## **ABILITY HOUSING ASSOCIATION**
**Report and Financial Statements For the year ended 30[th] September 2025 Registered Company No. 01261380**
**ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2025**
## **Contents**
|**CONTENTS**|**PAGE**|
|---|---|
|Company Information|3|
|Report of the Board|4|
|Operating and financial review and strategic report|8|
|Statement of the responsibilities of the Board for the report and|18|
|financial statements||
|Independent Auditor’s Report|19|
|Statement of Comprehensive Income|23|
|Statement of Changes in Equity (Reserves)|24|
|Statement of Financial Position|25|
|Statement of Cash Flows|26|
|Notes to the financial statements|27|
Page **2** of **53**
**ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2025**
## **Company Information**
|**Company registration number:**|01261380|
|---|---|
|**Regulator of Social Housing registration number:**|LH2174|
|**Charity number:**|271547|
|**Registered office and principal address:**|The Coach House|
||Gresham Road|
||Staines Upon Thames|
||TW18 2AE|
|**The Board:**|Mandy Dunstan (Chair)|
||Dominic Wallace (resigned 18thMarch 2025)|
||Jai Dosanjh|
||Lynsey van Aswegen|
||Dritan Uka|
||Tim Jennings|
||Vimal Gaglani|
||Rinat Abdrasilov|
||Kimberley Ellis|
||Nicholas Barker|
||Adrian Smith (resigned 1stOctober 2024)|
|**Senior Management Team:**||
|Chief Executive|Jeffrey Skipp|
|Director of Finance|Marcus Andrews|
|Director of Operations (Housing)|Stephanie Wood (appointed 11thNovember 2024)|
|Director of Care & Support|Lauren Green|
|**Company Secretary:**|Marcus Andrews|
|**Bankers:**|Barclays|
||1 Churchill Place|
||London E14 5HP|
|**Solicitors:**|Devonshires|
||30 Finsbury Circus|
||London EC2M 7DT|
|**Auditors:**|Menzies LLP|
||Statutory Auditor|
||95 Gresham Street|
||London|
||EC2V 7AB|
Page **3** of **53**
**ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2025**
## **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 2025.
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 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.
When Board vacancies arise, positions are advertised and, following consideration of applications, appointments are made following and interview process conducted by the Chair and other Board members. Once appointed, all new Board members meet with the CEO and visit Ability services, with the opportunity to meet customers and staff. We have a 12 month induction process to ensure they understand the organisation and feel supported in their role.
Page **4** of **53**
**ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2025**
## **Report of the Board**
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. All senior executive roles are subject to sector specific benchmarking when advertised, and salaries are set with consideration to size of the organisation, geographical location, and the context of the wider organisation’s pay structure.
Insurance policies indemnify Board members and officers against liability when acting for the Association.
## **National Housing Federation (NHF) Code of Governance**
Ability ensures full compliance with The NHF Code of Governance (2020 edition). Ability complies with the principal recommendations of the NHF Code of Governance.
## **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.
## **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 2024 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:
- Board approved terms of reference and delegated authorities for audit, finance and risk and customer services committees
- Clearly defined management responsibilities for the identification, evaluation and control of significant risks
- Robust strategic and business planning processes
- Detailed financial budgets and forecasts for subsequent years
- Formal recruitment, retention, training and development policies
- Established authorisation and appraisal procedures for all significant new initiatives and commitments
Page **5** of **53**
**ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2025**
## **Report of the Board**
- Regular reporting by senior management to the appropriate committee of key business objectives, targets and outcomes
- Board approved whistleblowing and anti-theft and corruption policies
- Detailed policies and procedures in each area of the Association’s work
The main risks currently faced by Ability are considered to be:
- Failure to comply with statutory and regulatory requirements to ensure that properties meet necessary standards and that our customers health & safety is not put at risk. To mitigate and control this risk, we have policies and procedures in place and regularly monitor performance data to ensure compliance.
- Undiscovered damp and mould in our properties, adversely affecting our customers’ health and safety. To mitigate this risk, we have a programme of annual property visits, and a damp & mould policy that details how any instances of damp and mould should be dealt with when reported.
- The impact on financial viability of losing key care & support contracts, or receiving below inflationary annual increases from Local Authority partners. To mitigate this risk, we continue to maintain good relationships with Local Authority partners, regularly update financial plans and forecasts, and ensure strong financial viability in our housing management service.
- Cyber security, which is on-going risk across most sectors of the economy. We have many security controls in place via our external IT provider, but cannot completely remove the risk of an attack taking place.
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 AFR 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.
Page **6** of **53**
**ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2025**
## **Report of the Board**
## **Events after the end of the reporting period**
Following the end of the reporting period, Ability has sold one social housing property for £950,000. The carrying value of this property at 30 September 2025 was £444,000.
The Report of the Board was approved by the Board on 25[th] February 2026 and signed on its behalf by:
**Mandy Dunstan** Chair
**Lynsey Van Aswegen** Board Member
**Marcus Andrews** Secretary
Page **7** of **53**
**ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2025**
## **Operating and Financial Review and Strategic Report**
## **Overview of the Financial Year**
Ability Housing owns and manages 649 properties (plus some office accommodation) across 31 local authority areas in London and the Southeast. We provide accessible housing for people who have impairments and disabilities who want to live independently within their communities.
We have made five key commitments in our Corporate Plan – Better Together, these are:
- Provide Good Quality Homes and Neighbourhoods
- Deliver high quality Housing Management & Support Services
- To Recruit, Retain and Develop an engaged workforce
- To grow our services and increase our reach
- To maintain financial sustainability and deliver Value for Money (VFM)
We have set out in this report our progress in achieving these commitments.
## **Property and Assets**
_**Landlord Health & Safety Compliance:**_ Compliance remained one of the strongest areas of performance this year, with our performance being as follows:
- Gas: 100%
- Electrical: 99.2%
- Asbestos management surveys: 100%
- Asbestos re-inspections: improved to 98.4% (two remaining access issue cases)
- Lifts: 100%
This demonstrates well-controlled safety processes, good contractor performance, and strong operational oversight.
_**Repairs:**_ This year we have continued to strengthen the service, maintaining strong operational oversight and improving consistency despite workload fluctuations. While performance has varied month-to-month, the service has delivered a performance of 82.16% of repairs completed within timescale, close to target of 85%, with several individual months achieving or exceeding the 85%. The continued investment in process improvements, job planning and contractor management places us in a strong position for 2025/26.
_**Planned Maintenance:**_ We did not deliver the full planned maintenance programme within the year. We made strategic adjustments to the programme, reprofiling several kitchen and bathroom installations into the 2025/26 financial year.
Despite these changes, we successfully delivered a significant portion of the programme, achieving the following numbers of component replacements:
- Domestic & adapted kitchens: 14
- Bathrooms & wet rooms: 6
- Windows (full property) & front doors: 8
- Gas boilers: 34
- EPC works: 8
Looking ahead, we have strengthened scheduling and planning processes for 2025/26 to ensure full delivery of the revised programme. This includes improving forward visibility, contractor readiness, and financial control.
Page **8** of **53**
**ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2025**
## **Operating and Financial Review and Strategic Report**
_**EPC:**_ Last year we acknowledged that we failed to meet our internal EPC targets due to other priorities. This year we re-established the EPC programme and delivered 9 EPC upgrades against a target of 10. We remain fully committed to ensuring that all properties achieve EPC C or better by 2030, in line with regulatory expectations and our sustainability goals.
- _**Damp & Mould:**_ Service improvements embedded successfully during the year:
- 100% of 14-day response cases were maintained for 10 months of the year. There were 2 that were not addressed within 14 days but were still resolved successfully.
- Seasonal increases in case volumes were managed without compromising response times.
This shows the impact of revised processes adopted over the summer, improved monitoring, and clearer contractor expectations.
## **Housing Support and Management**
_**Intensive Housing Management Support:**_ Last year we highlighted our co-produced support plans and personalised approach to tenancy sustainment. This year we have further embedded this model, resulting in:
- Met the IHM target for number of visits of 100%
- Stronger case management
- Greater individual support for residents with higher needs
- Improved alignment between support plans and daily housing management activity
_**Annual Tenancy Audit:**_ We have maintained our commitment to carrying out annual tenancy audits. This work remained strong throughout the year, meeting the target of 100% of annual visits for every tenant. These audits continue to be vital for identifying:
- Welfare or support needs
- Changes in household circumstances
- Hidden disrepair
- Safeguarding or risk concerns
- Opportunities for early intervention
The tenancy audit process is a key focus area, and we will continue to prioritise it in the year ahead.
_**Estate Inspections:**_ Last year we enhanced our estate inspections to improve visibility, health and safety monitoring, and resident engagement. This year those changes have matured into a consistent estate-based model of customer contact. During the year estate inspections have continued at high frequency and we achieved 96% for the year against our target of 100%. We have strengthened community engagement, improved neighbourhood management, and ensured continued oversight of building and environmental health.
_**Arrears Management:**_ Arrears performance showed year on year improvement, marking the third successive year of reductions. ‘True arrears’ (i.e. arrears greater than 5 weeks old) reduced to 3.4%, outperforming our 4% target, and the long-term trend shows a continued downward trajectory, from 4.4% in 2024 and 5.3% in 2023.
Page **9** of **53**
**ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2025**
## **Operating and Financial Review and Strategic Report**
## **Compliments and Complaints**
## _**Compliments**_
A total of 18 compliments (2024: 14) were recorded during the reporting year, representing a 29% increase compared with the previous year. This rise is primarily attributable to the introduction of customer satisfaction surveys, which have provided additional opportunities for customers to submit positive feedback.
It is recognised, however, that further improvements are required to ensure that all compliments received directly by our frontline services are formally acknowledged and captured within our reporting systems. We believe that more positive feedback is being received informally than is currently logged, and strengthening these processes will improve our understanding of good practice and customer satisfaction.
The compliments received primarily related to the following themes:
- Satisfaction with the timeliness of repair attendance
- Positive views on the quality and standard of repair work
- Appreciation of staff conduct and professionalism across both Housing and Care & Support teams
- Recognition of the support and assistance received throughout the repair process
## _**Complaints**_
During the reporting year, 87 formal complaints were received. Of these, 65 were resolved at Stage One, indicating that the majority were addressed satisfactorily without requiring escalation.
Repairs accounted for 50% of all complaints, with the predominant driver being overdue repairs. Other key themes included:
- Delays in completing repairs
- Insufficient communication regarding progress or expected timescales
- Concerns regarding the standard or quality of repair work
This year we introduced weekly complaints review meetings to provide stronger oversight, ensure timely responses, and monitor progress more effectively. In addition, we established a quarterly strategic complaints meeting focused on evaluating trends, identifying learning opportunities, and continually improving our approach and practices.
## **Recruit, Retain and Develop an Engaged Workforce**
The success of our business relies on Ability’s most important resource: the staff teams who deliver services to our customers. The principles underlying the strategy are as follows:
- Ability’s Workforce Wellbeing Statement and Commitments
- Understanding our People – a focus on Equality, Diversity and Inclusion which are central to Ability’s values, and
- Maintaining and building upon our Investors In People accreditation, in addition to ISO and Disability Confident accreditation
During the year, Ability achieved its lowest level of vacancies within Care and Support (C&S) services, reflecting the continued focus on workforce stability and retention.
We have maintained a strong commitment to investing in our C&S teams learning, maximising available central government funding to supplement our own spend where possible.
Page **10** of **53**
**ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2025**
## **Operating and Financial Review and Strategic Report**
Following the successful relaunch of our organisational induction and probation processes for Care and Support teams last year, we are now extending this work to Housing and Property teams to ensure consistent, high-quality onboarding with a focus on values and behaviours, supporting staff to deliver high quality services to our residents from the commencement of their employment.
We have prepared managers for legislative changes associated with the Employment Rights Act (ERA) 2025, managers have been regularly briefed and an in-depth training programme scheduled throughout 2026. Implementation of ERA requirements across 2026 and 2027 will result in a number of changes to people policies, all of which are planned to be phased in line with the government’s implementation timetable, ensuring the business remains compliant and well protected.
The forthcoming competency and conduct standard in housing has led to a broader focus on workforce capability. In response, we have increased investment in learning for Housing and Property teams to ensure readiness for regulatory and operational change. We have partnered with a new e-learning provider that delivers high-quality content across Care and Support, Housing and Property learning streams, as well as targeted development for central teams and enhanced management capability across the business.
## **Care and Support**
For most of the year, Ability delivered care and support services in four local authority areas in the southeast of England. However, we were unsuccessful in retendering for one of our services, which transferred to the incoming provider in July 2025. 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, administered in January 2025, showed 94.5% of customers (on average) were satisfied with the service they received. The results were as follows:
|**Question**|**2025**|**2024**|
|---|---|---|
|Ability staff help me feel safe in my home|93.75%|95.95%|
|There is some flexibility in the way I receive my support as sometimes I
don't want to stick to a fixed plan|95.14%|91.89%|
|I feel that staff listen to me and I feel comfortable discussing and
planning my support with them|95.14%|95.94%|
|If I am not happy I know who to talk to|95.83%|94.59%|
|Staff know what is important to me and how I like to live my life|92.43%|95.55%|
Of the 238 surveys sent Ability received 155 responses, equating to a 60.5% return rate (2024: 63.5%)
Informed by customer feedback at service level, the organisation has developed service-specific development plans aimed at enhancing the quality of support provided and improving customer outcomes. During 2026, the organisation intends to implement a revised framework and monitoring process for service development planning, incorporating insights from customer satisfaction survey data and other quality assurance mechanisms to ensure continuous improvement.
All services performed consistently well throughout the year, as evidenced by internal performance indicators and quarterly quality audits. This strong performance has been further validated through local authority quality monitoring activity. All CQC-registered services are rated as ‘Good’.
Page **11** of **53**
**ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2025**
## **Operating and Financial Review and Strategic Report**
Safeguarding arrangements were further strengthened during the year through the expansion of safeguarding training and the establishment of a safeguarding review panel, designed to identify learning from incidents and disseminate good practice across the organisation
During the year, the organisation also provided training for support teams in trauma-informed care, alongside strengths-based support planning and risk assessment and management. This programme of training is intended to further enhance the quality and consistency of support delivered, ensuring that services are provided in a person-centred manner that maximises customer choice and control. By focusing on individual strengths, capabilities, and aspirations, the organisation seeks to support customers to live as independently as possible, supported by strengths-based and psychologically informed approaches.
## **Grow our Services and Increase our Reach**
We have continued to develop our services through organic growth and have achieved this in some services by allocating accommodation to individuals with higher and more complex support needs. We have also been accepted onto several local authority framework agreements and dynamic purchasing systems (DPS) and will continue applications for target geographical areas.
The organisation was also unsuccessful in the re-tender of one existing service, which transferred to the incoming provider in July 2025. The successful bidder submitted a lower-priced proposal, with price accounting for 50% of the total evaluation score. This outcome has informed ongoing work to review cost structures and pricing assumptions, ensuring that future bids remain both competitive and financially sustainable while continuing to meet required quality standards.
During the year, we have been focusing on strengthening our business development pipeline. This activity supports the sustainable growth of our care and support service by identifying future opportunities in advance, enabling us to plan capacity, develop service models aligned to local need, and respond proactively to commissioning priorities.
## **Maintain financial sustainability**
The most significant challenge to maintaining financial sustainability within care and support services continues to be the level of annual fee uplifts agreed by local authorities, particularly in the context of increased National Insurance Contributions and the ongoing rise in the National Living Wage (NLW). While the organisation supports increases to the NLW and seeks, where possible, to remunerate care and support staff above statutory minimums, the ability to do so is dependent on local authority inflationary fee increases being commensurate with both wage growth and wider cost inflation affecting care and support providers. Care and Support providers, including Ability, continue to be exposed to increased financial risk where local authority fee uplifts do not fully reflect underlying cost increases.
A further challenge has arisen from Void turnaround times in services. This has been driven in part by delays in funding approval and placement decision-making, reflecting wider financial pressures within adult social care commissioning. Further pressures have been experienced within our services operating on a “spot purchase basis”, where funding ceases immediately upon a customer being admitted to hospital. Many Ability services support individuals with complex needs, unplanned hospital admissions can form an expected part of the customer journey for some. This can result in short-term financial pressure, as staffing costs cannot always be reduced commensurately.
Page **12** of **53**
**ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2025**
## **Operating and Financial Review and Strategic Report**
We have concluded protracted negotiations with local authorities this year, ensuring inflationary increases are adequate to meet the inflationary pressures affecting our care and support services. We have also commenced negotiations regarding those services operating on a “spot purchase basis”, seeking to secure additional core funding, which will in part mitigate future risks in relation to elongated void times and unplanned customer hospital admissions.
## **Ability’s Plans for the future**
Ability Housing association’s corporate plan - Better Together - sets out our key objectives to September 2026. Ability’s service approach is underpinned by the principles of personalisation and co-production and support planning tools follow a strengths-based approach, ensuring that support and care plans are individually tailored and promote choice, control and autonomy.
Over the next year our corporate plan focuses on the following key objectives:
- Provide good quality homes and neighbourhoods
- Deliver high quality Housing Management & Support Services
- To recruit, retain and develop an engaged workforce
- To grow our services and increase our reach
- To maintain financial sustainability and deliver value for money
## **Better Together**
By 2026 Ability Housing Association will be able to demonstrate that:
- We provide high-quality homes for our residents with a timely and qualitative repairs service. We have invested significantly in our properties, and no home has an energy rating below EPC D, with all homes to be at a rating of EPC C or above by 2030.
- We have co-produced with every customer the service they receive based on their needs, preferences and aspirations. We will have engaged with residents in their neighbourhoods to improve the local area and agreed with them a local plan to be implemented.
- We have relaunched our Customer Committee, involving customers in the development of Ability’s organisational strategies and plans, evaluating our performance and service delivery.
- Our Housing & Support Officers are both proactive and responsive, supporting customers to maintain independent living and achieve their aspirations.
- Our care and support services have delivered high-quality co-produced support focused on the needs, preferences and aspirations of the individual, ensuring everyone has choice and control over the support they receive and the life they lead.
- Our workforce is well-managed, engaged, and trained to deliver high-quality services and outcomes with our customers.
- We will have grown our care and support business, increasing our reach and the number of people who benefit from Ability’s services, while increasing our economies of scale, that will support the financial success of this part of our business going forward.
- We have reinvested money from homes we have disposed of to create more opportunities for people to receive supported housing and care and support from Ability in our core areas of operation.
Page **13** of **53**
**ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2025**
## **Operating and Financial Review and Strategic Report**
- We are financially strong, with management decisions based on robust data and information. We will be efficient and effective, ensuring our resources are targeted, delivering high-quality services to the people we serve.
## **Financial Review**
Ability’s overall turnover increased by 3.5% in 2025 to £10,956k (2024: £10,589k). Income from social housing activities increased by 6.0% to £6,190k (2024: £5,840k), whilst income from non-social housing activities increased by 0.4% to £4,766k (2024: £4,749k).
The above graph shows that an increasing percentage of Ability’s turnover is coming from social housing activities. This is due to the rents having increased on average more than Local Authority contract income, combined with the loss of one Local Authority care & support contract in the year. Rents have increased in line with the Government policy, based on September CPI + 1%, but the volume of housing activity is relatively static, with no significant change to number of properties.
Operating costs increased by 4.3% to £10,616k (2024: £10,174k).
The graph shows that the portion of operating costs attributable to social housing activity has increased this year. Ability’s operating surplus was £338k (2024: £453k), which represents 3.0% of turnover (2024: 4.3%).
Page **14** of **53**
**ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2025**
## **Operating and Financial Review and Strategic Report**
The change was mainly due to one-off legal costs in support of a case against a developer, changes to employer national insurance contributions and the loss of one Local Authority care & support contract.
## **Capital structure and treasury policy**
Ability took the decision to repay two fixed rate loans during the year in order to take advantage of low breakage costs arising from relatively high interest rates. The loan repayments will save future interest costs and help generate additional cash for future investment in property and services.
Interest payable was £219k (2024: £265k), which included £124k of break costs arising from the loan repayments. Interest receivable was £69k (2024: £170k) and was lower due to Ability holding less cash balance for most of the year following repayment of the loans.
At 30[th] September 2025, Ability has one fixed rate loan at 1.65% which matures in December 2031. Outstanding borrowings amounted to £2,577k (2024: £5,757k) of which £317k falls due to be paid within the next year (2024: £536k). Ability has no undrawn facilities.
Ability ended the year with a cash balance of £2,338k (2024: £4,707k).
Ability was compliant with all lenders’ covenants in 2024/25.
## **Reserves**
At 30[th] September 2025 reserves amounted to £17,831k (2024: £17,648k). 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**
Ability has a Value for Money strategy which seeks to ensure we make the best use of the various forms of capital we have at our disposal. As a small housing association, we have a fixed level of resources and operate in a challenging environment with a high level 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 2025, we have calculated VFM metrics in accordance with the Regulator of Social Housing ‘Value for Money Metrics Technical Note Guidance June 2025’. The results are as follows:
|**METRIC**|**2025**|**2024**|**SH Provider**
**Median**|
|---|---|---|---|
|1.
Reinvestment %|0.7%|0.6%|_6.2%_|
|2a.
New Supply Delivered (Social Housing Units) %|-|-|_1.2%_|
|2b.
New Supply Delivered (Non-Social Housing Units) %|-|-|_-_|
|3.
Gearing %|0.5%|2.1%|_11.8%_|
|4.
EBITDA MRI Interest Cover %|320.5%|334.3%|_221.6%_|
|5.
Headline Social Housing cost per unit £|£ 8,587|£ 7,807|_£ 12,029_|
|6a.
Operating Margin (Social Housing Lettings) %|1.3%|0.5%|_12.1%_|
|6b.
Operating Margin (Overall) %|3.1%|3.9%|_6.9%_|
|7.
Return on Capital Employed %|0.7%|0.8%|_2.2%_|
Page **15** of **53**
**ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2025**
## **Operating and Financial Review and Strategic Report**
The specialist nature of the services delivered by Ability makes it difficult to benchmark our VFM metrics. 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, and as such the results are of limited value. As a benchmark for comparison purposes, we have used the data as published by the Regulator of Social Housing (specifically, the Supported Housing Provider Median as per the ‘Value for money additional tables 2024’ provided as part of the ‘Value for Money Metrics & Reporting – annex to the Global Accounts 2024’).
**Reinvestment % (metric 1)** shows a small increase from 0.6% in 2024 to 0.7% in 2025. Ability spent 77% more on improvements to its existing properties in 2024 than in the prior year, but it is still below the SH Provider Median. However, future years spend plans are supported by our asset management strategy, which is underpinned by a full stock condition survey, ensuring that investment is made where necessary, so this metric is not cause for concern.
**New Supply (metrics 2a and 2b)** are both zero as Ability has not developed nor acquired any additional housing units in the year. Ability is currently not developing new properties.
**Gearing (metric 3)** shows a reduction in the year from 2.1% in 2024 to 0.5% in 2025. This is because Ability repaid two loans in the year, and the balance outstanding in respect of the remaining fixed term loan has reduced following further repayments in the year. Ability’s gearing level is lower than the SH Provider Median due to a low level of debt.
**EBITDA MRI (metric 4)** has reduced in the year from 334.3% in 2024 to 320.5% in 2025. The change is due to a reduction in interest receivable which arises from Ability having less cash due to the repayment of two loans in the year. The metric shows that Ability can comfortably cover its loan interest payments and is generating cash to invest in its properties and services.
**Headline social housing cost per unit (metric 5)** has increased by 10% in the year, from £7,807 in 2024 to £8,587 in 2025. This due to an increase in housing management costs, driven by increased costs of staff (driven by general inflation) and significant one-off legal costs in the year. Compared to the SH Provider Median, Ability’s costs are relatively low, although this is partly due to the difficulty of establishing a comparable average cost, given the variety of operating models in the specialist housing sector.
**Operating margin on social housing (metric 6a)** showed a small improvement in the year, from 0.5% in 2024 to 1.3% in 2025, mainly due to the release of an impairment charge following two long term vacant properties being brought back into use. Ability’s operating margin is still significantly lower than that of the SH Provider Median, which shows this is an area for further improvement, to ensure that Ability can fund future investment in its properties and provide a quality service to residents.
**Operating margin overall (metric 6b)** shows a reduction from 3.9% in 2024 to 3.1% in 2025, which results largely from one-off legal costs set against higher income, and increased staff costs arising from the changes to employer national insurance contributions.
**Return on capital employed (metric 7)** shows a slight reduction from 0.8% in 2024 to 0.7% in 2025. This metric measures the efficiency of investment of capital resources. Ability has a slightly lower return than the SH Provider Median, due primarily to its lower operating margin.
Page **16** of **53**
**ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2025**
## **Operating and Financial Review and Strategic Report**
## **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.
Page **17** of **53**
**ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2025**
## **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:
- select suitable accounting policies and then apply them consistently.
- make judgements and accounting estimates that are reasonable and prudent.
- state whether applicable United Kingdom Accounting Standards and the Statement of Recommended Practice (SORP) Accounting by Registered Housing Providers 2018, have been followed, subject to any material departures disclosed and explained in the financial statements.
- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Association will continue in business.
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:
- So far as each director is aware, there is no relevant audit information of which the company’s auditors are unaware
- The directors have taken all steps that they ought to have taken as directors to make themselves aware of any relevant audit information and to establish that the auditors are aware of that information
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 18[th] March 2026.
## **External auditors**
A proposal will be made at the AGM to appoint the external auditors for the 2025-26 financial year.
The Operating and Financial Review and Strategic Report were approved by the Board on 25[th] February 2026 and signed on its behalf by:
**Mandy Dunstan Chair**
Page **18** of **53**
**ABILITY HOUSING ASSOCIATION**
**Report and Financial Statements for the year ended 30 September 2025**
## **Report of the Independent Auditors**
## **To the members of Ability Housing Association for the year ended 30 September 2025**
## **Opinion**
We have audited the financial statements of Ability Housing Association (the ‘Association’) for the year ended 30 September 2025 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:
- give a true and fair view of the state of the Association’s affairs as at 30 September 2025 and of its income and expenditure for the year then ended;
- have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
- have been prepared in accordance with the requirements of the Companies Act 2006, the Housing and Regeneration Act 2008 and the Accounting Direction for Private Registered Providers of Social Housing 2022.
## **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 and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
Page **19** of **53**
**ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2025**
## **Report of the Independent Auditors**
## **To the members of Ability Housing Association for the year ended 30 September 2025**
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:
- the information given in the Report of the Board and the Operating and Financial review and Strategic Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
- the Report of the Board and the Operating and Financial review and Strategic Report have been prepared in accordance with applicable legal requirements.
## **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:
- adequate accounting records have not been kept by the Association, or returns adequate for our audit have not been received from branches not visited by us; or
- the Association’s financial statements are not in agreement with the accounting records and returns; or
- certain disclosures of directors’ remuneration specified by law are not made; or
- we have not received all the information and explanations we require for our audit.
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:
- a satisfactory system of control over transactions has not been maintained.
## **Responsibilities of the Board**
As explained more fully in the Statement of the Responsibilities of the Board set out on page 17, the Board is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Board determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Board is responsible for assessing the 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.
Page **20** of **53**
**ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2025**
## **Report of the Independent Auditors To the members of Ability Housing Association for the year ended 30 September 2025**
## **Auditor’s responsibilities for the audit of the financial statements**
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
## **Extent to which the audit was considered capable of detecting irregularities, including fraud**
We identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and then design and perform audit procedures responsive to those risks, including obtaining audit evidence that is sufficient and appropriate to provide a basis for our opinion.
In identifying and addressing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, our procedures included the following:
- We obtained an understanding of laws, regulations and guidance that affect the Association, focusing on those that had a direct effect on the financial statements or that had a fundamental effect on its operations. Key laws, regulations and guidance that we identified included the Companies Act 2006, the Statement of Recommended Practice for registered housing providers: Housing SORP 2018, the Housing and Regeneration Act 2008, the Accounting Direction for Private Registered Providers of Social Housing 2022, tax legislation, health and safety legislation, and employment legislation.
- We enquired of the Board and reviewed correspondence and Board meeting minutes for evidence of non-compliance with relevant laws and regulations. We also reviewed controls the Board have in place, where necessary, to ensure compliance.
- We gained an understanding of the controls that the Board have in place to prevent and detect fraud. We enquired of the Board about any incidences of fraud that had taken place during the accounting period.
- The risk of fraud and non-compliance with laws and regulations was discussed within the audit team and tests were planned and performed to address these risks. We identified the potential for fraud in the following areas: laws related to the construction and provision of social housing recognising the regulated nature of the Association’s activities.
- We reviewed financial statements disclosures and supporting documentation to assess compliance with relevant laws and regulations discussed above.
- We enquired of the Board about actual and potential litigation and claims.
- We performed analytical procedures to identify any unusual or unexpected relationships that might indicate risks of material misstatement due to fraud.
- In addressing the risk of fraud due to management override of internal controls we tested the appropriateness of journal entries and assessed whether the judgements made in making accounting estimates were indicative of a potential bias.
Page **21** of **53**
**ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2025**
## **Report of the Independent Auditors To the members of Ability Housing Association for the year ended 30 September 2025**
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.
Elizabeth Hatchman Senior Statutory Auditor **For and on behalf of**
## **Menzies LLP**
Statutory Auditor 95 Gresham Street London EC2V 7AB
Date: 02 March 2026
Page **22** of **53**
**Report and Financial Statements for the year ended 30 September 2025**
## **ABILITY HOUSING ASSOCIATION**
|**Statement of Comprehensive Income**
**Note**
Turnover
2
Operating costs
2
(Loss)/gain 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)/gains in respect of pension scheme
Total comprehensive income for the year|**2025**
**£’000**
10,956
(10,616)
(2)
338
69
(219)
188
-
188
(5)
183|**2024**
**£’000**
10,589
(10,174)
38|
|---|---|---|
|||453
170
(265)|
|||358|
|||-|
|||358
2|
|||360|
## **The notes on pages 27 to 53 form part of these financial statements.**
The financial statements on pages 23 to 53 were authorised and approved for issue by the Directors on 25[th] February 2026 and were signed on its behalf by:
**Mandy Dunstan** Chair
**Lynsey Van Aswegen** Board Member
**Marcus Andrews** Secretary
Page **23** of **53**
**ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2025**
## **Statement of Changes in Equity (Reserves)**
|**Income and Expenditure Reserve**
Balance at 30thSeptember 2023
Surplus for the year
Actuarial gains in respect of pension scheme
Balance at 30thSeptember 2024
Surplus for the year
Actuarial loss in respect of pension scheme
Balance at 30thSeptember 2025|**£’000**
17,288
358
2|
|---|---|
||17,648
188
(5)|
||17,831|
## **The notes on pages 27 to 53 form part of these financial statements.**
Page **24** of **53**
**ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2025**
## **Statement of Financial Position at 30[th] September 2025**
|**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**|**2025**
**£’000**
50,069
502
50,571
939
2,338
3,277
(2,837)
440
51,011
(33,010)
(170)
17,831
17,831
17,831|**2024**
**£’000**
50,615
526|
|---|---|---|
|||51,141|
|||1,167
4,707|
|||5,874
(2,802)|
|||3,072|
|||54,213
(36,358)
(207)|
|||17,648|
|||17,648|
|||17,648|
Company registration number: 01261380
## **The notes on pages 27 to 53 form part of these financial statements.**
The financial statements on pages 23 to 53 were authorised and approved for issue by the Directors on 25[th] February 2026 and were signed on its behalf by:
**Mandy Dunstan** Chair
**Lynsey Van Aswegen** Board Member
**Marcus Andrews** Secretary
Page **25** of **53**
**ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2025**
## **Statement of Cash Flows**
|**Note**
**Net cash generated from operating activities**
i
**Cash flow from investing activities**
Interest Received
Purchase and construction of housing properties
Proceeds from the sale of tangible fixed assets
Purchase of other 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 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 in trade and other creditors
Pension movements
Grant recycled
Loss/(gain) on disposals of property
**Adjustments for investing or financing activities**
Loss on disposal of tangible fixed assets
**Net cash generated from operating activities**|**2025**
**£’000**
1,365
69
(343)
-
(61)
(335)
(3,180)
(219)
(3,399)
(2,369)
4,707
2,338
**2025**
**£’000**
338
907
(387)
228
252
(42)
-
2
67
1,365|**2024**
**£’000**
794|
|---|---|---|
|||170
(316)
158
(116)|
|||(104)
(375)
(265)|
|||(640)|
|||50
4,657|
|||4,707|
|||**2024**
**£’000**
453
1,000
(388)
(386)
131
-
(51)
(38)
73|
|||794|
## **The notes on pages 27 to 53 form part of these financial statements.**
Page **26** of **53**
**ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2025**
## **Notes to the financial statements**
## **Legal Status**
The Association is a private company, registered in England & Wales, 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 November 2025) 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 **27** of **53**
**ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2025**
## **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:
- Cash is held at cost; and
- Financial assets such as receivables are classified as loans and receivables and held at amortised cost using the effective interest method; and
- Financial liabilities such as loans are held at amortised cost using the effective interest method.
## **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.
## **Retirement benefits**
The cost of providing retirement pensions and related benefits is charged to management expenses over the periods benefiting from the employees’ services.
The detailed pensions policy can be seen at the beginning of note 19.
Page **28** of **53**
**ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2025**
## **Notes to the financial statements**
## **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 for freehold properties, and over the term of the lease for leasehold properties.
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.
## **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.
Page **29** of **53**
**ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2025**
## **Notes to the financial statements**
## **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|
|Heating 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:
|Freehold offices|1% - 2%|
|---|---|
|Long leasehold property|Over life of lease|
|Furniture, fixtures and fittings|25%|
|Computer equipment|33.3%|
|Vehicles|25%|
|Office 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.
## **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
Page **30** of **53**
**ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2025**
## **Notes to the financial statements**
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 is 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 & contingent 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.
Contingent liabilities are possible but uncertain obligations that are not recognised in the financial statements as a transfer of economic benefit to settle the possible obligation is not probable, or the amount of the obligation cannot be reliably estimated.
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 effect on amounts recognised in the financial statements. The items in the financial statements where these judgements and estimates have been made include:
- **Social care contracts**
- Management judgement is applied in determining the extent to which the risks and benefits are transferred to the Association when considering the income to be recognised.
Page **31** of **53**
**ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2025**
## **Notes to the financial statements**
- **Estimation uncertainty**
- Information about estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses is provided below. Actual results may be substantially different.
- **Useful lives of depreciable assets**
- Management reviews its estimate of the useful lives of depreciable assets at each reporting date based on the expected utility of the assets. Uncertainties in these estimates relate to technological obsolescence that may change the utility of certain software and IT equipment and changes to Decent Homes Standards which may require more frequent replacement of key components.
## **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 **32** of **53**
**ABILITY HOUSING ASSOCIATION**
**Report and Financial Statements for the year ended 30 September 2025**
## **Notes to the financial statements**
## **2. Particulars of turnover, cost of sales, operating costs and operating surplus**
|**Social housing lettings**
**Other social housing activities**
Management services
Management services - lettings
**Non social housing activities**
Charges for support services
Covid 19 Local Authority
**Social housing lettings**
**Other social housing activities**
Management services
Management services - lettings
**Non social housing activities**
Charges for support services
Covid 19 Local Authority Grants|**Turnover**
**£’000**
6,107
58
25
6,190
4,766
-
4,766
10,956
**Turnover**
**£’000**
5,761
56
23
5,840
4,754
(5)
4,749
10,589|**Operating**
**costs**
**£’000**
(6,024)
(58)
-
(6,082)
(4,534)
-
(4,534)
(10,616)
**Operating**
**costs**
**£’000**
(5,731)
(56)
-
(5,787)
(4,387)
-
(4,387)
(10,174)|**2025**
**(Loss)/gain on**
**disposal of**
**property,**
**plant &**
**equipment**
**£’000**
(2)
-
-
(2)
-
-
-
(2)
**2024**
**Loss)/gain on**
**disposal of**
**property,**
**plant &**
**equipment**
**£’000**
38
-
-
38
-
-
-
38|**Operating**
**Surplus**
**£’000**
81
-
25|
|---|---|---|---|---|
|||||106
232
-|
|||||232|
|||||338|
|||||**Operating**
**Surplus**
**£’000**
68
-
23|
|||||91
367
(5)|
|||||362|
|||||453|
Page **33** of **53**
**ABILITY HOUSING ASSOCIATION**
**Report and Financial Statements for the year ended 30 September 2025**
## **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**
**(Loss)/gain on disposal of property,**
**plant & equipment**
**Operating surplus / (deficit) on social**
**housing lettings**
**Voids**|**General**
**Needs**
**Housing**
**£'000**
772
144
62
**978**
(317)
(147)
(139)
(132)
(6)
(103)
(152)
-
**(996)**
**-**
**(18)**
**52**|**Supported**
**Housing**
**£'000**
4,048
756
325
**5,129**
(1,662)
(773)
(728)
(691)
(32)
(538)
(794)
190
**(5,028)**
**(2)**
**99**
**275**|**2025 Total**
**£'000**
**4,820**
**900**
**387**
**6,107**
**(1,979)**
**(920)**
**(867)**
**(823)**
**(38)**
**(641)**
**(946)**
**190**
**(6,024)**
**(2)**
**81**
**327**|**2024**
**Total**
**£'000**
**4,499**
**874**
**388**|
|---|---|---|---|---|
|||||**5,761**|
|||||**(1,673)**
**(888)**
**(967)**
**(671)**
**(37)**
**(552)**
**(943)**
**-**|
|||||**(5,731)**|
||||||
|||||**38**|
||||||
|||||**68**|
|||||**335**|
Page **34** of **53**
**ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2025**
## **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
**Total owned**
Accommodation managed for
others
**Total managed**
**Non-social housing**
Respite unit
**Owned but managed by others**
General needs
**Total owned and managed**|**2024**
**No.**
43
534
1
**578**
71
**649**
8
11
**668**|**Additions**
**No.**
-
-
-
**-**
-
**-**
-
-
**-**|**Disposals**
**No.**
-
-
-
**-**
-
**-**
-
-
**-**|**Other**
**No.**
-
-
-
**-**
-
**-**
-
-
**-**|**2025**
**No.**
43
534
1|
|---|---|---|---|---|---|
||||||**578**
71|
||||||**649**|
||||||8
11|
||||||**668**|
## **5. Operating surplus / (deficit)**
The operating surplus / (deficit) is arrived at after charging:
||**2025**|**2024**|
|---|---|---|
||**£’000**|**£’000**|
|Depreciation of freehold housing properties|664|660|
|Depreciation of leasehold housing properties|282|281|
|Depreciation of other tangible fixed assets|77|59|
|Operating lease rentals|||
|- Office equipment|8|9|
|**-**Land and buildings|641|552|
|Auditor’s remuneration (excluding VAT)|||
|- For audit services|20|16|
|- For other services – tax compliance|1|-|
Page **35** of **53**
**ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2025**
## **Notes to the financial statements**
|**6.**
**(Loss)/Gain on disposal of fixed assets**
Proceeds of sale
Cost of sale
**(Loss) / surplus on disposal**
**7.**
**Interest receivable and similar income**
Interest receivable and similar income
**8.**
**Interest payable and similar charges**
Loan and bank overdrafts
Loan repayment charges
Defined Benefit pension interest
**9.**
**Employees**
Average monthly number of employees:
Administration
Housing, support and care
Average monthly number of employees (full-time
equivalent)|**2025**
**£’000**
**Housing**
**properties**
-
2
**(2)**|**2025**
**£’000**
**Total**
**-**
**2**
**(2)**
**2025**
**£’000**
69
**2025**
**£’000**
87
124
8
219
**2025**
**No.**
10
122
132
117|**2024**
**£’000**
**Total**
158
120
**38**
**2024**
**£’000**
170
**2024**
**£’000**
252
-
13|
|---|---|---|---|
||||265|
||||**2024**
**No.**
11
124|
||||135|
||||117|
Average number of employees expressed in full-time equivalents is calculated based on a standard working week of 40 hours per week for Support workers, and 35 hours per week for all other employees.
Page **36** of **53**
**ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2025**
## **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
£100,000 - £109,999
**Employee costs**
Wages and salaries
Social security costs
Pension costs|**2025**
**No.**
3
2
1
1
1
**2025**
**£’000**
4,286
487
169
4,942|**2024**
**No.**
3
1
2
-
1
**2024**
**£’000**
4,110
396
166|
|---|---|---|
|||4,672|
## **10. Directors, members and executive directors**
|**Employee costs**|**2025**|**2024**|
|---|---|---|
||**£’000**|**£’000**|
|Aggregate emoluments of directors (including pension contributions)|355|340|
|Emoluments of the highest paid director (excluding pension contributions|104|100|
|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 (2024: £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 (2024: £Nil).
Page **37** of **53**
**Report and Financial Statements for the year ended 30 September 2025**
## **ABILITY HOUSING ASSOCIATION**
## **Notes to the financial statements**
## **11. Tangible fixed assets - properties**
|**Cost**
At 1 October 2024
Works to existing
properties
Disposals
At 30 September 2025
**Depreciation and**
**impairment**
At 1 October 2024
Charged in year
Released on disposal
Impairment (reversal)
At 30 September 2025
**Net book value**
At 30 September 2025
At 30 September 2024|**Freehold**
**Social housing**
**properties**
**held for**
**letting**
**£'000**
47,975
231
(165)
48,041
9,377
664
(146)
(14)
9,881
38,160
38,598|**Leasehold**
**housing**
**properties**
**held for**
**letting**
**£'000**
15,732
112
(84)
15,760
3,789
282
(43)
(102)
3,926
11,834
11,943|**Total**
**housing**
**properties**
**held for**
**letting**
**£'000**
63,707
343
(249)
63,801
13,166
946
(189)
(116)
13,807
49,994
50,541|**Completed**
**shared**
**ownership**
**properties**
**£'000**
75
-
-
75
-
-
-
-
-
75
75|**Total**
**housing**
**properties**
**£'000**
63,782
343
(249)|
|---|---|---|---|---|---|
||||||63,876|
||||||13,166
946
(189)
(116)|
||||||13,807|
|||||||
||||||50,069|
||||||50,616|
|**Expenditure on works to existing properties**
Components capitalised
Amounts charged to Statement of Comprehensive Income|**2025**
**£’000**
343
1,690
2,033|**2024**
**£’000**
316
1,638|
|---|---|---|
|||1,954|
Page **38** of **53**
**ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2025**
## **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|**2025**
**£’000**
387
31,136
31,523
**2025**
**£’000**
38,235
11,834
50,069|**2024**
**£’000**
388
31,523|
|---|---|---|
|||31,911|
|||**2024**
**£’000**
38,673
11,943|
|||50,616|
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. Accumulated impairment losses of £116k from previous years have been reversed in the year to 30 September 2025 as both properties the impairment related to, one freehold and one leasehold, were brought back into use in the year.
The carrying values of the properties (prior to the recognition of the impairment charges) are £108k (leasehold property) and £51k (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 70 (2024: 199) properties were subject to charges securing loan funding. These properties had a Net Book Value of £3,575k (2024: £3,595k) securing the Dexia loan.
Page **39** of **53**
**ABILITY HOUSING ASSOCIATION**
**Report and Financial Statements for the year ended 30 September 2025**
## **Notes to the financial statements**
## **12. Tangible fixed assets – other**
|**Cost**
At 1 October 2024
Additions
Disposals
At 30 September 2025
**Depreciation**
At 1 October 2024
Charged in year
Released on disposal
At 30 September 2025
**Net book value**
At 30 September 2025
At 30 September 2024|**Freehold**
**offices**
**£'000**
501
-
-
501
267
10
-
277
224
234|**Vehicles**
**and office**
**equipment**
**£'000**
993
-
-
993
993
-
-
993
-
-|**Furniture**
**fixtures**
**and**
**fittings**
**£'000**
369
-
-
369
369
-
-
369
-
-|**Long life**
**systems**
**and**
**computer**
**equipment**
**£'000**
263
22
-
285
178
19
-
197
88
85|**Service**
**charge**
**recoverable**
**assets and**
**WIP**
**£’000**
341
39
(20)
360
135
48
(13)
170
190
206|**Total**
**£'000**
2,467
61
(20)|
|---|---|---|---|---|---|---|
|||||||2,508|
|||||||1,942
77
(13)|
|||||||2,006|
||||||||
|||||||502|
|||||||525|
## **13. Debtors**
|**Due within one year**
Rent and service charges receivable
Less: provision for bad and doubtful debts
Other debtors
Prepayments and accrued income|**2025**
**£’000**
618
(298)
320
340
279
939|**2024**
**£’000**
757
(466)|
|---|---|---|
|||291
635
241|
|||1,167|
Page **40** of **53**
**ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2025**
## **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
Pension creditors
Recycled Capital Grant Fund (note 16)
Accruals and deferred income
Holiday pay accrual
Deferred grant income
**15.**
**Creditors: amounts falling due after more than one year**
Loans (note 18)
Deferred grant income (note 17)
**16.**
**Recycled capital grant fund**
At 1 October
Grants recycled
Correcting Adjustment
At 30 September|**2025**
**£’000**
317
516
267
80
-
24
51
1,150
45
387
2,837
**2025**
**£’000**
2,260
30,750
33,010
**2025**
**£’000**
51
-
-
51|**2024**
**£’000**
536
405
297
-
-
26
51
1,050
50
387|
|---|---|---|
|||2,802|
|||**2024**
**£’000**
5,221
31,137|
|||36,358|
|||**2024**
**£’000**
35
51
(35)|
|||51|
Page **41** of **53**
**ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2025**
## **Notes to the financial statements**
## **17. Deferred Grant Income**
|At 1 October
Disposals
Released to income
At 30 September
Due in one year
Due after one year|**2025**
**£’000**
31,523
-
(387)
31,136
387
30,749|**2024**
**£’000**
31,956
(45)
(388)|
|---|---|---|
|||31,523|
|||387
31,136|
The gross amount of grant received prior to amortisation was £39,137k (2024: £39,137k).
## **18. Loan analysis**
|**Due within one year**
Housing loans
**Due after more than one year**
Housing loans
**Total loans**|**2025**
**£’000**
317
2,260
2,577|**2024**
**£’000**
536
5,221|
|---|---|---|
|||5,757|
## **Security, terms of repayment and interest rates**
Housing loans are secured by fixed charges on individual properties.
The Orchardbrook loan was repaid in October 2024, and the Barclays loan was repaid in December 2024. The remaining loan with Dexia is repaid in quarterly instalments over the agreed period of the loan. The final instalment falls to be repaid in the period 2031. The interest rate on this borrowing is 1.65%. At 30 September 2025 the Association had undrawn loan facilities of £0k (2024: £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|**2025**
**£’000**
317
349
1,271
640
2,577|**2024**
**£’000**
536
499
1,704
3,018|
|---|---|---|
|||5,757|
Page **42** of **53**
**ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2025**
## **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 were notified in 2021 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 is seeking clarification from the Court on these items, and this process is ongoing, with the Court’s determination expected no earlier than the beginning of 2026. It is estimated that this could potentially increase the value of the full Scheme liabilities by £155m. We note that this estimate has been calculated as at 30 September 2022 on the Scheme’s Technical Provisions basis. Until the Court direction is received, it is unknown whether the full (or any) increase in liabilities will apply and therefore, in line with the prior year, no adjustment has been made in these financial statements in respect of this.
## **Social Housing Pension Scheme**
The company participates in the Social Housing Pension Scheme (the Scheme), a multi-employer scheme which provides benefits to some 500 non-associated employers. The Scheme is a defined benefit scheme in the UK. 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 last completed triennial valuation of the scheme for funding purposes was carried out as at 30 September 2023. This valuation revealed a deficit of £693m. A Recovery Plan has been put in place with the aim of removing this deficit by 31 March 2028.
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.
For accounting purposes, a valuation of the scheme is carried out with an effective date of 30 September each year. The liability figures from this valuation are rolled forward for accounting year-ends from the following 31 March to 28 February inclusive.
Page **43** of **53**
**ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2025**
## **Notes to the financial statements**
The latest accounting valuation was carried out with an effective date of 30 September 2024. The liability figures from this valuation were rolled forward for the company’s accounting year-30 September 2025.
The liabilities are compared, at the relevant accounting date, with the company’s fair share of the Scheme’s total assets to calculate the company’s net deficit.
## **Fair value of plan assets, present value of defined benefit obligation, and defined benefit asset (liability)**
|**2025**
**£’000**
Fair value of plan assets
1,060
Present value of defined benefit obligation
1,221
Surplus (deficit) in plan
(161)
Unrecognised surplus
-
Defined benefit asset (liability) to be recognised
(161)
Deferred tax
-
Net defined benefit asset (liability) to be recognised
(161)
**Reconciliation of opening and closing balances of the defined benefit obligation**
Defined benefit obligation at 30 September 2024
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 2025|**2024**
**£’000**
1,089
1,294
(205)
-
(205)
-|
|---|---|
||(205)|
||**£’000**
1,294
-
2
62
-
49
-
(98)
(88)
-
-
-
-
-|
||1,221|
Page **44** of **53**
**ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2025**
## **Notes to the financial statements**
|**Reconciliation of opening and closing balances of the fair value of plan assets**
Fair value of plan assets at 30 September 2024
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 2025
The actual return on plan assets (including any changes in share of assets) over the period from
September 2024 to 30 September 2025 was £0.
**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**
1,089
54
(54)
59
-
(88)
-
-
-
1,060
30
**£’000**
-
2
8
-
-
-
-|
|---|---|
||10|
||**£’000**
(54)
(49)
-
98
(5)
-|
||(5)|
Page **45** of **53**
**ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2025**
## **Notes to the financial statements**
|**Assets**
Global Equity
Absolute Return
Distressed Opportunities
Credit Relative Value
Alternative Risk Premia
Liquid Alternatives
Emerging Markets Debt
Risk Sharing
Insurance-Linked Securities
Property
Infrastructure
Private Equity
Real Assets
Private Debt
Private Credit
Credit
Investment Grade Credit
Cash
Corporate Bond Fund
Liquid Credit
Long Lease Property
Secured Income
Liability Driven Investment
Currency Hedging
Net Current Assets
Total assets|**2025**
**£’000**
128
-
-
-
-
185
-
-
3
53
-
2
126
-
139
42
35
9
-
-
-
19
318
-
1
1,060|**2024**
**£’000**
132
-
-
-
-
175
44
-
4
41
-
1
113
-
135
-
-
18
20
6
-
28
368
2
2|
|---|---|---|
|||1,089|
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.
Page **46** of **53**
**ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2025**
## **Notes to the financial statements**
## **Key assumptions**
||**2025**|**2024**|
|---|---|---|
||**% per annum**|**% per annum**|
|Discount Rate|5.68%|
4.99%|
|Inflation (RPI)|2.89%|
3.07%|
|Inflation (CPI)|2.56%|
2.68%|
|Salary Growth|3.56%|
3.68%|
||75% of|75% of|
|Allowance for commutation of pension for cash at retirement|maximum|maximum|
||allowance|allowance|
The mortality assumptions adopted at 30 September 2025 imply the following life expectancies:
||**Life expectancy at**|
|---|---|
||**age 65 years (Years)**|
|Male retiring in 2025|20.5|
|Female retiring in 2025|23.0|
|Male retiring in 2045|21.7|
|Female retiring in 2045|24.5|
## **Scheme: TPT Retirement Solutions – The Growth Plan**
The company participates in the scheme, a multi-employer scheme which provides benefits to some 521 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 2023. This valuation showed assets of £514.9m, liabilities of £531.0m and a deficit of £16.1m. To eliminate this funding shortfall, the Trustee has asked the participating employers to pay additional contributions to the scheme as follows:
Page **47** of **53**
**ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2025**
## **Notes to the financial statements**
## **Deficit contributions**
From 1 April 2025 to 31 March 2028: £2,100,000 per annum (payable monthly)
Unless a concession has been agreed with the Trustee the term to 31 March 2028 applies.
Note that the scheme’s previous valuation was carried out with an effective date of 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 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)
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.
||**30 September**|**30 September**|**30 September**|
|---|---|---|---|
||**2025**|**2024**|**2023**|
||**£**|**£**|**£**|
|Present value of provision|9,272|1,691|6,571|
|**Reconciliation of opening and closing provisions**||||
|||**2025**|
**2024**|
|||**£**|
**£**|
|Provision at start of period||1,691|
6,571|
|Unwinding of the discount factor (interest expense)||(6)|
225|
|Deficit contribution paid||(3,653)|
(5,106)|
|Remeasurements - impact of any change in assumptions||95|
1|
|Remeasurements - amendments to the contribution||11,145|
-|
|schedule||||
|Provision at end of period||9,272|
1,691|
Page **48** of **53**
**ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2025**
## **Notes to the financial statements**
## **Income and expenditure impact**
|Interest (income)/expense
Remeasurements – impact of any change of assumptions
Remeasurements – amendments to the contribution
schedule
Contributions paid in respect of future service*
Costs recognised in income and expenditure account|**2025**
**£**
(6)
95
11,145
1,967
13,201|**2024**
**£**
225
1
-
3,464|
|---|---|---|
|||3,690|
* includes defined contribution schemes and future service contributions (i.e. excluding any deficit reduction payments) to defined benefit schemes which are treated as defined contribution schemes.
## **Assumptions**
||**30**|**September**|**30 September**|**30 September**|
|---|---|---|---|---|
|||**2025**|**2024**|**2023**|
||**%**|**per annum**|**% per annum**|**% per annum**|
|Rate of discount||4.33|5.24|5.88|
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.
## **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 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 £38k (2024: £38k). At 30 September 2025 the Association had 2 (2024: 3) active members in the fund. Expected payments in the next financial year amount to approximately £30k.
## **Contingent Liability – Social Housing Pension Scheme**
We were notified in 2021 by the Trustee of the Scheme that it had performed a review of the changes made to the Scheme’s benefits over the years and the result was that there was uncertainty surrounding some of these changes that could potentially increase the value of the full Scheme liabilities. At 30 September 2025 this is no longer considered to be a contingent liability as the obligation is considered remote. No adjustment has been made in these financial statements in respect of this in the current year or prior year.
Page **49** of **53**
**ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2025**
## **Notes to the financial statements**
## **20. Reconciliation of net cash flow to movement in net debt**
|(Decrease)/Increase in cash
Cash inflow 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|**2025**
**£’000**
(2,369)
3,180
811
811
(1,049)
(238)|**2024**
**£’000**
50
375|
|---|---|---|
|||425|
|||425
(1,474)|
|||(1,049)|
## **21. Analysis of changes in net debt**
|Cash at bank and in hand
Loans
Changes in net debt|**1 Oct**
**2024**
**£’000**
4,707
(5,757)
(1,050)|**Cashflow**
**£’000**
(2,369)
3,180
811|**30 Sep**
**2025**
**£’000**
2,338
(2,577)|
|---|---|---|---|
||||(239)|
## **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. Ability’s own current estimate of the contingent liability is between £400k and £1,200k. This was also recognised as a contingent liability in the prior year financial statements to 30 September 2024 with an estimate of costs between £533k and £648k. The related legal process was concluded in 2025, but the scope and costs of the works required to resolve these issues remains unconfirmed. Given the uncertainties involved around estimating the financial effect, the amount and timing of any outflows and possibility of any reimbursements, no provision has been recognised in the financial statements.
Page **50** of **53**
**ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2025**
## **Notes to the financial statements**
## **23. Leasing commitments**
Operating lease payments amounting to £566k (2024: £467k) are due within one year. The future minimum lease payments under non-cancellable operating leases are:
|**Office equipment**
Due in one year or less
**Total office equipment**
**Land and buildings**
Due in one year or less
Between one and five years
Over five years
**Total land and buildings**
**Total operating leases**|**2025**
**£’000**
1
1
565
1,101
2,124
3,790
3,791|**2024**
**£’000**
1|
|---|---|---|
|||1
466
288
504|
|||1,258|
|||1,259|
## **24. Related parties**
There are currently no beneficiary members of the directors (2024: nil).
There have been no related party transactions in the year (2024: 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)|**2025**
**£’000**
-
2,577
2,577|**2024**
**£’000**
-
5,757|
|---|---|---|
|||5,757|
The fixed rate financial liabilities have a weighted average interest rate of 1.65% (2024: 4.46%) and the weighted average period for which it is fixed is 1 year to 7 years (2024: 1 year to 16 years). Two of the three loans have been repaid in the year. The debt maturity profile is shown in note 18.
## **Borrowing facilities**
The Association has no undrawn committed borrowing facilities at 30 September 2025.
Page **51** of **53**
**ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2025**
## **Notes to the financial statements**
## **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|**2025**
**£’000**
1,000
1,338
2,338|**2024**
**£’000**
3,200
1,507|
|---|---|---|
|||4,707|
## **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
Joining during the year
Leaving during the year
At 30 September|**2025**
**No.**
14
-
(1)
13|**2024**
**No.**
15
-
(1)|
|---|---|---|
|||14|
## **27. Capital commitments**
At the year end the Association had capital commitments of £Nil (2024: £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**|**2025**
**£’000**
2,338
618
340
166
**3,462**|**2024**
**£’000**
4,707
757
635
135|
|---|---|---|
|||**6,234**|
Page **52** of **53**
**ABILITY HOUSING ASSOCIATION Report and Financial Statements for the year ended 30 September 2025**
## **Notes to the financial statements**
|**Financial liabilities**
Measured at amortised cost
Loans
Trade creditors
Accrued expenditure
**Total financial liabilities**|**2025**
**£’000**
2,577
783
854
**4,214**|**2024**
**£’000**
5,757
702
732|
|---|---|---|
|||**7,191**|
## **29. Events after the end of the reporting period**
Following the end of the reporting period, Ability has sold one social housing property for £950,000. The carrying value of this property at 30 September 2025 was £444,000.
Page **53** of **53**