic life.

The Association depreciates the major components of its housing properties over the following timescales:

Structure 100 years
Roof 60 years
Kitchen 20 years
Bathroom 25 years
Boiler 15 years
Heatng System 30 years
Windows & Doors 20 years
Electrics 30 years

Other tangible fixed assets

Other tangible fixed assets are measured at cost less accumulated depreciation and any accumulated impairment losses.

Depreciation is provided evenly on the cost of other tangible fixed assets to write them down to their estimated residual values over their expected useful lives. No depreciation is provided on freehold land.

The principal annual rates used for other assets are:

ncipal annual rates used for other assets are:
Freehold ofces 1% - 2%
Long leasehold property Over life of lease
Furniture, fxtures and ftngs 25%
Computer equipment 33.3%
Vehicles 25%
Ofce equipment 25% - 33.3%
Company CRM/Financial system 10%

Gains or losses arising on the disposal of other tangible fixed assets are determined as the difference between the disposal proceeds and the carrying amount of the assets and are recognised as part of the surplus / deficit for the year.

Page 31 of 53

ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2023

Notes to the financial statements

Leased assets

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

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 to the lessor is included in the statement of financial position as a finance lease obligation.

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. Finance charges are deducted in measuring the surplus or deficit. Assets held under finance leases are included in tangible fixed assets and depreciated and assessed for impairment losses in the same way as owned assets.

Rentals payable under operating leases are charged to the statement of comprehensive income on a straight-line basis over the lease term, unless the rental payments are structured to increase in line with expected general inflation, in which case the Association recognises annual rent expense equal to amounts owed to the lessor. The aggregate benefit of lease incentives are recognised as a reduction to the expense recognised over the lease term on a straight line basis.

Properties for sale

Shared ownership first tranche sales completed properties for outright sale and property under construction are valued at the lower of cost and net realisable value. Cost comprises materials, direct labour and direct development overheads. Net realisable value is based on estimated sales price after allowing for all further costs of completion and disposal.

Provisions for liabilities

Provisions are recognised when the Association has a present obligation (legal or constructive) as a result of a past event, it is probable that the Association will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.

Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value using a pre-tax discount rate. The unwinding of the discount is recognised as finance cost in profit or loss in the period it arises.

Holiday pay accrual

A liability is recognised to the extent of any unused holiday pay entitlement which has accrued at the reporting date and carried forward to future periods. This is measured at the undiscounted salary cost of the future holiday entitlement so accrued at the reporting date.

Significant judgements and estimates

Preparation of the financial statements requires management to make significant judgements and estimates. The following judgements (apart from those involving estimates) have had the most significant

Page 32 of 53

ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2023

Notes to the financial statements

effect on amounts recognised in the financial statements. The items in the financial statements where these judgements and estimates have been made include:

Impairment

The Association considers whether indicators of impairment exist in relation to tangible assets. Indicators considered include external sources of information such as market value, market interest rates and returns on investment, actual or proposed changes to the technological, economic or legal environment, obsolescence or damage to the asset, operational changes or internal reporting which indicates that the asset is performing worse than expected. The Association also considers expected future performance of the asset. Any impairment loss is charged to the Statement of Comprehensive Income.

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

Following a trigger for impairment, the Association performs impairment tests based on a value in use calculation. The value in use calculation is based on a discounted cash flow model. The cash flows are derived from the business plan for the next 5 years. The recoverable amount is most sensitive to the discount rate used for the discounted cash flow model as well as the expected future cash flows and the growth rate used for extrapolation purposes. The Association has identified no additional cash generating units for impairment assessment purposes at a property scheme level during this financial year.

Defined benefit obligation (DBO)

Management's estimate of the DBO is based on a number of critical underlying assumptions such as standard rates of inflation, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses.

Page 33 of 53

ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2023

Notes to the financial statements

2. Particulars of turnover, cost of sales, operating costs and operating surplus / (deficit)

Social housing lettings
Other social housing activities
Management services
Management services - lettings
Non social housing activities
Charges for support services
Care home
Covid 19 Local Authority Grants
Social housing lettings
Other social housing activities
Management services
Management services - lettings
Non social housing activities
Charges for support services
Care home
Covid 19 Local Authority Grants		 Turnover
£’000
5,332
52
20
5,404
4,581
-
2
4,583
9,987
Turnover
£’000
4,875
49
41
4,965
4,569
105
21
4,695
9,660		 2023
Operating
costs
£’000
(5,578)
(52)
-
(5,630)
(4,133)
-
-
(4,133)
(9,763)
2022
Operating
costs
£’000
(4,745)
(49)
-
(4,794)
(4,167)
(249)
(102)
(4,518)
(9,312)		 Operating
Surplus /
(deficit)
£’000
(246)
-
20
(226)
448
-
2
450
224
Operating
Surplus /
(deficit)
£’000
130
-
41
171
402
(144)
(81)
177
348

Page 34 of 53

ABILITY HOUSING ASSOCIATION

Report and Financial Statements for the year ended 30 September 2023

Notes to the financial statements

3. Particulars of income and expenditure from social housing lettings

Rent receivable net of identifiable
service charges
Service charge income
Amortised government grants
Turnover from social housing lettings
Management
Services
Routine Maintenance
Planned Maintenance and major repairs
Bad debt provision
Property lease charges
Depreciation of housing properties
Reversal of impairment loss
Operating costs on social housing
lettings
Operating (deficit) / surplus on social
housing lettings
Voids		 General
Needs
Housing
£'000
667
132
62
861
(255)
(128)
(175)
(97)
(10)
(75)
(160)
-
(900)
(39)
44		 Supported
Housing
£'000
3,460
688
323
4,471
(1,326)
(665)
(907)
(506)
(53)
(392)
(829)
-
(4,678)
(207)
229		 2023
Total
£'000
4,127
820
385
5,332
(1,581)
(793)
(1082)
(603)
(63)
(467)
(989)
-
(5,578)
(246)
273		 2022
Total
£'000
3,849
637
389
4,875
(1,404)
(742)
(668)
(504)
(24)
(547)
(916)
60
(4,745)
130
255

Page 35 of 53

ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2023

Notes to the financial statements

4. Accommodation in management and development

At the end of the year accommodation in management for each class of accommodation was as follows:

Social Housing
General housing
Supported housing
Low cost home ownership
Residential care homes
Total owned
Accommodation managed for others
Total managed
Non social housing
Respite unit
Owned but managed by others
General needs
Total owned and managed		 2023
No.
43
534
2
-
579
71
650
8
11
669		 2022
No.
43
534
2
-
579
71
650
8
11
669

5. Operating surplus / (deficit)

The operating surplus / (deficit) is arrived at after charging

2023 2022
£’000 £’000
Depreciation of freehold housing properties 658 669
Depreciation of leasehold housing properties 280 245
Depreciation of other tangible fixed assets 59 74
Operating lease rentals - -
- Office equipment 7 6
-Land and buildings 467 547
Auditor’s remuneration (excluding VAT)
- For audit services 17 15
- For other services – covenant compliance 1 1

Page 36 of 53

ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2023

Notes to the financial statements

6.
Loss on disposal of fxed assets
2023
£’000
Housing
properties
(components)
Proceeds of sale
-
Cost of sale
-
Surplus / (Loss) on disposal
-
7.
Interest receivable and similar income
Interest receivable and similar income
8.
Interest payable and similar charges
Loan and bank overdrafts
Defined Benefit pension operating cost
9.
Employees
Average number of employees (FTE):
Administration
Housing, support and care
Average monthly number of employees		 2023
£’000
Other
property
plant and
equipment
-
-






2023
£’000
Total
-
-

2022
£’000
Total
-
52
- - (52)
2023
£’000
120
2023
£’000
254
12
266
2023
No.
11
108
119
136		 2022
£’000
16
2022
£’000
282
2
284
2022
No.
11
110
121
154

Page 37 of 53

ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2023

Notes to the financial statements

9. Employees (continued)

The full-time equivalent number of staff who received remuneration (including directors):

£60,000 - £69,999
£70,000 - £79,999
£80,000 - £89,999
£90,000 - £99,999
Employee costs
Wages and salaries
Social security costs
Defined Benefit pension operating cost		 2023
No.
2
1
-
1
2023
£’000
3,874
363
155
4,392		 2022
No.
-
1
1
1
2022
£’000
3,877
370
149
4,396

10. Directors, members and executive directors

Employee costs 2023 2022
£’000 £’000
Aggregate emoluments of directors (including pension contributions) 283 257
Emoluments of the highest paid director (excluding pension contributions 97 94
and including benefits in kind)
Total expenses reimbursed to directors not chargeable to UK income tax
- Board members - -
- Executives - -

The Chief Executive is a member of the Social Housing Pension Defined Contribution Scheme. He is an ordinary member of the pension scheme and no enhanced or special terms apply. Pension contributions totalled £5k (2022: £5k) in respect of the Chief Executive. The Directors and executive directors are considered to be key management personnel.

Board members

None of the Board members received emoluments (2022: £Nil).

Page 38 of 53

Report and Financial Statements for the year ended 30 September 2023

ABILITY HOUSING ASSOCIATION

Notes to the financial statements

11. Tangible fixed assets - properties

Freehold
Social housing
properties
held for
letting
Leasehold
housing
properties
held for
letting
£'000
£'000
Cost
At 1 October 2022
(restated)
47,894
15,690
Works to existing
properties
143
50
Disposals
(94)
(40)
At 30 September 2023
47,943
15,700
Depreciation and
impairment
At 1 October 2022
(restated)
8,267
3,283
Charged in year
658
280
Released on disposal
(71)
(13)
At 30 September 2023
8,854
3,550
Net book value
At 30 September 2023
39,089
12,150
At 30 September 2022
(restated)
39,627
12,407
Expenditure on works to existing properties
Components capitalised
Amounts charged to statement of comprehensive income		 Total
housing
properties
held for
letting
£'000
63,584
193
(134)
63,643
11,550
938
(84)
12,404
51,239
52,034
 Completed
shared
ownership
properties
£'000
188
-
-
188
-
-
-
-
188
188
2023
£’000
193
1,685
1,878		 Total
housing
properties
£'000
63,772
193
(134)
63,831
11,550
938
(84)
12,404
51,427
52,222
2022
£’000
105
1,106
1,211

The opening position at 1[st] October 2022 has been restated. A detailed review of Ability’s fixed asset register was undertaken in the year in order to assist with planning future property investment levels as per Ability’s asset management strategy. This review found a number of misstated property component values, in respect of both cost (£41k) and depreciation (£225k).

Page 39 of 53

ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2023

Notes to the financial statements

Social housing assistance
Total accumulated social housing grant received or receivable
at 30 September:
Recognised in the statement of comprehensive income
Held as deferred income
Housing properties book value, net of depreciation
Freehold land and buildings
Long leasehold land and buildings		 2023
£’000
385
31,956
32,341
2023
£’000
39,277
12,150
51,427		 2022
£’000
389
32,340
1,211
2022
(restated)
£’000
39,815
12,407
52,222

Annually housing properties (cash generating units) are assessed for impairment indicators. Where indicators are identified an assessment for impairment is undertaken comparing the scheme’s carrying amount to its recoverable amount. Impairment charges of £116k have been taken in respect of two properties, one freehold and one leasehold, each comprising one unit of accommodation. The properties are both vacant due to structural issues and the impairment charges reflect the expenditure required to bring them back into use. The carrying values of the properties (prior to the recognition of the impairment charges) are £111k (leasehold property) and £53k (freehold property).

Amounts do not include capitalised interest; all interest charges are written off to expenditure as incurred. At the year-end a total of 199 (2022: 199) properties were subject to charges securing loan funding. Of these 119 properties with a Net Book Value of £12,299k (2022: 119 properties with a Net Book Value of £12,919k) secured the total Barclays facility, 70 properties with a Net Book Value of £3,633k (2022: 70 properties with a Net Book Value of £2,033k) secured the Dexia loan and 10 properties with a Net Book Value of £608k (2022: 10 properties with a Net Book Value of £623k) secured the Crown Mortgage loans (Orchardbrook / Fresh PLC).

Page 40 of 53

ABILITY HOUSING ASSOCIATION

Report and Financial Statements for the year ended 30 September 2023

Notes to the financial statements

12. Tangible fixed assets – other

Cost
At 1 October 2022
Additions
Disposals
At 30 September 2023
Depreciation
At 1 October 2022
Charged in year
At 30 September 2023
Net book value
At 30 September 2023
At 30 September 2022		 Freehold
offices
£'000
501
-
-
501
247
10
257
244
254		 Vehicles
and office
equipment
£'000
1,011
-
-
1,011
1,011
-
1,011
-
-		 Furniture
fixtures
and
fittings
£'000
369
-
-
369
369
-
369
-
-		 Long life
systems
and
computer
equipment
£'000
247
16
-
263
137
19
156
107
110		 Service
charge
recoverable
assets and
WIP
£’000
172
53
-
225
60
30
90
135
112		 Total
£'000
2,300
69
-
2,369
1,824
59
1,883
486
476

13. Debtors

Due within one year
Rent and service charges receivable
Less: provision for bad and doubtful debts
Other debtors
Prepayments and accrued income		 2023
£’000
739
(429)
310
311
160
781		 2022
£’000
602
(366)
236
359
17
612

Page 41 of 53

ABILITY HOUSING ASSOCIATION

Report and Financial Statements for the year ended 30 September 2023

Notes to the financial statements

14.
Creditors: amounts falling due within one year
Loans (note 18)
Trade creditors
Rent and service charge accounts in credit
Rent and service charges received in advance
Taxation and social security
Recycled Capital Grant Fund (note 16)
Accruals and deferred income
Holiday pay accrual
Deferred grant income
15.
Creditors: amounts falling due afer more than one year
Loans (note 18)
Deferred grant income (note 17)
16.
Recycled capital grant fund
At 1 October
Grants recycled
Grant utilised
Grants repaid - GLA
At 30 September		 2023
£’000
442
338
246
14
23
35
1,019
70
388
2,575
2023
£’000
5,690
31,568
37,258
2023
£’000
35
-
-
-
35		 2022
£’000
418
334
251
25
22
35
956
45
389
2,475
2022
£’000
6,132
31,952
38,084
2022
£’000
35
-
-
-
35

Page 42 of 53

ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2023

Notes to the financial statements

17. Deferred Grant Income

At 1 October
Released to income
At 30 September
Due in one year
Due after one year		 2023
£’000
32,341
(385)
31,956
388
31,568		 2022
£’000
32,729
(388)
32,341
389
31,952

The gross amount of grant received prior to amortisation was £39,188k (2022: £39,188k).

18.
Loan analysis
Due within one year
Housing loans
Due after more than one year
Housing loans
Total loans		 2023
£’000
442
5,690
6,132		 2022
£’000
418
6,132
6,550

Security

Housing loans are secured by fixed charges on individual properties.

Terms of repayment and interest rates

The loans are repaid in monthly, quarterly or half yearly instalments over the agreed period of the loan. The final instalments fall to be repaid in the period 2020 to 2037. Interest rates on borrowings ranged from 1.65% to 10.69%. At 30 September the Association had undrawn loan facilities of £0k (2022: £0k).

Based on the lender's earliest repayment date, borrowings are repayable as follows:

Within one year or on demand
One year or more but less than two years
Two years or more but less than five years
Five years or more		 2023
£’000
442
469
1,597
3,624
6,132		 2022
£’000
418
442
1,493
4,197
6,550

Page 43 of 53

ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2023

Notes to the financial statements

19. Pension Provision

The SHPS Defined Benefit obligation is accounted for in accordance with the provisions of FRS 102 as adopted by SHPS. The SHPS Growth Plan provision continues to be accounted for as a provision based on the net present value of payments agreed at the year end. The provision will be adjusted following the triennial valuations in the pension scheme, either increasing or decreasing the provision with the opposite entry being shown as operating costs within income and expenditure. The unwinding of the discount is shown as a finance cost.

The Association participates in two funded multi-employer defined benefit schemes, the Social Housing Pension Scheme (SHPS) and the Local Government pension scheme under a TUPE transfer agreement and one multi-employer defined contribution scheme.

Contingent Liability – Social Housing Pension Scheme

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

Social Housing Pension Scheme

Fair value of plan assets, present value of defined benefit obligation, and defined benefit asset (liability)

Fair value of plan assets
Present value of defined benefit obligation
Surplus (deficit) in plan
Unrecognised surplus
Defined benefit asset (liability) to be recognised
Deferred tax
Net defined benefit asset (liability) to be recognised		 2023
£’000
996
1,245
(249)
-
(249)
-
(249)		 2022
£’000
1,075
1,299
(224)
-
(224)
-
(224)

Page 44 of 53

ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2023

Notes to the financial statements

Reconciliation of opening and closing balances of the defined benefit obligation
Defined benefit obligation at 30 September 2022
Current service cost
Expenses
Interest expense
Member contributions
Actuarial losses (gains) due to scheme experience
Actuarial losses (gains) due to changes in demographic assumptions
Actuarial losses (gains) due to changes in financial assumptions
Benefits paid and expenses
Liabilities acquired in a business combination
Liabilities extinguished on settlements
Losses (gains) on curtailments
Losses (gains) due to benefit changes
Exchange rate changes
Defined benefit obligation at 30 September 2023
nciliaton of opening and closing balances of the fair value of plan assets
Fair value of plan assets at 30 September 2022
Interest income
Experience on plan assets (excluding amounts included in interest
income) - gain (loss)
Employer contributions
Member contributions
Benefits paid and expenses
Assets acquired in a business combination
Assets distributed on settlements
Exchange rate changes
Fair value of plan assets at 30 September 2023		 £’000
1,299
-
2
68
-
52
(3)
(91)
(82)
-
-
-
-
-
1,245
£’000
1,075
57
(108)
54
-
(82)
-
-
-
996

Reconciliation of opening and closing balances of the fair value of plan assets

The actual return on plan assets (including any changes in share of assets) over the period from 30 September 2022 to 30 September 2023 was (£51,000).

Page 45 of 53

ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2023

Notes to the financial statements

Defined benefit costs recognised in Statement of Comprehensive Income (SOCI)

Current service cost
Expenses
Net interest expense
Losses (gains) on business combinations
Losses (gains) on settlements
Losses (gains) on curtailments
Losses (gains) due to benefit changes
Defined benefit costs recognised in Statement of Comprehensive Income (SOCI)
Defined benefit costs recognised in Other Comprehensive Income (OCI)
Experience on plan assets (excluding amounts included in net interest cost) - gain (loss)
Experience gains and losses arising on the plan liabilities - gain (loss)
Effects of changes in the demographic assumptions underlying the present value of the
defined benefit obligation - gain (loss)
Effects of changes in the financial assumptions underlying the present value of the
defined benefit obligation - gain (loss)
Total actuarial gains and losses (before restriction due to some of the surplus not being
recognisable) - gain (loss)
Effects of changes in the amount of surplus that is not recoverable (excluding amounts
included in net interest cost) - gain (loss)
Total amount recognised in Other Comprehensive Income - gain (loss)		 £’000
-
2
11
-
-
-
-
13
£’000
(108)
(52)
3
91
(66)
-
(66)
Assets 2023 2022
£’000 £’000
Global Equity 77 51
Absolute Return 18 11
Distressed Opportunities 35 55
Credit Relative Value 35 52
Alternative Risk Premia 15 25
Emerging Markets Debt 7 9
Risk Sharing 72 76
Insurance-Linked Securities 14 38
Property 45 48
Infrastructure 113 142

Page 46 of 53

ABILITY HOUSING ASSOCIATION

Report and Financial Statements for the year ended 30 September 2023

Notes to the financial statements

Assets
Private Debt
Opportunistic Illiquid Credit
High Yield
Opportunistic Credit
Cash
Corporate Bond Fund
Liquid Credit
Long Lease Property
Secured Income
Liability Driven Investment
Currency Hedging
Net Current Assets
Total assets		 2023
£’000
46
51
2
-
10
-
-
32
48
380
(7)
3
996		 2022
£’000
46
63
5
4
-
18
-
42
51
360
(23)
2
1,075

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

Key assumptions

2023 2022
% per annum % per annum
Discount Rate 5.70% 5.41%
Inflation (RPI) 3.29% 3.67%
Inflation (CPI) 2.77% 3.23%
Salary Growth 3.77% 4.23%
75% of 75% of
Allowance for commutation of pension for cash at retirement maximum maximum
allowance allowance

The mortality assumptions adopted at 30 September 2023 imply the following life expectancies:

Life expectancy
at age 65 years
Male retiring in 2023 21.0
Female retiring in 2023 23.4
Male retiring in 2043 22.2
Female retiring in 2043 24.9

Page 47 of 53

ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2023

Notes to the financial statements

Scheme: TPT Retirement Solutions – The Growth Plan

The company participates in the scheme, a multi-employer scheme which provides benefits to some 638 non-associated participating employers. The scheme is a defined benefit scheme in the UK. It is not possible for the company to obtain sufficient information to enable it to account for the scheme as a defined benefit scheme. Therefore it accounts for the scheme as a defined contribution scheme.

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

The scheme is classified as a 'last-man standing arrangement'. Therefore the company is potentially liable for other participating employers' obligations if those employers are unable to meet their share of the scheme deficit following withdrawal from the scheme. Participating employers are legally required to meet their share of the scheme deficit on an annuity purchase basis on withdrawal from the scheme.

A full actuarial valuation for the scheme was carried out at 30 September 2020. This valuation showed assets of £800.3m, liabilities of £831.9m and a deficit of £31.6m. To eliminate this funding shortfall, the Trustee has asked the participating employers to pay additional contributions to the scheme as follows:

Deficit contributions

From 1 April 2022 to 31 January 2025: £3,312,000 per annum (payable monthly)

Unless a concession has been agreed with the Trustee the term to 31 January 2025 applies.

Note that the scheme’s previous valuation was carried out with an effective date of 30 September 2017. This valuation showed assets of £794.9m, liabilities of £926.4m and a deficit of £131.5m. To eliminate this funding shortfall, the Trustee asked the participating employers to pay additional contributions to the scheme as follows:

Deficit contributions

From 1 April 2019 to 30 September 2025: £11,243,000 per annum (payable monthly and increasing by 3% each on 1st April)

The recovery plan contributions are allocated to each participating employer in line with their estimated share of the Series 1 and Series 2 scheme liabilities.

Where the scheme is in deficit and where the company has agreed to a deficit funding arrangement the company recognises a liability for this obligation. The amount recognised is the net present value of the deficit reduction contributions payable under the agreement that relates to the deficit. The present value is calculated using the discount rate detailed in these disclosures. The unwinding of the discount rate is recognised as a finance cost.

Page 48 of 53

Report and Financial Statements for the year ended 30 September 2023

ABILITY HOUSING ASSOCIATION

Notes to the financial statements

30 September
2023
£
30 September
2022
£
30
Present value of provision
6,571
11,167
Reconciliaton of opening and closing provisions
2023
£
Provision at start of period
11,167
Unwinding of the discount factor (interest expense)
505
Deficit contribution paid
(5,106)
Remeasurements - impact of any change in assumptions
5
Remeasurements - amendments to the contribution
schedule
-
Provision at end of period
6,571
Income and expenditure impact
2023
£
Interest expense
505
Remeasurements – impact of any change of assumptions
5
Remeasurements – amendments to the contribution
schedule
-
Contributions paid in respect of future service*
4,195
Costs recognised in income and expenditure account
4,705		 September
2021
£
54,014
2022
£
54,014
352
(10,358)
(652)
(32,189)
11,167
2022
£
352
(652)
(32,189)
6,808
(25,681)

Assumptions

30 September 30 September 30 September
2023 2022 2021
% per annum % per annum % per annum
Rate of discount 5.88 6.00 0.72

The discount rates shown above are the equivalent single discount rates which, when used to discount the future recovery plan contributions due, would give the same results as using a full AA corporate bond yield curve to discount the same recovery plan contributions.

Page 49 of 53

ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2023

Notes to the financial statements

Surrey County Council Pension scheme

The Association makes payments as an Admitted Body to the Surrey County Council Pension Fund for employees who were members of that scheme on 1st April 2008 under the terms of a TUPE transfer. This is a funded defined benefit scheme that covers Surrey County Council employees and Scheduled and Admitted Bodies under the Local Government Pension Scheme Regulations 1997.

The Association has been notified by the Scheme Administrator that they are unable to satisfactorily identify the Association's share of the underlying Scheme assets and liabilities as at 30 September 2023 and accordingly the pension costs are accounted for as defined contribution. The scheme administrator has confirmed that the Association has no liability for past service deficit contributions.

The total employer contribution payable in the year was £33k (2022: £18k). At 30 September 2023 the Association had 3 (2022: 3) active members in the fund. Expected payments in the next financial year amount to approximately £33k.

20. Reconciliation of net cash flow to movement in net debt

(Decrease) / Increase in cash
Cash inflow / (outflow) from change in debt
Change in net debt resulting from cash flows
Movement in net debt for the period
Net debt at 1 October
Net debt at 30 September		 2023
£’000
(78)
418
340
340
(1,814)
(1,474)		 2022
£’000
(219)
396
177
177
(1,991)
(1,814)

21. Analysis of changes in net debt

Analysis of changes in net debt
Cash at bank and in hand
Loans
Changes in net debt		 1 Oct
2022
£’000
4,735
(6,550)
(1,815)		 Cashflow
£’000
(78)
418
340		 30 Sep
2023
£’000
4,657
(6,132)
(1,475)

Page 50 of 53

ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2023

Notes to the financial statements

22. Contingent assets / liabilities

Government Grant

The Association receives capital grant from Homes England (formerly Homes and Communities Agency), which is used to fund the acquisition and development of housing properties and their components. In certain circumstances, upon disposal of grant funded properties, the Association is required to recycle this grant by crediting the Recycled Capital Grant Fund, which if not reassigned, could be subject to repayment (see note 16 for further details).

The Association owns one property where defects in the external wall system have been identified. A provisional estimate of the costs to the Association of the required works to resolve these issues is between £533k and £648k, however the costs remain unconfirmed. In addition, the Association is pursuing legal action against the contractor to recover all direct and associated costs and initial legal advice suggests that the claim is likely to be successful. Given the uncertainties involved, no provision has been recognised in the financial statements.

The Association had no other contingent assets or contingent liabilities at 30 September 2023 (2022: £nil).

23. Leasing commitments

Operating lease payments amounting to £450k (2022: £401k) are due within one year. The leases to which these amounts relate expire as follows:

Office equipment
Expiring in one year or less
Between one and two years
Between two and three years
Between three and four years
Over four years
Total office equipment
Land and buildings
Expiring in one year or less
Between one and two years
Between two and five years
Over five years
Total land and buildings
Total operating leases		 2023
£’000
2
1
-
-
-
3
448
72
216
576
1,312
1,315		 2022
£’000
2
2
1
-
-
5
399
72
216
648
1,335
1,340

Page 51 of 53

ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2023

Notes to the financial statements

24. Related parties

There are currently no beneficiary members of the directors (2022: nil). There have been no related party transactions in the year (2022: none).

25. Financial liabilities excluding trade creditors – interest rate risk profile

The Association’s financial liabilities are sterling denominated. The interest rate profile of the Association’s financial liabilities at 30 September was:

Floating rate
Fixed rate
Total (note 18)		 2023
£’000
-
6,132
6,132		 2022
£’000
-
6,550
6,550

The fixed rate financial liabilities have a weighted average interest rate of 4.22% (2022: 4.20%) and the weighted average period for which it is fixed is 1 year to 17 years (2022: 1 year to 18 years).

The debt maturity profile is shown in note 18.

Borrowing facilities

The Association has no undrawn committed borrowing facilities. The facilities available at 30 September in respect of which all conditions precedent had been met were as follows:

Expiring in less than one year
Expiring in one to two years
Greater than 5 years		 2023
£’000
-
-
-
-		 2022
£’000
-
-
-
-

Financial assets

Other than short term debtors, financial assets held are cash deposits in notice and current accounts, all of which is measured at historic cost. They are sterling denominated and the interest rate profile at 30 September was:

Floating rate on cash deposits
Financial assets on which no interest is earned		 2023
£’000
3,200
1,458
4,658		 2022
£’000
2,450
2,286
4,736

Page 52 of 53

ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2023

Notes to the financial statements

26. Share Capital

The Association is a company limited by guarantee and therefore has no share capital. Each member (see numbers below) agrees to contribute £1 in the event of the company winding up.

At 1 October 2022
Joining during the year
Leaving during the year
At 30 September 2023		 2023
No.
17
1
(3)
15		 2022
No.
22
-
(5)
17

27. Capital commitments

At the year end the Association had capital commitments of £Nil (2022: £Nil).

28. Financial instruments

Financial assets
Measured at cost
Cash and cash equivalents
Measured at amortised cost
Rent and service charges receivable
Other debtors
Accrued income
Total financial assets
Financial liabilities
Measured at amortised cost
Loans
Trade creditors
Accrued expenditure
Total financial liabilities		 2023
£’000
4,657
739
311
148
5,855
6,132
584
867
7,583		 2022
£’000
4,735
602
359
-
5,696
6,550
585
782
7,917

Page 53 of 53