Registered no. IP224 Arbour Housing Limited Report and Financial Statements For the Year Ended 31 March 2024 Arbour Housing Limited Year Ended 31 March 2024 Contents page Page Board of Management and Advisers strategic report of the Board of Management Report of the Board of Management 13 Independent Auditor's Report to the members of Arbour Housing Limited 17 statement of Comprehensive Income 21 statement of Changes in reserves 22 statement of Financial Position 23 statement of cash flows 24 Notes to the financial statements 25 Arbour Housing Limited Year Ended 31 March 2024 Board of Management and Advisers Board of Management A Clarke Chair M Blair th th Co-opted 29 November 2022 and Elected 26 June 2023 S Bryans W Chambre th th Co-opted 28 March 2023 and Elected 26 June 2023 P Flynn C Lyness M Spence Resigned 31" August 2023 J Hool I Elliott th Passed away 20 December 2023 N Hampton C Rooney th Co-opted 28 November 2023 Chief Executive K Matthews Registered office 18 - 22 Carleton Street Portadown Co. Armagh BT62 3EN Registered number Charity no. 102344 Independent Auditors ASM (B) Ltd Glendinning House 6 Murray Street Belfast BTI 6DN Bankers Danske Bank 45/48 High Street Portadown BT62 ILB Solicitors Thompson Mitchell 12-14 Mandeville St, Portadown BT62 3NZ Carson McDowell Cleaver, Fulton, Rankin Murray House, 50 Bedford St, Belfast 4 Murray St, BT2 7FW Belfast BTI 6DN A&L Goodbody 42/46 Fountain street, Belfast, BTI 5EF Arbour Housing Limited Year Ended 31 March 2024 strategic report of the Board of Management for the year ended 31 March 2024 The Board of Management present their strategic report for Arbour Housing Limited for the year ended 31 March 2024. Principal activities Arbour Housing is a Co-operative and Community Benefit society registered with the Department for Communities ("DfC") providing housing accommodation for those in need. It has charitable status with HM Revenue and Customs and is a registered charity with the Charity Commission for Northern Ireland. Corporate Strategy Last year Arbour Housing reviewed and updated its 2018-2023 Strategy to cover the next 5 years, 2023 to 2028. Arbour aims to build on what has been achieved to date and to make a positive difference to our tenants, local communities and the environment. Vision Statement., To provide more homes, meet our tenants, needs and make a positive difference to people's lives, communities and the environment. Strategic Objectives., l. Empower our tenants Supportingi involving and empowering tenants in everything we do. 2. Build a strong business Being a strong, well-run organisation who are seen as a partner and employer of choice. 3. Provide great homes Providing good quality and safe homes that meet residents, needs now and in the future. 4. Provide more new homes Building new homes to meet housing needs across Northern Ireland. 5. Protect our environment Reducing our impact on the environment. Values.. These are the guiding principles of what we do and how we work and will set the standard that our tenants can expect from us. Our values are to be - Caring, Honest, Supportive and Effective and to have Integrity. The strategy will be actioned through a series of annual business plans that are designed towards a programme of performance improvement and business growth. The plan sets oiit a series of goals and Iiey performance indicators that will guide staff towards the strategic objectives and are monitored by the Board of Management and the management team throughout the year. Board of Management The Board of Management meets regularly throughout the year. There are three committees that meet regularly throughout the year with specific responsibilities for property services, procurement and development, finance and corporate performance and audit and risk. Board members are elected for a three year period; retire on expiration of the three years and are eligible for re-election if they have not served the maximum allowed of nine years. Arbour Housing Limited Year Ended 31 March 2024 Strategic report of the Board of Management for the year ended 31 March 2024 Gender analysis 6 members of the Board of Management are male and 3 are female. The management team of Arbour Housing comprises 4 males and I female. At 31 March Arbour Housing had a total of 31 employees of which 13 were male and 18 were female. For staff, excluding the senior management team, analysis shows the average female salary to be 4,630/0 lower than the male average. For members of the senior management team, excluding the Chief executive, the average female salary is 13.83 % lower. Arbour Housing fully supports fair employment and its objective is to fill each position with the best candidate through a process of open and fair competition in line with best recruitment practice. Arbour Housing has a salary strLtcture based upon assessment of the job specification and skills requirement for each post. A job evaluation framework is used to objectively carry out the job assessment. The successful candidates for recruitment of each role has their salary determined by the independent evaluation of the job and the analysis above is the reflection of this. Operational performance Arbour Housing aims to operate efficiently and effectivelyi and outputs are monitored by the Board of Management and Committees who receive performance reports covering a variety of financial and non-financial performance information. For the core business areas the Board has set a number of key performance indicators these include rent arrears, voids, customer satisfaction, maintenance repair times, and financial stability. In challenging operating conditions, the following performance against key targets has been achieved:_ Performance Indicator Liquidity margin Actual 2023-24 1.12 Target 2023-24 >0.5 Comment Liquidity remains at a comfortable level and the position is managed throughout the year with emphasis on managing borrowing and interest costs. Gearing ratio 24.60/0 25.70/0 Lower than budget and remains comfortably within covenants agreed with lenders. Lower gearing reflects the management of borrowing and the timing of development ex enditure bud eted around ear end. Better than budget and is comfortably within covenants agreed with lenders. This represents a positive outturn in the context of considerable increases in interest rates and increased market costs for re airs includin ca ital works. Interest cover 1890/0 Arbour Housing Limited Year Ended 31 March 2024 strategic report of the Board of Management for the year ended 31 March 2024 Performance Indicator Operating margin Actual 2023-24 Target 2022-23 26.40/0 Comment Turnover is 20/0 below budget which includes rent l % below budget offset by operating costs 3 % better than budget which includes admin overhead 7 % better than bud et. Payments have remained strong through the period and exceeded those anticipated to be impacted by the cost of living crisis. Arrears and tenants continue to be a matter for considerable su ort. Analysis shows 0.34 % loss arising on routine void turnaround with reduced number of tenants terminating. There were other losses for non routine voids including those with additional maintenance works 0.340/0 Tenant arrears 6.54 % Loss of revenue through Voids 0.730/0 Response maintenance Emergency Urgent Routine repairs completed within timescale Tenant satisfaction Service Provision Rent value for money Quality of neighbourhood Recommend to family or friend Ability of staff to dea l effectively with uer 910/0 860/0 89% 85% 80% 800/0 Results reflect good performance by contractors and ongoing management supervision in the matter of contractor performance. 890/0 900/0 Achieved high levels of tenant satisfaction within all operational areas reflecting the success of the Tenant Participation strategy. There is continued focus on areas to address and improve service. 900/0 850/0 890/0 850/0 85% The management of financial resources is critical to Arbour Housing's ability to meet its objectives. Whilst Arbour Housing has a voluntary non-profit making status, the geiieraLion of dri ilririudl sui-pSus is vilal to eiisui-e tlie oii-goiiig iiivesLimeiil in Iiew housing stock, to provide for longer term maintenance obligations, to meet the commitments to lenders and to generally ensure adequate protection against unforeseen circumstances. Employee information Arbour Housing's total staff costs increased to £1,438,575 (2023: £1,202,098) including reduced pension costs. Sickness absence levels were 4.60/0 in 2023-24 (4.80/0 in 2022- 23). There were 6 new staff joining and 3 staff members left during the year. Arbour Housing Limited Year Ended 31 March 2024 strategic report of the Board of Management for the year ended 31 March 2024 Geo-political Events Following on from the challenges brought about by Geo-Political events such as the outworking of the war in Ukraine, Arbour has had to manage through new and additional challenges that included cost inflation, interest rate increases, supply chain disruption and labour skills shortages. To maintain effective decision making in the interests of Arbour Housing, throughout the year the Board has overseen: Development and implementation of mitigating actions and processes to ensure that Arbour Housing continues to operate an effective control environment: in particular, addressing any key reporting and other controls on which we place reliance historically, but which may not prove effective in the current environment. Provision of reliable and relevant information, on a continuing basis, in order to manage operations and those of our suppliers. Maintenance of capital, ensuring that Arbour Housing has sufficient reserves. Arbour Housing's Board considers that the challenges which arose throughout the year have not had a material effect on Arbour Housing's financial position that would impact on its ability to maintain operations, continued level of service to tenants or its ability to maintain bank covenants. The Board are of the opinion that the agreed actions have assisted tenants and Arbour Housing itself to avoid the potentially significant impact that might have arisen due to the uncertainty created by the challenges noted above, The reported surplus for the year ended 31st March 2024 is ahead of the budget set at the beginning of the year and therefore ahead of the reforecast set midway through the year to take account of the potential impact of interest rate rises cost pressures and potential impact of tenants, circumstances. The results reflect increased rental income from an increase in the number of homes provided and from rents, managed void loss, investment in maintaining homes through response repairs, other planned works and progress with on-going development activity. The latest review of rental debtors and tenant payments shows that the position has not deteriorated and Arbour Housing continues to offer support to tenants in financial hardship including referral to other support services. The Board consider that there will be no significant impact on the value of properties under the existing use valuation basis as a result of the inflationary and interest rate increases. In response to the challenges Arbour Housing continues to carry out comprehensive risk assessments and has put in place actions to manage and mitigate identified risks. Arbour Housing's component replacement programme is now on schedule having recovered from the programme disruption caused by the pandemic. Arbour Housing Limited Year Ended 31 March 2024 strategic report of the Board of Management for the year ended 31 March 2024 Consideration of the overall financial impact of interest and inflationary cost increases have been reflected in the budget for 2024-25 and five-year projections 2024-29. which covers operational performance, financial position and cash flow projections. Arbour Housing will undertake regular reviews of the underlying assumptions in the budget and five-year plan over the course of 2024-25 and consider corrective action measures, as appropriate. The operating surplus for the year ended March 2025 is projected to be £1.16m presenting a healthy outcome for the year ahead. The budget and five-year plan projections confirm that Arbour Housing is in a position to achieve its objectives and is in a position, financially, to manage the risks raised. The projections show that the impacts on cash flow is not a concern and that Arbour Housing has adequate facilities in place to ensure liquidity at all times. The key financial ratios computed on the budget outturn and five-year plan are comfortably within those covenanted to lenders. The Board considers that the budget provides a reasonable estimate of the financial impact of the interest rate and inflationary cost increases. Subsequent events Arbour Housing Board considers there have been no other events since the year end that have had a significant effect on its financial position. status Arbour Housing Limited is registered under the Co-operative and Community Benefit Societies Act (Northern Ireland) 1969 (No. IP224) and is a Registered Housing Association. Arbour Housing Limited is a registered charity (Charity No. XN46064). Arbour Housing Limited is registered with the Charity Commission for Northern Ireland (Registration No. NIC102344). Value for Money Arbour Housing Limited's focus on delivering value for money as identified in two principal strands. Strand I relates to continuous improvement that is a key element of our business strategy. Strand 2 relates to benchmarking our outcomes against our peers and other relevant external measures to identify and prioritise areas of focus. Our consideration in driving Vfm is to maximise capacity and better utilise our assets and rp.SOLircef in a manner that balances and meets the needs of both existing and future tenants and residents. Value in our service provision is therefore informed by the perspective of our customers. The focus is not just about cost savings and financial improvement. Consideration is given to economy, efficiency and effectiveness in the maintenance and use of our housing assets to achieve our targets for new housing development, resident services and community investment. Arbour Housing pays due regard to rents and our annual business plans are designed towards continual performance improvements and organisational growth which will contribute towards achieving our Vfm aims. Vfm is ensuring that our investment and expenditure is providing adequate returns in terms of the quality of service from suppliers and contractors as well as ensuring costs are managed. Arbour Housing Limited Year Ended 31 March 2024 Strategic report of the Board of Management for the year ended 31 March 2024 In the year 2023-24 our Vfm approach has helped deliver 59 homes to the Social Housing Development Programme at 105 % of the Total Cost Index which is considered to be a positive outcome in the context of increasing building costs. With loan finance at 45 % of the total cost of the properties acquired, gearing is well within the covenant level required by our lenders, The results mean Arbour Housing will incur comparatively lower interest charges and is maintaining capacity for further investment in homes for those in need. The income generated in the year ended 31 March 2024, from rent, rates and service charges, totalled £8.86m (2023 - £7.64m) and represents an increase of 16.0 % on the previous year (2023 _ 8.90/0), The cash generated was applied to interest charges on existing loans (180/0), capital repayments on existing loans (160/0) maintenance activities (310/0), rates (10 % ), management and overhead (250/0), with maintenance activities including reinvestment in improvement and replacements representing an increased amount. For the year ended 31 March 2023 Arbour Housing had a net drawdown of finance (£9.75m), received Housing Association Grant funding (£19.2m) and expending a total of £29.Om on new housing stock and presents a reduced cash balance at year end (£0.14m). Arbour Housing's activities which contribute to Vfm include; Effective procurement of services designed to secure most economical supply including the use of joint procurement with other Housing Associations to consolidate the combined purchasing power Focused set of internal key performance indicators to encourage efficient cost- effective practices and services Regular contract meeting with service providers including review of contract performance indicators A programme of quality assurance checks on work being carried out by service providers Ongoing investment in existing properties to ensure continued operational service and standard of accommodation Engagement with benchmarking opportunities including NIFHA and Dfc to measure performance against others A series of tenant satisfaction surveys to assess quality of services from the perspective of the end user tenants Tenant Participation Arbour Housing is committed to ensuring that all tenants receive the best service possible. To achieve this, we will provide a range of real opportunities for tenants to contribute to and influence decisions and the service delivery of Arbour Housing, placing tenants at the centre of our decision-making process and to build upon our existing good practices and level of tenant involvement. The objectives of our Tenant Participation Strategy are.. To ensure that tenant involvement is at the centre of what we do. To develop and establish regular and meaningful opportunities for all our tenants to partake in. To provide tenants with the support they need to promote tenant participation, local empowerment and community cohesion. Arbour Housing Limited Year Ended 31 March 2024 Strategic report of the Board of Management for the year ended 31 March 2024 To promote partnership working between Arbour Housing, tenants and the local community to deliver effective and meaningful improvements to the local environment. Tenant Involvement helps us manage our business so that tenants and other stakeholders find it easy to participate in and influence decisions at a level at which they are comfortable. To help achieve this, we recognise that many different opportunities are required. We aim to. Put tenants, views at heart of our decision-making process Listen, act and provide feedback to tenants Provide a range of options for tenant involvement, via our Menu of Involvement Ensure the promotion and expression of our community ethos Ensure all staff embrace this strategy to achieve meaningful participation Review our practices and how we operate by acting positively to feedback from tenants Commit to the provision of adequate resources to deliver all aspects of the strategy. The members of the Tenants, Forum have access to training to enable them to maximise their contribution including Governance training and following consideration, have approved activities for Tenant Engagement throughout the year. The Tenants Forum performs an enhanced scrutiny role on behalf of Arbour Housing. Tenant involvement in the scrutiny of a landlord's performance is rooted in the principle that landlords take account of the following; Tenant's priorities and needs Involving tenants in setting policies and standards Taking tenants, views into account before decisions are taken How to support tenants to hold the landlord to account. Results from the latest Tenant Satisfaction Survey support the practice of tenant involvement and participation,. 76.5 1 of respondents were satisfied that Arbour Housing listened to their views and acted on them 96.50/0 of respondents felt that Arbour Housing kept them informed about things that might affect them as a resident. Tenant Forum members have been involved in policy reviews and participated in joint £c.he.mp. visits with estate compliance officer's to proiiide a tenant perspective on a range of services provided with requests and views considered and actioned in the year to March 2024. Forum members have also held meetings with assorted members of Staff and Contractors to outline any issues that tenants in their area may be experiencing to enhance the services provided by Arbour. Risk Management Responsibility for the identification of risks is clearly defined and operates through a rolling risk assessment process. Key risks facing Arbour Housing are considered by the Board of Management and the Board has adopted a risk-aware strategic focus. Performance in the sector is generally affected by government policies and changing legislation, the impact of the regulatory regime, changes in demographic, political or io Arbour Housing Limited Year Ended 31 March 2024 Strategic report of the Board of Management for the year ended 31 March 2024 economic conditions or environmental risks. Some of the major factors which may affect Arbour Housing over the next year are: Strategic risks Macroeconomic and financial environment Delivering against Tenant expectations Diversification into new business Access to labour and skills Counterparty risk The requirements arising from the objective of decarbonisation and the investment that will be required Operational risks existing stock and service delivery Existing stock quality Delivering services to tenants Health and safety Costs and inflation Grant funding levels Rent setting Tenant welfare Rental income and arrears Data security Data integrity Operational risks development Contractual risks Construction process risks Finance and treasury management Existing debt New debt Alternative funding models Pensions Fraud Measures are in place to control these risks and the implementation of further mitigating actions is regularly monitored by the Board. Following the easing of risks arising from Covid 19 new risks are arising from the wider global circumstances that have been developing over recent months. Arbour Housing is alert to the risks and will monitor and mitigate as far as is possible. Performance in the year ended 31 March 2024 During the year the number of homes in management increased to 1,490 (2022-23: 1,436). A further 180 properties had been substantially progressed in the year and will be completed in early 2024-25. The turnover figures show an increase of 16.40/0 in income from social housing activities from £8,760,818 in 2022-23 to £10,195,480 in 2023-24. Arbour Housing's annual review of rental charges at March 2024 resulted in a 7.5 % increase in the majority of rents, which was considered in the context of increasing costs faced and the pressures on tenants. li Arbour Housing Limited Year Ended 31 March 2024 strategic report of the Board of Management for the year ended 31 March 2024 Operating costs of £7,393,126 represents 72.40/0 of turnover (73.30/0 in 2022-23) with a further 15.3 % to cover interest cost on loans (12.10/0 in 2022-23). The surplus on ordinary activities was £1,329,668, showing a decrease from 2022-23 by £29,035. The surplus on ordinary activities is reflective of the increase in operating costs and interest costs on loans being higher at 18. 10/0 than the increase in revenue at 15.1 % in addition to an increase in the level of capitalised repairs within the planned maintenance programme of works. The Board is content that the figures represents a healthy underlying performance. Arbour Housing continued its programme of major repairs and improvements to properties and the total expenditure in the year, inclusive of capital reinvestment, was £2,238,953 (2022-23 £2,071,566). The level of expenditure of this nature will fluctuate from year to year dependent on the age and condition of schemes and the portion of this charged through the statement of comprehensive income can have a significant impact on the amount of retained surplus in any one year. Difficulties in the supply market and increasing market costs have contributed to the recorded increased costs. The Board is confident that this does not impact on the covenants related to Bank finance. Financing costs increased from £1,073,974 in 2022-23 to £1,559,386 because of the borrowing requirements through the year and the increasing interest rates through the year. The current year includes no other finance costs relating to pension adjustments (2022-23: £14,000). Arbour Housing is committed to supporting contractors and suppliers through the timely payment of invoices. The target is to settle the accounts for undisputed invoices within 30 days. For the year 2023-24 the average payment period was 18 days (2022-23: 17 days). Expected performance in the year ending 31 March 2025 Arbour Housing expects to maintain its level of operations and performance in 2024-2025. It is planned that 381 homes will be undergoing development during the year. £1,995,254 of expenditure regarding the on-golng programme of component replacement, major repairs and improvements to properties is anticipated in the year. Financial sustainability Arbour Housing has a robust framework of longer term financial planning in place. The Board regularly considers the longer term financial plan which covers a 25 year period. The plan includes sensitivity analysis and compares projected results to funders, covenants where applicable. The Board has considered the potential impact of the Covid 19 pandemic and will keep this under review. By order of the Board Angela Clarke Chair 04do Qier Date: 12 Arbour Housing Limited Year Ended 31 March 2024 Report of the Board of Management for the year ended 31 March 2024 The Board present their report together with the financial statements for the year ended 31 March 2024. Principal activities Arbour Housing is a registered non-profit making housing association providing housing accommodation for those in need. It is an active participant in the Social Housing Development Programme. Financial results The surplus on ordinary activities for the year was £1,329,668 compared to a surplus of £1,358,703 for the previous year. Board of Management The Board of Management meets regularly throughout the year. There are three committees which meet regularly throughout the year with specific responsibilities for property services, procurement and development, finance and corporate performance and audit and risk. Board members are elected for a three year period; retire on expiration of the three years and are eligible for re-election if they have not served the maximum allowed of nine years. Treasury Arbour Housing's treasury policy is regularly reviewed by the Finance & Corporate Performance Committee, under delegated authority from the Board of Management. The aim is to maintain adequate cash balances to minimise interest payments on loans, without compromising the ability to meet our financial obligations as they arise. Arbour Housing was fully compliant with loan covenants during the year and monitors these covenants in all budget projections. All surpluses generated by Arbour Housing are reinvested in order to maintain homes in good condition, develop new homes at rents that are as low as possible and to reduce the borrowing requirements. The reserves that Arbour Housing has built up have been reinvested in its housing properties, and are not, therefore, represented by cash balances. Interest rate risk Exposure to fluctuating interest rates is managed by the composition of a balanced portfolio of fixed and variable rate loans. Arbour Housing's effective interest rate for 2023-24 was 5.17 % (2022_23: 4.520/0) and Arbour Housing has attempted to mitigate against the impact of increasing interest rates through effective cash management. 13 Arbour Housing Limited Year Ended 31 March 2024 Report of the Board of Management for the year ended 31 March 2024 Liquidity risk Arbour Housing maintains a mixture of long term and short term finance that is designed to ensure that there is sufficient funds to achieve business objectives and to facilitate growth with consideration to the interest costs of such finance. Currency risk Arbour Housing does not engage in foreign currency transactions and is not exposed to exchange risk. Environmental matters Arbour Housing recognises its corporate responsibility to carry out its operations and development programme whilst minimising environmental impacts. The Board's continued aim is to comply with all applicable environmental legislation, prevent pollution and to reduce waste wherever possible and its objectives are reinforced in its energy strategy. Arbour recognises that the Housing sector has a critical role to play in delivering the government's ambition for net zero carbon emissions and responding to the climate crisis. A major Environmental consideration for Arbour Housing this year has been Carbon Reduction. This has been addressed in Arbour's 2023-28 Carbon Reduction Strategy (CRS) which sets out the drivers for change and why the Carbon Reduction Pledge has been made, where we are starting from, and our priorities for action to decarbonise our operations and lay a foundation for the future. We're proud that over the last year we have brought the Strategy to life by developing a Carbon Reduction Framework that covers every aspect of our operations and has resulted in both the Board and majority of the staff undergoing in-depth training on Climate Change during the last year. We are currently working on our first Environment, Social & Governance (ESG) report. In a relatively short space of time'ESG' has risen on our agenda which is why the Board has decided to create and publish this report. Within the past year we have signed the Climate Action Pledge, adopted a Climate Change Strategy and rolled out our Carbon Reduction Framework across the business. All of this is in addition to being a purpose-led organisation that is making a positive difference in our community. This report will align with to the 'Sustainability Reporting Standard for Social Housing, which is the sector standard for ESG reporting and ensures that we report on the indicators that have been identified as being most relevant for our sector. It also allows comparisons to be made across the sector as well as the ability to learn and share best practice with our peers. Corporate Governance Having regard to the 2022-23 annual Regulatory Judgement from the Regulator (Department for Communities), which cover the three standards of Governance, Finance and Consumer and which received top grade, it is the opinion of the Board of Management that Arbour Housing is in compliance with the best practice issued by NIFHA Code of Governance. 14 Arbour Housing Limited Year Ended 31 March 2024 Report of the Board of Management for the year ended 31 March 2024 Audit and Risk Committee Arbour Housing has an Audit & Risk Committee with clearly defined terms of reference. The Committee monitors risk management and internal controls through the management of internal and external audit programmes. The Committee provides a forum through which the internal and external auditors report to the Board. The Board believes that it has an objective and professional relationship with its auditors. Going Concern After making enquiries, the Board of Management is confident that Arbour Housing has adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the financial statements. Internal controls The Board of Management is responsible for Arbour Housing's system of internal controls and for reviewing its effectiveness. Such a system is designed to manage and reduce, rather than to eliminate, the risk of failure to achieve business objectives. It can provide only reasonable, and not absolute, assurance against material misstatement or loss. We operate ongoing processes for identifying, evaluating and managing the significant risks faced by Arbour Housing. They have been in place for the year to 31 March 2024 and up to the date of the approval of the Annual Report and the Financial Statements. The processes are reviewed at least annually by the Committee. The key elements of the control system in operation are: The Board has adopted a formal schedule of matters reserved for its approval ensuring it maintains responsibility for overall strategyi approval of all property transactions and other major capital expenditure projects; There is an organisation structure with clearly defined lines of responsibility and delegation of authority; and Detailed budgets are prepared covering Arbour Housing's business which are reviewed and approved by the Board of Management. Actual results are compared against budget and appropriate action identified and initiated. Statement of the responsibilities of the Board of Management The Board of Management is responsible for preparing the Board of Management's Report and the financial statements in accordance with applicable laws and regulations. The Board of Management is required by law to prepare financial statements for each financial year which give a true and fair view of the state of affairs of Arbour Housing and of its surplus or deficit for that period. In preparing these financial statements, the Board of Management are required to. select suitable accounting policies and then apply them consistently; make judgments and accounting estimates that are reasonable and prudent; 15 Arbour Housing Limited Year Ended 31 March 2024 Report of the Board of Management for the year ended 31 March 2024 state whether applicable accounting standards 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 Arbour Housing will continue in operation. The Board of Management are responsible for keeping adequate accounting records that disclose with reasonable accuracy at any time the financial position of Arbour Housing and enable them to ensure that the financial statements comply with the Financial Reporting Standard 102 and Housing SORP 2018. They are also responsible for safeguarding the assets of Arbour Housing and for taking reasonable steps for the prevention and detection of fraud and other irregularities. Statement of disclosure to auditors So far as each of the members of the Board of Management are aware at the date of approval of these financial statements.. there is no relevant audit information of which Arbour Housing's auditors are unaware. and they have taken all the steps that they ought to have taken in order to make themselves aware of any relevant audit information and to establish thal Arbour Housing's auditors are aware of that information. Auditors A resolution to reappoint ASM (B) Ltd will be proposed at the Annual General Meeting. On behalf of the Board of Management eiacv. Angela Clarke Chair Date., 25th June 2024 16 Arbour Housing Limited Year Ended 31 March 2024 Independent Auditor's Report Opinion We have audited the financial statements of Arbour Housing Limited for the year ended 31 March 2024 which comprises the statement of comprehensive income, the statement of changes in reserves, the statement of financial position, the statement of cash flows and the related notes to the financial statements, including a summary of significant accounting policies. In our opinion the financial statements: give a true and fair view of the state of Arbour Housing's affairs as at 31 March 2024 and of its surplus for the year then ended; have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 102"The Financial Reporting Standard applicable in the UK and Republic of Ireland" and applicable law)"; and have been properly prepared in accordance with the requirements of the Co-operative and Community Benefit Societies Act (Northern Ireland) 1969. the Registered Housing Associations (Accounting Requirements) Order (Northern Ireland) 1993. Article 19 of the Housing (Nl) Order 1992; Regulation 9 of the Charities (Accounts and Reports) Regulations (Northern Ireland) 2015; and the Charities Act (Northern Ireland) 2008. Basis of 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 Arbour Housing 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 those 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 We have nothing to report in respect of the following matters in relation to which the ISAS (UK) require us to report to you where, the Board of Management's use of the going concern basis of accounting in the preparation of the financial statements is not appropriate. or the Board of Management have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about Arbour Housing's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the association's ability to continue as a going concern. 17 Arbour Housing Limited Year Ended 31 March 2024 Independent Auditor's Report (cont'd) Reporting on other information The other information comprises the information included in the Report of the Board of Management other than the financial statements and our auditor's report thereon. The Board of Management is responsible for the other information. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in so doing, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material incorisistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. Opinion on other matters prescribed by the Companies Act In our opinion, based on the work undertaken in the course of the audit. the information given in the Report of the Board of Management for the financial year for which the financial statements are prepared is consistent with the financial statements; and the Report of the Board of Management has 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 Arbour Housing and its environment obtained in the course of the audit, we have not identified material misstatements in the Report of the Board of Management. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion. adequate accounLing records have noL been kept, or returns adequate for our audit have not been received from branches not visited by us. or the financial statements are not in agreement with the accounting records and returns. or we have not received all the information and explanations we require for our audit. 18 Arbour Housing Limited Year Ended 31 March 2024 Independent Auditor's Report (cont'd) Responsibilities of the board of management As explained more fully in the Board of Management responsibilities statement the Board of Management is responsible for the preparation of the financial statements and for being satisfied Lhat they give a true and fair view, and for such internal control as the Board of Management determine is necessary Lo enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the flnancial statements, the Board of Managemeiit is responsible for assessing Arbour Housing's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accountingi unless the Board of Management either intend to cease operations, or have no realistic alternative but to do so. Auditor's responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAS (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. Trregularities, including Fraud, are instances of non-compllance with laws and regulatlons, We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularitles, including fraud. The extent to which our procedures are capable of detecting irregularitles, including fraud is detailed below.. a. We considered the opportunities and incentives that may exist within the company for fraud and identified the greatest potential for fraud in the following areas: timing of recognltion of income and posting of unusual journals. To address those risks we discussed the risks with client management and designed audit procedures to test the timing of revenue recognition and tesLed a sample of journals to confirm they were appropriate. A further description of our responsibilities for the audit OF financial statements is located on the Financial Reportlng Council's website at www.frc,org.uk/auditorsresponsibilities. This description forms part of our auditors, report. 19 Arbour Housing Limited Year Ended 31 March 2024 Use of our report Thls report is made solely to the Board of Management, in accordance wlth Artlcle 38 of the Co-operatlve and Communlty BenefiL Socleties Act (Northern Ireland) 1969 (formerly the Industrlal and Provident Socleties Act (Northern Ireland) 1969). Our audit work has been undertaken so that we might state to the Board of Management those matters that we are reguired to state to them in an audltors, report and for no other purpose, To the fullest extent permltted by law, we do not accept or assume responsibility to anyone other than the Society and the Board of Management, for our audit worl<, for thls report, or for the oplnion we have formed. B Clerkln (Senior Statutory Audltor) for and on behalf of ASM (B) Ltd Statutory Auditor Glendinning House 6 Murray Street Belfast BTI 6DN 25106/2024 20 Arbour Housing Limited Year Ended 31 March 2024 statement of Comprehensive Income For the year ended 31 March 2024 Restated 2023 2024 Note 5, 28, 30 6, 28, 30 10 Turnover Operating costs Gain on disposal of housing properties Operating surplus Interest receivable and similar income Interest payable and similar charges Other finance costs 10,189,650 8,868,617 (7,373,212) (6,504,176) 43,652 76,774 2,860,090 2,441,215 28,968 5,462 (1,559,390) (1,073,974) (14,000) 1,358,703 580,000 1,938,703 19,241,477 21,180,180 (201,794) 20,978,386 12a 12b Surplus on ordinary activities Actua rial gain (loss) in respect of pension Surplus for the financial year Retained surplus brought forward 1,329,668 423,000 1,752,668 20,978,386 22,731,054 31 24 Capitalised Interest Prior Years Retained surplus carried forward 22,731,054 All amounts above relate to continuing operations of Arbour Housing. The notes on pages 25 to 49 form part of these financial statements. 21 Arbour Housing Limited Year Ended 31 March 2024 Statement of Changes in Equity For the year ended 31 March 2024 Restated 2024 2023 Surplus for the financial year Movement in capital and reserve (note 3) Net addition to capital and reserves Opening total capital and reserves Closing total capital and reserves 1,752,668 1,938,703 (201,791) 1,736,912 19,241,577 20,978,489 1,752,668 20,978,489 22,731,157 22 Arbour Housing Limited Year Ended 31 March 2024 Statement of Financial Position As at 31 March 2024 Restated Notes 2024 2023 Fixed assets Housing properties depreciated cost 13 158,997,877 131,149,098 other tangible fixed assets 14 657,715 683,581 159,655,592 131,832,679 Current assets Debtors 15 4,177,723 1,828,839 Cash at bank and in hand 1,390,099 1,525,581 5,567,822 (6,264,528) 3,354,420 (5,746,563) Creditors.. amounts falling due within one year 16 Net current (liabilities)/assets (696,706) (2,392,143) Total assets less current liabilities 158,958,886 129,440,536 Creditors: amounts falling due after more than one year 17 (136,782,729) (108,462,047) Pension Asset 31 555,000 Total net assets Capital and reserves 22,731,157 20,978,489 Called up share capital 22 16 23 Capital reserve 23 87 80 Revenue reserve 24 22,731,054 20,978,386 Total funds 22,731,157 20,978,489 The notes on pages 25 to 49 form part of these financial statements. larke (Chair) S Bryans (Secretary) K Matthews (Chief xecutive) Arbour Housing Limited Registered number: IP224 Date: 25/0612024 Date: 25/06/2024 Date: 25/06/2024 23 Arbour Housing Limited Year Ended 31 March 2024 statement of Cash Flows For the year ended 31 March 2024 2024 2023 Note Net cash from operating activities Cash f low f rom investing activities Purchase and development of housing properties Receipt of housing association grant Receipts from disposal of housing properties Purchase of other tangible assets Interest received 25 3,776,901 2,846,739 (30,313,716) (20,294,821) 19,167,910 15,363,501 607,606 1,401,845 (17,608) (29,718) 28,968 5,462 (10,526,840) (3,553,731) Net cash used in investing activities Cash flows from financing activities Loan advances Loan principal repayments Allotment of shares 29,500,000 12,500,000 (21,241,302) (11,484,459) Interest paid Net cash used in from financing activities Net (decrease)/ increase in cash and cash Cash and cash equivalents at the beginning of the year {1,644,240) (1,055,516) 6,614,460 (39,972) (135,479) (746,964) 1,525,578 2,272,542 Cash and cash equivalents at the end of the year 26 1,390,099 1,525,578 The notes on pages 2J to 49 form part of tliese financial sLateiMents. 24 Arbour Housing Limited Year Ended 31 March 2024 Notes to the financial statements for the year ended 31 March 2024 l. General information Arbour Housing's principal activity during the financial year continues to be providing housing accommodation for those in need. Arbour Housing is registered under the Co-operative and Community Benefit Societies Act (Northern Ireland) 1969 and domiciled in the UK. The address of the registered office is 18-22 Carleton Street, Portadown, BT62 3EN. 2. Statement of compliance These financial statements of Arbour Housing Limited have been prepared on the going concern basis in compliance with United Kingdom Accounting Standards, including Financial Reporting Standard 102, 'The Financial Reporting Standard applicab5e in the United Kingdom and the Republic of Ireland ("FRS 102 ) under the historical cost convention, and in accordance with applicable accounting standards in the United Kingdom and Statement of Recommended Practice for Accounting by Registered Social Landlords. The principal accounting policies, which have been applied consistently throughout the year, are set out below. The presentation of the financial statements complies with the Registered Housing Associations (Accounting Requirements) Order (Northern Ireland) 1993. 3. Summary of significant accounting policies The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The company has adopted FRS 102 in these financial statements. Basis of preparation of financial statements These financial statements are prepared on a going concern basis, under the historical cost convention. The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying Arbour Housing's accounting policies. The areas involving a higher degree of judgement or complexityi or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 4. Foreign currencies Transactions and non-monetary assets, denominated in foreign currencies, are translated at the exchange rate at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the statement of financial position date or the exchange rate of a related foreign exchange contract where relevant. The resulting exchange gains or losses are dealt with in the Statement of comprehensive income. 25 Arbour Housing Limited Year Ended 31 March 2024 3. Summary of significant accounting policies (continued) Revenue recognition Revenue is measured at the fair value of the consideration received or receivable and represents the amount receivable for goods supplied or services rendered, net of returns, discounts and rebates allowed by Arbour Housing and value added taxes. Arbour Housing bases its estimate of returns on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement. Where the consideration receivable in cash and cash equivalents is deferred and the arrangement constitutes a financing transaction, the fair value of the consideration is measured at the present value of all future receipts using the imputed rate of interest. Revenue is recognised when, and to the extent that, Arbour Housing obtains the right to consideration in exchange for its performance. Net rental income Income includes rent and service charge income arising from the provision of housing accommodation and the amortisation of Housing Association Grant. Income is recognised in the period to which it relates. other income Other income is recognised in the Statement of comprehensive income when the terms of revenue recognition have been met. Employee benefits Arbour Housing provides a range of benefits to employees, including paid holiday arrangements and defined contribution pension plans. Short term benefits Short term benefits, including holiday pay and other similar non-monetary benefits, are recognised as an expense in the period in which the service is received. Defined benefit plan Arbour Housing operates a defined benefit plan for certain employees. A defined benefit plan defines the pension benefit that the employee will receive on retirement, usually dependent upon several factors including age, length of service and remLineration. A defiiied beiiefit plan is a post-employment benefit other than a defined contribution plan. The liability recognised in the balance sheet in respect of the defined benefit plan is the present value of the defined benefit obligation at the end of each financial year less the fair value of the plan assets at the same date. The defined benefit obligation is calculated annually by an external actuary using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future payments Lssing market yields on high quality corporate bonds that are denominated in Sterling and that have terms approximating the estimated period of the future payments ('discount rate,). 26 Arbour Housing Limited Year Ended 31 March 2024 3. Summary of significant accounting policies (continued) The fair value of plan assets out of which the obligations are to be settled is measured in accordance with Arbour Housing's accounting policy for financial assets. For most plan assets this is the quoted price in an active market. Where quoted prices are not available appropriate valuation techniques are used to estimate the fair value. The cost of the defined benefit plan, recognised in profit or loss, except where included in the cost of an asset, comprises: (a} the increase in net defined benefit liability arising from employee service during the financial year; and (b) the cost of plan introductions, benefit changes, curtailments and settlements. The net interest cost on the net defined benefit liability is determined by multiplying the net defined benefit liability by the discount rate (both as determined at the start of the financial year, taking account of any changes in the net defined benefit liability during the financial year as a result of contribution and benefit payments). This net interest cost is recognised in profit or loss as 'finance expense, and presented within 'interest payable and similar charges,. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in other comprehensive income. These amounts together with the return on plan assets less the interest income on plan assets included in the net interest cost, are presented as 're- measurement of net defined benefit liability, in other comprehensive income. Tangible fixed assets Housing properties Operates a full component accounting policy in relation to the capitalisation and depreciation of its completed housing stock. Housing properties are stated at cost including appropriation on costs and net of initial sales proceeds from part owners in respect of leasehold schemes. Other fixed assets other fixed assets are stated at cost less accumulated depreciation. Long leasehold office property Arbour Housing's policy is to depreciate the cost over the remaining useful economic life of the property. iv. Schemes under construction Schemes under construction are carried at cost and are not depreciated until brought into use. 27 Arbour Housing Llmited Year Ended 31 March 2024 3. Summary of significant accounting policies (continued) Capltalisation of development costs Development costs are capitalised where they are directly attributable to bringing the properties into working condition for their intended use. Such costs generally include the labour costs of company employees arising directly from the acquisition or development of the property and incremental costs that would only have been avoided if the property concerned had not been acquired or constructed. Due to the higher volume of development in recent years and higher interest rates on borrowings, the Board of Management considered the option of adding capital interest to scheme development cost during the current financial year 2023-24. The change in accounting policy on capitalised interest resulted in a reduction of the previous year's surplus by £201,794 and an increase in the current year's profit by £95,769. Necessary changes are made in the Statement of Comprehensive Income to reflect these changes. Housing Association Grant and other grants Housing Association Grant and other grants received as a contribution towards the capital costs of housing properties of Arbour Housing were set against the capital cost of these properties in prior years. As per the 2018 Housing SORP and FRS 102 the grants have been included as 'Creditors.' amounts falling due after more than one year, and 'Creditors'. amounts falling due within one year, and are amortised to the Statement of comprehensive income as per the turnover policy above. Housing Association Grant received against revenue expenditure is credited to revenue in the period in which the related expenditure is charged. Such grants, although treated as a grant for accounting purposes, may be repayable under certain circumstances, primarily following the sale of housing property, but any amount repayable would be restricted to the net proceeds of the sale. Depreciation and Impairment Housing properties Housing properties are split between land, structure and major components which require periodic replacement. Replacement or refurbishment of such major components is capitalised and depreciated over the estimated useful life which has been set taking into account professional guidance and Arbour Housing's asset management strategy. In determining the remaining useful lives for the housing stock, Arbour Housinq has taken account of views provided by both internal and external professional sources. Freehold land is not subject to depreciation whilst leasehold land is depreciated over the unexpired period of the lease. Depreciation is charged so as to write down the cost or valuation of the freehold housing properties and major components on a straight line basis over their expected use economic lives. Major components are treated as separable assets and depreciated over their expected useful economic lives or the lives of the structure to which they relate, if shorter, at the following annual rates: 28 Arbour Housing Limited Year Ended 31 March 2024 Land Structure (including roof) Windows and doors Main heating system unit Kitchens Bathrooms Electrics Mechanical systems Lift Solar Panel Air Source Heat Pump Not depreciated 100 years 35 years 15 years 20 years 25 years 30 years 30 years 20 years 20 years 20 years Housing assets are subject to a depreciation charge in the year of acquisition or completion. Where there is evidence of impairment, the fixed assets are written down to the recoverable amount and any write down is charged to operating surplus. other fixed assets Depreciation of other fixed assets is charged on a straight-line basis over the estimated useful economic lives of the assets at the following annual rates: Office furniture and equipment Computer equipment 5 years 3 years Long leasehold office property The useful economic life of the asset has been estimated at 50 years. Subsequent additions and major components Subsequent costs, including major inspections, are included in the assets carrying amount or recognised as a separate asset, as appropriate, only when it is probable that economic benefits associated with the item will flow to Arbour Housing and the cost can be measured reliably. The carrying amount of any replaced component is derecognised. Repairs, maintenance and minor inspection costs are expensed as incurred. Derecognition Tangible assets are derecognised on disposal or when no future economic benefits are expected. On disposal the difference between the net disposal proceeds and the carrying amount is recognised in the statement of comprehensive income. Leased assets At inception Arbour Housing assesses agreements that transfer the right to use assets. The assessment considers whether the arrangement is, or contains, a lease based on the substance of the arrangement. Operating leased assets Leases that do not transfer all the risks and rewards of ownership are classified as operating leases. Payments under operating leases are charged to the Statement of comprehensive income on a straight-line basis over the period of the lease. 29 Arbour Housing Limited Year Ended 31 March 2024 3. Summary of significant accounting policies (continued) Cash and cash equivalents Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of one month or less and bank overdrafts, Bank overdrafts are shown within borrowings in current liabilities. Impairment of non-financial assets At each statement of financial position date non-financial assets not carried at fair value are assessed to determine whether there is an indication that the asset (or asset's cash generating unit) may be impaired. If there is such an indication the recoverable amount of the assel (or asset's cash generating unit) is compared to the carrying amount of the asset (or asset's cash generating unit). The recoverable amount of the asset (or asset's cash generating unit) is the higher of the fair value less costs to sell and value in use. Value in use is defined as the present value of the future cash flows before interest and tax obtainable as a result of the asset's (or asset's cash generating unit) continued use, These cash flows discounted using a pre-tax discount rate that represents the current market risk-free rate and the risks inherent in the assets. If the recoverable amount of the asset (or asset's cash generating unit) is estimated to be lower than the carrying amount, the carrying amount is reduced to its recoverable amount. An impairment loss is recognised in the Statement of comprehensive income, unless the asset has been revalued when the amount is recognised in other comprehensive income to the extent of any previously recognised revaluation. Thereafter any excess is recognised in the Statement of comprehensive income. if an impairment loss is subsequently reversed, the carrying amount of the asset (or asset's cash generating unit) is increased to the revised estimate of its recoverable amount, but only to the extent that the revised carrying amount does not exceed the carrying amount that would have been determined (net of depreciation or amortisation) had no impairment loss been recognised in prior periods. A reversal of an impairment loss is recognised in the Statement of comprehensive income. Provisions Provisions are recognised when the company has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation. and the amount of the obligations can be estimated reliably. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. Provislons are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as a finance cost. 30 Arbour Housing Limited Year Ended 31 March 2024 3. Summary of significant accounting policies (continued) Contingencies Contingent liabilities, arising as a result of past events, are not recognised when (i) it is not probable that there will be an outflow of resources or that the amount cannot be reliably measured at the reporting date or (li) when the existence will be confirmed by the occurrence or non-occurrence of uncertain future events not wholly within the company's control. Contingent liabilities are disclosed in the financial statements unless the probability of an outflow of resources is remote. Financial instruments The company has chosen to adopt Sections 11 and 12 of FRS 102 in respect of financia5 instruments. Fina ncia l assets Basic financial assets, including trade and other receivables and cash and bank balances are initially recognised at transaction price, unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Such assets are subsequently carried at amortised cost using the effective interest method. At the end of each reporting period financial assets measured at amortised cost are assessed for objective evidence of impairment. If an asset is impaired the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset's original effective interest rate. The impairment loss is recognised in Statement of comprehensive income. If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been had the impairment not previously been recognised. The impairment reversal is recognised in statement of comprehensive income. Financial assets are derecognised when (a) the contractual rights to the cash flows from the asset expire or are settled, (b) substantially all the risks and rewards of the ownership of the asset are transferred to another party or, (c) despite having retained some significant risks and rewards of ownershipi control of the asset has been transferred to another party who has the practical ability to unilaterally sell the asset to an unrelated third party without imposing additional restrictions. Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in Statement of comprehensive income, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment. 31 Arbour Housing Limited Year Ended 31 March 2024 3. Summary of significant accounting policies (continued) Financial liabilities Basic financial liabilities, including trade and other payables, bank loans and loans from fellow company companies, are initially recognised at transaction price, unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future receipts discounted at a markel rate of interest. Debt instruments are subsequently carried at amortised cost, using the effective interest rate method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates. Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non- current liabilities. Trade payables are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method. Disposal proceeds fund The net surpluses, after loan repayments, that arise from the sale of property to tenants under the voluntary purchase grant arrangements instituted by the Department for Communities can be used by Arbour Housing to fund works on property that would not be eligible for housing association grant or in certain circumstances, attract loan finance. If the surpluses are not used within two years of their receipt they may be payable in part or in full to the Department for Communities. Revenue reserves Arbour Housing's policy is to retain a level of revenue reserves which reflects its needs at the current time and in the foreseeable future, The reserves required are sufficient to meet committed riinning costs for a period equivalent t.o ninp. month£ hiidgp.t.p.d fLlture expenditure. The Board of Management reviews the adequacy of the revenue reserves level on an annual basis. Tenants Services Fund For certain schemes Arbour Housing is required to charge the tenants for additional services provided, over and above those of the norma5 management and maintenance services. Arbour Housing levies an additional charge to the tenants for this. Annual surpluses and deficits are transferred to a fund to equalise the financial position over a period of time. 32 Arbour Housing Limited Year Ended 31 March 2024 4. Critical accounting Judgements and estimation uncertainty Estimates and judgements made in the process of preparing the financial statements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. a) Critical judgement in applying the entity's accounting policies Carrying value of properties On an annual basis, Arbour Housing carries out an impairment review of its housing property assets. Arbour Housing will first consider if there has been any trigger or indication that assets might be impaired. Arbour Housing will then determine an appropriate cash generating unit to be best represented by an individual scheme as this is the level that an investment appraisal will be completed at. The impairment review is based upon the existing use of the asset which corresponds with the economic use valuation "EUV" provided for bank security, This confirms that the majority of scheme are financially viable. In the event that a scheme notes a potential for impairment in the initial review, Arbour Housing will complete a discounted cash flow appraisal using the specific details of each of the schemes. Finally, if required, an external valuation will be obtained to assess if there is a requirement for impairment. Arbour Housing has completed their annual impairment review and reported its findings to the Finance committee and Board of Management in March 2024. There was no evidence of impairment noted based on the assessment carried out. There are no other critical judgements in applying the entity's accounting policies. b) Critical accounting estimates and assumptions The Board of Management makes estimates and assumptions concerning the future in the process of preparing the financial statements. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are add ressed below. Defined benefit pension scheme Arbour Housing has an obligation to pay pension benefits to certain employees. The cost of these benefits and the present value of the obligation depend on a number of factors, including; life expectancy, salary increases, asset valuations and the discount rate on corporate bonds. Management estimates these factors in determining the net pension obligation in the balance sheet. The assumptions reflect historical experience and current trends. See note 31 for the disclosures relating to the defined benefit scheme. ii, Useful economic lives of housing properties The annual depreciation on housing properties is sensitive to changes in the estimated useful economic lives and residual values of the assets. The useful economic lives and residual values are reviewed annually. They are amended when necessary to reflect current estimates, based on future investments, economic utilisation and the physical condition of the assets. See note 13 for the carrying amount of housing properties, and note 3 for the useful economic lives for each component of housing property. 33 Arbour Housing Limited Year Ended 31 March 2024 4. Critical accounting judgements and estimation uncertainty (continued) There are no other critical accountlng estimates and assumptions. 5. Turnover Turnover represents rental income, service charges receivable and other income (net of voids). Revenue is recognised when, and to the extent that, Arbour Housing obtains the right to consideration in exchange for its performance. 6. Operating costs 2024 2023 Direct costs 5,783,186 5,078,469 1,590,026 1,425,707 7,373,212 6,504,176 Administrative expenses 7. Operating surplus 2024 2023 This is stated after charging: staff costs (note 8) Depreciation (notes 13 & 14) Amortisation of grant (note 13) Release of capital grant (note 13) Release of revenue grant Loss on disposal of fixed assets 1,378,413 1,202,098 2,329,845 2,034,085 1,279,239 1,094,253 2,088 2,088 116,210 67,584 34,500 64,157 Auditors, remuneration -audit services 13,000 13,000 34 Arbour Housing Limited Year Ended 31 March 2024 8. Employee information Average monthly number of persons employed during the financial year by activity. 2024 2023 Administration Housing management Maintenance Development io 31 26 Staff costs 2024 2023 Wages and salaries Social security costs other pension costs Agency costs 1,138,212 104,277 128,820 7,104 1,378,413 909,978 89,740 189,798 12,582 1,202,098 9. Directors, emoluments The remuneration of key management personnel of Arbour Housing during the year was: 2024 2023 Aggregate emoluments Pension contributions 332,526 66,777 399,303 308,260 61,675 369,935 Emoluments to highest paid member of management team (excluding pension ) 89,121 85,277 The number of management team members to whom emoluments (excluding pensions contributions) were paid during the year falls within each of the following bands: 2024 2023 £85,000 - £90,000 £65,000 - £70,000 £60,000 £65,000 £55,000 £60,000 £50,000 - £55,000 Members of the Board of Management serve in a voluntary capacity and nil (2023: £nil) was in receipt of emoluments during the year. The Board and Committee members are reimbursed for expenses totaling Nil during the year (2023.. £nil). 35 Arbour Housing Limited Year Ended 31 March 2024 10.Transfer to disposal proceeds f und Restated 2024 2023 Proceeds of disposal Original asset, disposal costs and excluded surplus Transfer to disposal proceeds fund (note 18) 482,250 1,558,300 (212,067) (525,079) 270,183 1,033,221 11.Interest receivable and similar income 2024 2023 Interest receivable 28,968 5,462 12.a Interest payable and similar charges 2024 2023 On bank loans, overdrafts and other loans 1,655,159 1,073,974 12.b Other financial costs 2024 2023 Defined benefit pension scheme net interest cost (note 31) 14,000 36 Arbour Housing Limited Year Ended 31 March 2024 13. Housing properties - depreciated cost Restated 2024 2023 Housing Properties For relet Shared Equity For relet Total Total Cost or valuation At l April 2023 Add itions Disposals At 31 March 2024 151,732,799 30,382,989 (1,012,160) 181,103,628 119,963 7,574 151,852,762 30,390,563 (1,012,160) 181,231,165 132,492,462 21,048,573 (1,890,067) 151,650,968 127,537 Accumulated Depreciation At l April 2023 Charge for the year Disposals At 31 March 2024 20,494,825 2,286,371 (554,953) 22,226,243 7,045 20,501,870 2,286,371 (554,953) 22,233,288 19,321,381 1,991,681 (811,192) 20,501,870 7,045 Net book value At 31 March 2024 158,877,385 120,492 158,997,877 131,149,098 Net book amount comprises Freehold property Long leasehold property 152,135,915 6,741,470 158,877,385 120,492 152,256,407 6,741,470 158,997,877 126,018, 165 5,130,933 131,149,098 120,492 Net book amount comprises: Completed schemes Properties under construction 127,816,373 31,061,012 158,877,385 120,492 127,936,865 31,061,012 158,997,877 100,930,628 30,218,470 131,149,098 120,492 2024 2023 Housing Association Grant and other grants At l April 2023 Grarlts receivable Disposals At 31 March 2024 96,463,634 21,792,415 (553,972) 117,702,077 82,214,480 15,343,871 (1,094,717) 96,463,634 Accumulated Amortisation At l April 2023 Charge for the year Disposals At 31 March 2024 12,532,668 1,397,537 (291,962) 13,638,243 11,867,485 1,096,341 (431,158) 12,532,668 Net book value At 31 March 2024 104,063,834 83,930,966 37 Arbour Housing Llmited Year Ended 31 March 2024 14.Other tangible fixed assets Long leasehold office property Office and computer equipment Total Cost At l April 2023 Additions Disposals At 31 March 2024 911,428 275,245 17,608 (3,394) 289,459 1,186,673 17,608 (3,394) 1,200,887 911,428 Accumulated Depreciation At l April 2023 Charge for the year Disposals At 31 March 2024 279,961 18,587 223,131 24,887 (3,394) 244,624 503,092 43,474 (3,394) 543,172 298,548 Net book amount At 31 March 2024 At 31 March 2023 612,880 631,467 44,835 52,114 657,715 683,581 38 Arbour Housing Limited Year Ended 31 March 2024 15.Debtors 2024 2023 Gross rental debtors Technical Gross rental debtors Non-Technical Provision for bad debt Net rental { including rates, service charges) debtors Housing Association Grant receivable Prepayments and accrued income Tenant services account Other debtors 381,182 194,076 (260,032) 315,226 3,633,268 57,446 41,301 130,482 4,177,723 298,605 217,714 {218,067) 298,252 1,233,149 183,398 61,216 52,824 1,828,839 16.Creditors Amounts fallin due within I ear 2024 2023 Bank Loans (note 19) Loans (note 19) Bought Ledger Control Housing Association Grant and other grants (note 13) Rent In advance Accruals and deferred income Other creditors 1,615,710 1,463,719 2,680 896,214 1,314,390 96,068 1,968,630 4,862 5,746,563 1,713,615 1,281,762 103,045 1,547,928 2,468 6,264,528 17.Creditors Amounts fallin due after more than I ear 2024 2023 Bank Loans (note 19) Other Loans (note 19) Disposal Proceeds Fund (note 18) Housing Association Grant and other grants (note 13) 32,644,822 24,535,435 1,355,835 102,782,072 136,782,729 1,310,036 82,616,576 108,462,047 Arbour Housing expects to utilise the disposal proceeds fund within the timescales allowed by the Department for Communities. 39 Arbour Housing Limited Year Ended 31 March 2024 18.Disposal proceeds fund 2024 2023 At l April Transfers in from house sales (note 10) utilised against development schemes 1,310,037 270,183 {224,385) 1,355,835 330,902 1,033,221 (54,086) 1,310,037 19.Loans 2024 2023 Bank loans - Housing property Less than one year, or on demand (Note 16) Between one and two years Between two and five years After more than five years 1,615,710 1,636,080 13,235,759 17,772,983 34,260,532 1,463,719 1,492,644 13,240,133 9,802,658 25,999,154 Security Bank loans bear interest at rates ranging between 3.22 % and 6.70 % at variable and fixed rates. Bank loans are repayable on an amortised basis over varying periods between 22 and 30 years. All RCF loans outstanding at the end of the applicable availability period, will be converted to term loan until the end of facility term being repayable on amortised basis over 25 years. All bank loans are secured by way of mortgages upon the deeds of approved portfolios of properties. 2024 2023 Department of Communities - Housing property loans Less than one year (Note 16) Between one and two years Between two and five years After more than five years 2,680 2,680 Security The loans from the Department for Communities are now fully paid down. 40 Arbour Housing Limited Year Ended 31 March 2024 20.Financial instruments - assets 2024 2023 Financial assets at amortised cost 4,120,277 1,645,441 21.Finance Instruments - liabilities 2024 2023 Financial liabilities at amortlsed cost 37,524,541 28,871,540 22.Called up share capital Ordinary shares of £1 each fully paid: 2024 2023 At l April Issued in the year Transferred to capltal reserve At 31 March 23 20 (7) 18 23 23.Capital reserves 2024 2023 At l April Transfer to capital reserve At 31 March 80 80 87 80 24. Revenue reserves Restated 2024 2023 At l April Surplus on ordinary activities Actuarial gainl(loss) recognlsed in pension scheme 20,978,386 1,752,668 19,241,477 1,358,703 580,000 22,731,054 21,180,180 Prior years adjustment - capitalised interest (201,794) At 31 March 22,731,054 20,978,386 41 Arbour Housing Limited Year Ended 31 March 2024 25.Net cash generated from operating activities 2024 2023 Surplus on ordinary activities Surplus arising from disposals of housing property Transfer to disposal proceeds fund Interest receivable and similar income Interest payable and similar charges other finance costs Operating surplus Depreciation charge Amortisation charge and grant release Impairment and costs written off Movement in debtors Movement in creditors Difference in pension charge and cash contributions Net cash generated from operating activities 1,329,668 1,358,703 (313,835) {1,109,995) 270,183 1,033,221 (28,968) (5,462) 1,559,391 1,073,974 14,000 2,816,439 2,364,441 2,329,845 2,034,085 (1,397,537) (1,163,935) 34,500 64,157 (87,884) (41,964) 209,034 (369,988) (127,496) (40,057) 3,776,901 2,846,739 26.Analysis of net debt l April 2023 31 March 2024 Cash flow Cash at bank and in hand Bank overdraft 1,525,579 (135,480) 1,390,099 Cash and cash equivalents Debt due after one year Debt due within one year Debt 1,525,579 (24,535,435) (1,466,399) (26,001,834) (24,476,255) (135,480) (8,109,387) (149,311) (8,258,698) (8,394,178) 1,390,099 (32,644,822) (1,615,710) (34,260,532) (32,870,433) Net Debt 27.Reconciliation of net cash flow to movement in net debt Restated 2024 2023 (Decrease)/Increase in cash and cash equivalents and in Repayment of loans New loans (135,480) (746,666) 21,241,302 11,484,459 (29,500,000) (12,500,000) (8,394,178) (1,762,207) (24,476,256) (22,714,048) (32,870,434) (24,476,255) Movement in net debt in the financial year Net debt at l April Net debt at 31 March 42 Arbour Housing Limited Year Ended 31 March 2024 28.Turnover, Operating costs and operating surplus - Association 2024 2023 Operating Surplus/ {deficit) Operating Surplus/ (deficit) Operating Turnover Operating Costs Social Housing Activities 10,175,565 7,359,127 2,816,438 2,364,441 Non-social Housing Activities 14,085 14,085 10,189,650 7,393,126 2,816,438 2,364,441 29.Housing Stock Number of units owned by the Arbour Housing managed at year end 2024 2023 Number Number General Needs Housing 1,490 1,436 Total owned 1,490 1,436 Number of units managed (but not owned) by Arbour Housing managed at year end 2024 2023 Number Number General Needs Housing Total managed Total Units Owned and Managed at year end 1,495 1,440 43 OMN Ln o ts) LnooNNcoLnotN Ln (rs Ln ￿ (Th (D a¥ 0% 0) (o ¢x> (x) ty CO ** (r> 4N0k0￿MMm￿41trLn iN)Lri0￿0￿i￿rq ON￿[n￿o¢ oo)(No ok0m￿0m￿￿ty{Th lx) cy) (N pj e4fWotD￿mMM￿trLn rritrio DJ o c o) o) t o c (£irtH￿Li0Qa ZO(nw)Uziu)Z￿c￿EQ￿C)C)_u Arbour Housing Limited Year Ended 31 March 2024 30.Turnover, operating costs and operating surplus or deficit from social and non-social housing activities - Association (continued) Social Housing Activities (continued) 2024 Total 2023 Total Dfc Allowances Mana ement Allowances Mana ement Costs Deficit 584 100 762 227 178 127 563 112 684 371 121 259 Maintenance allowances Planned & c clical maintenance Reactive Maintenance Deficit 878 088 220 716 1 099 370 441 998 853 495 213,509 975 970 335,984 Technical & non- technical income Technical Non- technical Total 6 581 138 2 216 805 8 797 943 5 523 458 2 076 236 7 599 694 Non-social Housing Activities 2024 Tota I 2023 Total Operating Income Provision of support services Other recharges Other Income 14,085 107,799 Total non-social housing income Operating costs Administration costs Other costs 14,085 107,799 1,280 12,805 14,085 9,800 97,999 107,799 Total non-social housing expenditure Operating surplus on non-social housing 45 Arbour Housing Limited Year Ended 31 March 2024 31.Pension liability The net pension 'deficit' shown below under FRS102 section 28 'Retirement benefits, does not represent a shortfall which requires short term cash funding. The amount shown below is calculated to comply with the Financial Reporting Standard, the specific requirements of which differ from the basis on which pension liabilities are actuarially calculated for the purpose of the ongoing funding of the scheme. The Financial Reporting Standard requires: actLtarial deficiencies to be recognised immediately as a 'liability in the financial statements rather than being spread forward over employees, remaining service lives. the actuaryi in valuing the scheme's liabilities, is required to use a bond yield as the discount rate for valuing future liabilities, rather than a rate that reflects the expected return on the scheme's particular asset portfolio, with the result of an apparent increase in the present value of future longer term liabilities. At the 31st March 2024 the pension valuation reports a net pension asset of £1.039M before consideration of a surplus restriction, In line with FRS102 para 28.22 the Association has not recognised this surplus on the basis of prudence, as it is uncertain as to whether this SLtrplus (calculated for Financial Reporting purposes) will be recoverable via reduced pension contributions (calculated for pension funding purposes) As such we have recognised a nil balance in the Pension Asset / (Liability) Account. The below is in relation to employees and ex-employees who are members of the NILGOSC pension scheme. An Actuarial Valuation of the scheme was carried out as at 31 March 2024. The major assumptions used by the actuary were. 31 March 31 March 2024 2023 Rate of increase in salaries Rate of increase in pensions in payment Discount rate Inflation assumption 4.1% 2.6% 4.10/0 4.8% 4.6% 2.6% 2.6% The mortality assumptions used were as follows: 2024 Years 2023 Years Average expected future life at age 65 for male currently aged 65 female currently aged 65 male CLtrrently aged 45 female currently aged 45 21.7 22.2 25.0 24.6 22.7 23.2 25.6 26.0 46 Arbour Housing Limited Year Ended 31 March 2024 The assets in the scheme and the expected rates of return were: Value at Value at 31 March 31 March 2024 2023 £'ooo 1,859 412 £'ooo 1,467 411 Equities Property Government Bonds Corporate Bonds Multi Asset Credit Cash Other 739 178 565 756 110 488 238 239 259 198 Total market value of assets Present value of scheme liabilities 4,250 4,250 3,669 3,669 Net pension deficit 47 Arbour Housing Limited Year Ended 31 March 2024 Notes to the financial statements for the year ended 31 March 2024 31 Pension liability (continued) Reconciliation of present value of scheme liabilities 2024 £'ooo 2023 £'ooo At l April Service cost Member contributions Interest on scheme liabilities Actuarial losses/(gains) Benefits paid At 31 March 3,139 80 27 144 (130) (49) 3,211 4,439 149 25 120 (1,551) (43) 3,139 Reconciliation of fair value of scheme assets 2024 2023 £'ooo £'ooo 3,835 106 (441) 187 25 (43) 3,669 At l April Interest on pension scheme assets Actuarial (losses)/gains Employer contributions Member contributions Benefits paid At 31 March 3,669 173 223 207 27 (49) 4,250 Funded status £'ooo £'ooo 530 (530) Unrecognised asset due to restriction Net funding of funded plans Amount in Statement of Financial Position 484 (1,039) (555) Analysis of amounts charged/ (credited) to income and expenditure £'ooo £'ooo Current service cost InleresL oli pensiori sclierne cisseLs Interest on pension scheme liabilities 80 {29) 24 149 (106) 120 75 163 Amounts for current and previous two years: Restated 2024 2023 2022 £'ooo £'ooo 4,250 3,669 3,211 3,139 1,039 530 223 (441) (130) (1,551) £'ooo 3,835 4,439 (604) 115 (283) Fair value of employer assets Present value of defined benefit obligation ( Deficit)/Surplus Experience (losses}/gains on assets Experience (gains}/losses on liabilities 48 Arbour Housing Limited Year Ended 31 March 2024 Actuarial gains and losses The amount of actuarial gains/(loss) recognised in the Statement of comprehensive income is £423,000 (2023: Gain of £580,000). 32 Contingent liabilities Arbour Housing released Housing Association Grant of £263,269 (2023: £278,263) during the year in relation to building components replaced arising from planned maintenance works. The possibility of any reimbursement to the Department for Communities is considered to be unlikely as the housing properties are expected to continue to be made available for social housing for the foreseeable future. 33 Capital commitments 2024 2023 Capital Expenditure Contracted for but not provided in the financial statements 29,566,006 24,622,939 The Association anticipates that some of this expenditure will be funded by HoLssing Association Grant from the Department for Communities and by private finance. 34 Related Parties Arbour Housing has not identified any transactions which must be disclosed under the terms of section 33 of FRS 102. 49