The Board of Management is pleased to present the report and audited financial statements for the year ended 31 March 2000. This report gives a brief business overview of the financial affairs of the Association during the last 12 months.
The Vale is a major registered social landlord whose primary objective is to provide quality housing at affordable rents.
In trying to achieve this we aim to develop affordable solutions to housing needs: manage effectively with financial responsibility and tenant involvement, the resources of the Association to deliver quality services: to seek and develop opportunities for beneficial partnership in co-operation with other agencies and to perform at the highest levels expected of registered social landlords.
Our principal activities consist of managing our existing stock, and to develop and acquire new homes: to carry out property maintenance to the stock and the provision of a 24 hour emergency service to our tenants.
Last year was an important year for the Association in that it covered the 5th Anniversary of the transfer of homes from the Vale of White Horse District Council and was rightly regarded as a significant milestone in the Association's development.
In reviewing the last 5 years, the Association is pleased that the key promises and targets given at the outset have been achieved. Rent increases to tenants transferred from the local authority have been no more than 1% above inflation and out performance of the business plan has meant that rent increases for new tenants have been kept to an absolute minimum with year on year increases below those applicable to transferring tenants.
At the end of our 5th year the average rent is one of the lowest in the South-East Region with our new and relet rents in line with other associations operating in the area.
Over 230 properties have either been acquired or developed during our first 5 years. Unfortunately, through the Right to Buy process this gain has been offset by sales of just over 500 properties.
Through the use of Tenant Surveys, Focus Groups and Tenant Forums the Association is proud of the fact that during the last 5 years service delivery at all levels is perceived to have improved and it is incumbent upon the Association to continue this trend.
Specific highlights in the last 12 months include moving into new offices in Abingdon from which Area Management, Development, and cash collection is provided. With other offices at Hanney and Wantage this now completes the immediate office needs.
During the year the Association was accredited with ISO14001 for Environment Management Systems for the work the Association continues to undertake of improving the environment in which we work. This involves monitoring and pursuing policies which are environmentally friendly and limiting the damage to the environment arising from our operations. The Association is the first registered social landlord in the country to achieve this accreditation.
On the development side 43 new homes were provided during the year, including the first development outside the immediate Vale area.
The accounts show a net surplus for the year of £514,000 compared to an original forecast of a small deficit of £123,000. The improved financial position was largely due to increased levels of income arising from house sales (£450,000). Other results where broadly in line with expectations, with small savings achieved helping to offset the additional cost of providing for depreciation on the housing stock as required by the new Statement of Recommended Practice (SORP).
The largest proportion of our operational spending in the year was on repairs, maintenance and improvements to our stock. This totalled £5.7million including £1.3million on planned renewals. This programme included over £500,000 spending on new or replacement central heating systems and affected 214 properties: £180,000 was spent on replacement of rainwater goods e.g. gutters, soffits. £158,000 on the provision of external doors; £111,000 on upgrading kitchens and bathrooms; £131,000 on additional insulation works.
Over 33% of our properties had some money spent on them last year for work classified as planned maintenance.
The Association was involved in letting almost 400 properties during the year. 60% of these went to people on the Council's waiting list. The average time for re-letting a property was 5 weeks. The Association has a policy of carrying out any necessary repairs during the void period as opposed to re-letting the property immediately available and carrying out those repairs whilst the new tenant is in situ. From surveys of new tenants this policy is fully endorsed
The Association continues to partake in a number of benchmarking exercises, aimed at comparing performance against other associations. These results coupled with those produced by the Housing Corporation, confirm that our overall financial performance compares very favourably against any chosen peer group. The overall indication is that the Association can be proven to be a low cost association, whilst at the same time delivering comparable services to other providers.
a) Financial Framework
The Association has out performed its original Business Plan and has deliberately fed back some of those gains directly to its tenants through lower rent increases together with the provision of some additional services wherever possible.
Our Business Plan is built upon maintaining current stock levels. The difficulties of acquisition and building in the immediate area are recognised. The rate of loss through the Right to Buy Scheme continues to be hard to forecast, particularly given the unpredictability of changes in the recent discount rules and increasing house prices in the area.
Whilst the current low rates of inflation are welcomed by tenants, the Association is experiencing increasing costs in its major service area of repairs. These are well in excess of inflation. The completion of the initial "catch up " programme after transfer may hold maintenance costs down, but rising aspirations and expectations of our tenants are expected to put additional pressure on the Association's financial resources in the medium term. The stock condition survey that is currently in progress will give a clearer view of future repair costs.
The out performance of the Business Plan has meant that the Association has been able to meet Housing Corporation requirements to limit rent increases to RPI +1%. The strength of our Business Plan is however conditional on there being no major changes in Government Policy in the medium term.
b) The Treasury Management Policy
The Association has a loan facility of £120 million. Current spending plans are likely to use just under £100 million of this.
The original plan last year provided for loan drawdowns during the year of £4.3million. Actual loan drawdowns amounted to £1.4million with a total debt outstanding at the year-end of £76.2million. Drawdowns were significantly lower due to reduced spending on development projects and the utilisation of cash receipts from sales.
During the year the Resources Committee reviewed the Treasury Strategy and remains committed to a balanced portfolio between variable and fixed arrangements.
c) Rent Policy
The Association remains committed to providing quality services at the lowest rent possible. In this year's Tenants' Survey the majority of our tenants felt that our rents were reasonable and represented value for money.
However, there are disadvantages to having a low rent base because of the restrictions this brings on our ability to develop and improve services in meeting increased expectations.
From April 2000 the Association will be outside the initial 5 year rent guarantee period. It fully intends to abide by the present Housing Corporation guidance on rent increases which allow for present rental income to increase by 1% above inflation.
In achieving this policy and being particularly mindful of the need to reduce the differentials between rents charged to tenants who transferred from the local authority and new tenants, rent increases for transferring tenants will be higher than those for new tenants in the foreseeable future. A change in policy will also mean that from April 2000 all re-let properties will be charged a rent similar to a first letting. With a re-let turnover of over 8% a year this should mean that within the next 10 years rent convergence should be almost achieved.
d) Long Term Stock Maintenance Repair Policy
A stock condition survey is currently in hand to update anticipated spending levels on the stock.
e) Statement of Recommended Practice
The accounts have been prepared in accordance with the recommendations contained within the latest SORP. The impact of these recommendations has been to provide an additional depreciation charge in the Income and Expenditure Account of £131,000. This figure has been arrived at in accordance with the methodology included within the SORP and takes into account valuation figures provided by external consultants.
The Association has always adopted the view that the balance sheet valuation of its stock should be at current values and not based upon historic costs.
The statement of accounting policies has been revised to take account of the recommendations included in the SORP.
f) Employment Polices
Similar to any service provider, the key to the successful working of the Association, is its staff.
Employment policies fully comply with current legislation. The Association has a staffing policy covering recruitment: training; industrial relations; conditions of service; disciplinary and grievance procedures; codes of practice and pension entitlements.
The Association believes that its employment policy provides for openness and accountability.
Staff are involved in the workings of the organisation at various levels. These include a Health and Safety Group and a Staff Association which meets regularly with the Management Team and has representatives from the recognised Unions and staff themselves.
Training is encouraged throughout the organisation both at an individual and an organisational level.
The Association has a positive attitude towards the employment of disabled persons preferring to concentrate on abilities and not disabilities. Work in this area during the year resulted in the Employment Service granting the Association the right to use the Disability Symbol.
The Board of Management has adopted the competence and accountability Code of Governance published by the National Housing Federation (revised January 2000) and believes that the Association complies with the principal recommendations of the Governance requirements.
The Board of Management comprises 15 non executive Members and is responsible for the management of the affairs of the Association. The Board Members are drawn from 3 elements of our community; there are five tenant representatives; 3 local authority appointments; and 7 Members drawn from professional local business sectors. The Board normally meets formally 5 times a year for regular business together with an annual general meeting. It has 3 standing Committees in place to consider the detailed work of the Association. These cover Resources, Housing Management, Development and Property Services. These Committees meet on a regular basis, usually in the weeks prior to the Board meeting itself. Also in place are an Urgency Committee; an Audit Committee; a Remuneration Committee; and Appeals Committee.
The Board is responsible for the Association's statutory and policy framework. The implementation of that framework is delegated to the Chief Executive and other executive officers. The Management Team comprises of the Chief Executive, the Director of Finance and Administration, the Director of Housing Services and the Director of Property Services. The Management Team meets on a weekly basis to review and discuss internal matters and are present either individually or collectively at all Committee and Board meetings.
Tenant Board Members are elected by the tenant forums and serve for a 3 year term. Local Authority nominees are appointed by the Vale of White Horse District Council annually.
Professional Members of the Board are recruited following public advertisement.
It is the intention that no Board Member should serve more than 12 consecutive years on the Board.
The Association has 131 shareholding Members and an open membership policy.
Each Committee comprises either 6 Members (Appeals Committee 3) with the allocation to tenant representatives being no more than 1/3 of each Committees membership. The Chair of a Committee cannot be a local authority nominee with the local authority representation being no more than 1/5 of each Committee's membership. Each of the Committees consider policy and detailed issues arising within their terms of reference with, if necessary, recommendations to the Board of Management where appropriate. The broad terms of reference for each Committee are as follows: