Peabody Trust
26 July 2007
PEABODY TRUST
Report and Financial Statements
31 March 2007
Charity registration: 206061
Housing Corporation registration: L0014
Deloitte & Touche LLP
St Albans
PEABODY TRUST
OPERATING AND FINANCIAL REVIEW
Operating and financial review 1
Governors' statement of internal control 12
Independent auditor's report 13
Trust income and expenditure account 14
Trust statement of total recognised surpluses and deficits 15
Trust balance sheet 16
Trust cash flow statement 17
Notes to the Trust cash flow statement 18
Consolidated income and expenditure account 20
Consolidated statement of total recognised surpluses and deficits 21
Consolidated balance sheet 22
Consolidated cash flow statement 23
Notes to the consolidated cash flow statement 24
BOARD, EXECUTIVE OFFICERS AND ADVISORS
Members of the Board of Governors
Pam Alexander (Chair of the Board, Member of the Nominations & Remuneration
Committee)
Farmida Bi (Member of the Resident & Community Committee) - appointed 25 October
2006
Fred Calcott (Chair of Resident Liaison Committee and Member of the Resident &
Community Committee)
Peter Doyle (Member of the Property, Finance and Audit & Risk Committees)
Ngaire Drake (Member of the Property Committee)
Dudley Fishburn (Vice-Chair of the Board, Chair of the Finance Committee, Chair
of the Nominations & Remuneration Committee and Member of the Audit & Risk
Committee)
Karl King (Member of the Property Committee) - appointed 13 December 2006
Hattie Llewelyn-Davies (Chair of the Resident & Community Committee and Member
of the Nominations & Remuneration Committee)
Ken Olisa (Chair of the Audit & Risk Committee and Member of the Resident &
Community and Finance Committees)
Christopher Strickland (Chair of the Property Committee and Member of the
Nominations & Remuneration Committee)
Marc Hume (Member of the Resident & Community Committee)
Marisa Cassoni (Member of the Finance, Audit & Risk and Property Committees)
Co-opted Committee Members
Jane Atkinson (Property Committee) - resigned 29 August 2006
Simon Hill (Property Committee)
Elizabeth Moxon (Property Committee) - resigned 2 November 2006
Neil Gardiner (Property Committee)
Margaret Kerss (Resident & Community Committee)
Janet McLagan (Resident & Community Committee)
Ian Parkes (Resident & Community Committee)
Kirk Mitchell (Resident & Community Committee)
Executive Officers
Stephen Howlett (Group Chief Executive)
Catriona Simons (Group Finance Director)
Ronnie Clawson (Corporate Services Director) - resigned 22 September 2006
Siobhan McHale (Interim Corporate Services Director) - appointed 27 September
2006, resigned 2 February 2007
David Lavarack (Corporate Services Director) - appointed 2 April 2007
Nick Dudman (Interim Property Director)
Maura Santos (Director of Community Services) - resigned 1 July 2006
Stephen Burns (Acting Director of Community Services) - appointed 3 July 2006
Julie Webb (Interim Director of Customer Services)
BOARD, EXECUTIVE OFFICERS AND ADVISORS
Auditors Company Secretary Company Secretary
Deloitte & Touche LLP Graham Lawrence Graham Lawrence
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OVERVIEW
Peabody Trust is one of London's oldest housing associations and a general
charity. Uniquely for a housing association, it has its own Act of Parliament
stipulating the Trust's objective to work solely within London for the relief of
poverty.
Founded in 1862 by George Peabody, an American banker, entrepreneur and
philanthropist, today the Peabody Group owns or manages more than 18,000 homes
in London, providing affordable homes for some 50,000 people in 32 boroughs.
Peabody's portfolio comprises a significant number of properties in central
London. Most are in central and inner London, with over 5,750 properties built
before 1900 and 2,300 of these built before 1875. This legacy of Victorian and
Edwardian properties presents us with significant refurbishment challenges. The
majority of our homes are on estates with open, communal green spaces. There are
also a number of street properties. The Trust also acquired three local
authority estates in Islington, Hackney and Barnet between 1998 and 2000
comprising 2,271 homes.
KEY MISSION AND VISION
Peabody Trust's principal activity within its mission of tackling poverty in
London is the provision of accommodation for those in housing need. This will be
achieved by providing excellent customer services, thriving communities and
desirable homes through a first class organisation. The Trust also provides a
wide range of economic and community regeneration activities. The Trust's long
term vision is to become a beacon organisation recognised for our clarity of
purpose, excellent services and innovative approach to today's housing and
community regeneration challenges.
DESCRIPTION OF OPERATIONS
The Peabody Group is based in London. The Group consists of two registered
social landlords, Peabody Trust and CBHA, and a number of smaller trading
companies.
The Group is a charitable organisation and has 4 key areas of activity:
• The provision of rented housing for people who are unable to afford to
rent or buy in the open market;
• The provision of supported housing and care for those who need
additional support;
• The provision of low cost home ownership, particularly shared ownership;
and
• The delivery of community regeneration activities such as the provision
of learning opportunities and access to ICT training and accreditation.
In 1997 a Community Regeneration directorate was established to tackle poverty
at its roots - poor education, low skills and lack of opportunity. Working on
and around our estates in some of the most deprived areas of London, the team is
well placed to reach the most excluded and to ensure that services are
accessible by taking support right into the heart of the community.
Since being established, the team have set up a wide range of anti poverty
initiatives that helped 2,500 people find jobs and 5,000 people achieve
qualifications - many for the first time. In 2006-07 we assisted over 300 people
into employment and almost 800 in achieving qualifications.
OBJECTIVES AND STRATEGY
The objectives and strategy of the Trust are set out in a rolling three year
business plan that is reviewed annually and approved by the Board. The business
planning process includes an assessment of strengths and weaknesses,
opportunities and threats, which are discussed between the Executive team and
the Board of Governors.
The Trust's Business Plan 2007-2010, entitled 'Putting the customer first',
takes forward the Trust's vision and mission and recognises certain key areas on
which to focus during the business plan period. The Trust's priorities have been
distilled into eight key areas:
• Clear customer focus - Improve customer satisfaction with the quality
and accessibility of services;
• More choice - Offer customers more choice about where they live and the
type of tenure they prefer, providing opportunities for greater customer
involvement;
• 21st Century Peabody Community - Define an ideal Peabody community in
consultation with customers and all our stakeholders;
• Improve life chances - Improve life chances for people of all ages and
champion neighbourliness;
• Improve and build homes - Provide customers with good quality homes that
meet their expectations;
• Cleaner, safer, greener - Improve our estate environments and reduce our
carbon footprint;
• Deliver value for money - Deliver high quality, value for money
services; and
• Develop a skilled workforce - Recruit and retain high calibre staff to
deliver the Trust's objectives for customers.
The Trust's main objectives for the forthcoming year in each of the key areas
detailed above are outlined below.
Clear customer focus
In order to ensure have clear customer focus, we will:
• Improve the quality and effectiveness of the maintenance service through
the maintenance turnaround team;
• Define and implement estate plans to improve service delivery on each
estate; and
• Roll-out a core competencies training programme for customer services
frontline staff.
More choice
In order to ensure we provide more choice, we will:
• Implement a choice based lettings service for transfers;
• Research customer appetite and ability to become full or partial
homeowners;
• Review our customer involvement strategy;
• Improve our understanding of customers' needs and priorities based on
survey feedback;
• Introduce local and regional plans that set priorities for each estate;
and
• Ask customers what community development initiatives they want.
21st Century Peabody Community
In order to deliver the 21st Century Peabody Community, we will:
• Carry out research on a sample of Peabody estates to assess the
condition of the homes and the aspirations and needs of customers;
• Project these conclusions into the future;
• Define 'ideals'; to include a good home and services, an attractive
environment, a safe community and opportunities for training, jobs and
social interaction; and
• Measure the gap between the 'ideal' and our current service provision
and plan how to move towards the customer's ideal over time.
Improve Life Chances
In order to improve the life chances of our customers, we will:
• Increase the delivery of basic skills and 'english for speakers of other
languages' provision;
• Develop and implement a programme for financial inclusion;
• Establish management committees for all community centres;
• Increase the number of Youth Forums;
• Develop and implement an employer-led approach on employment programmes;
and
• Deliver debt counselling alongside rent collection enforcement to reduce
rent arrears.
Improve and build homes
In order to improve and build homes, we will:
• Continue with work to ensure compliance with the DECENT Homes Standard
by 2010;
• Commence project SOUND (works to external fabric of estates);
• Dispose of properties to meet the Asset Management delivery timetable;
and
• Develop current and programmed new build schemes to time and on budget.
Cleaner, safer, greener
In order to be cleaner, safer and greener, we will:
• Roll out the cleaning pilot to all estates;
• Define and implement a revised approach to anti-social behaviour;
• Integrate grounds maintenance into estate services;
• Specify and tender grounds maintenance contracts;
• Add energy efficiency targets to the asset management strategy;
• Measure the carbon footprint of the central office; and
• Implement the findings of the Trust's Green Taskforce.
Deliver value for money
In order to deliver value for money services, we will:
• Develop effective measures and targets for efficiency and value for
money;
• Embed our new procurement procedures through training and support to
ensure that procurement processes deliver value for money and promote
efficiency, compliance and probity;
• Develop integrated IT systems to enhance recording and management of
supplier and contract details;
• Review the corporate overhead allocation policy to ensure it is
equitable and enables enhanced understanding of business performance;
• Review the Group structure to ensure relevance to the current business
activities and optimised risk management, particularly in respect of future
new developments;
• Increase partnership working to enable community regeneration to deliver
more projects for less direct expenditure; and
• Produce and monitor performance information more efficiently.
Develop a skilled workforce
In order to develop and retain a skilled workforce, we will:
• Redefine the performance management system to provide a clear line of
sight to the business priorities and greater fairness and consistency in
performance evaluation;
• Develop and implement new pay, benefits and grading structures which
facilitate recruitment and progression within the Trust; and
• Redefine key staff behaviours.
Performance Indicators
The section below highlights some of the key indicators used by senior
management and the Board of Governors to monitor achievement of these
objectives.
Housing Management and Maintenance
• Customer satisfaction
• Rent collection rate
• Current rent arrears as % of rent roll
• Average re-let times for empty properties
• Number of empty properties
• Repair response times
• Percentage of properties in possession of a valid gas safety certificate
Asset management
• Progress towards Decent Homes Standard
Financial
• Results compared to budget
• Operating margin
• Compliance with loan covenants
Performance against key indicators
All operations achieved their budgeted turnover and surplus.
All areas achieved their target performance indicators, with the exception of
the following:
• As at 31 March 2007 98% of properties (where gas is supplied to the
premises) were in possession of a valid gas safety certificate or were
covered by the Trust's no access protocol.
• The average number of days to re-let empty properties was 87 as at 31
March 2007. This average continued to be distorted by a small number of
properties that had been empty for a considerable period but have now been
let, however, performance for the year was a 66% improvement on 2005/06. At
31 March 2007 the Trust only had 44 properties available to let.
• The percentage of emergency repairs completed within target stood at 90%
at 31 March 2007, performance on urgent and routine repairs was at 90%
compared with 85% and 84% respectively for 31 March 2006. A new appointment
scheduling system was introduced early in 2006/07 and this is expected to
further improve performance in this area.
The Trust has detailed action plans in place to address the above issues. These
plans have delivered improvements in all areas since 31 March 2006, and will
continue to do so in 2007/08.
REGULATION AND GOVERNANCE
The Group is regulated by the Housing Corporation with whom it is registered and
it complies with the Housing Corporation's Regulatory Code. Peabody Trust and
CBHA are also both registered charities and are regulated by the Charity
Commission. Performance is assessed by the Housing Corporation by means of
annual assessments against four main criteria - viability, governance,
management and development. The corporation uses a 'traffic light' system to
measure compliance. At the start of 2006/07 the Group had green lights for
viability, governance and development and the remaining, for management, as
amber. Much of the Group's efforts in 2006/2007 were focused on addressing the
issues underlying the remaining amber light and in December 2006 the green light
for management was restored.
During July 2006 the Trust was inspected by the Audit Commission and achieved a
one star rating with promising prospects for improvement demonstrating the
progress made since the last inspection and leading to the reinstatement of the
green light for management.
The Board of Governors of Peabody Trust is the incorporated body of trustees of
the charity and as such is the ultimate governing body of the Trust. The Board
comprises 12 non-executive directors who meet no less than seven times each
year. All members give their time voluntarily and receive training as
appropriate to support them in their roles. Members of the Board of Governors of
Peabody Trust are listed on page 1 of these financial statements.
The Trust is managed by an Executive Team headed by the Chief Executive and
supported by directors of finance, customer services, property, corporate
services and community services. All members of the Executive Team attend board
meetings. Executive Officers of the Trust are not members of the Board and,
although for the purposes of salary disclosure they are referred to as
directors, they are not regarded as directors for legal purposes. The Executive
Officers meet on a fortnightly basis under the chairship of the Chief Executive
in order to manage the Trust's affairs within the framework set by the Board.
The Executive Officers of Peabody Trust are listed on page 1 of these financial
statements.
The maximum permitted term of office for Governors is limited to three periods
of three years and thereafter a maximum of three terms of one year each.
The Group is eligible for exemption from the Financial Services Authority's
requirements relating to corporate governance disclosures but the Governors have
elected to provide the majority of applicable disclosures. These are set out in
the appropriate parts of this report and the financial statements.
The Group complies with the fundamental aspects of the National Housing
Federation's code of governance.
Subsidiary Entity Boards
CBHA is regulated by the Housing Corporation, with whom it is registered. The
Board of Trustees of CBHA comprises two Peabody Trust Board members and 3
Peabody Trust Executive Officers as nominated by the Peabody Trust Board of
Governors. The Trustees are supported by a range of functional committees and a
local Board.
The non-charitable entities within the Group each have a board of directors
comprising two Peabody Trust governors and two Peabody Trust Executive Officers
in order that, in line with Housing Corporation guidance and other good
practice, these boards should not replicate the main governing body.
Delegation and Functional Committees
The Peabody Trust Board is supported by 5 functional committees each of which
meets 4 times per year (the Nominations and Remuneration Committee only meets
twice each year) and is composed of members of the Board and co-opted members.
The co-opted members are not full Committee members and as such do not have
voting rights at meetings. Each of these committees has clear terms of reference
and delegated authority. They report back to the Board at each Board meeting,
where their recommendations are fully considered and approved as appropriate.
The Audit and Risk Committee is responsible for overseeing internal audit,
external audit, and control and risk management. The Finance Committee oversees
and reports to the Board on the Trust's financial performance, treasury matters
and financial statements. The Resident and Community Committee is responsible
for overseeing the provision of services to the Trust's current and prospective
tenants, leaseholders and other customers. The Property Committee is responsible
for overseeing effective asset management and the control and delivery of
development and reinvestment programmes. The Nominations and Remuneration
Committee advises the Board on appointments to the Board and Committees,
remuneration issues, including senior staff salaries and human resource
policies.
RISK MANAGEMENT
The main risks faced by the Group are considered by the Executive Team with the
Board as part of the business planning process. The Trust has taken steps to
ensure that it identifies factors that may affect future performance. The
Trust's Risk and Risk Management Strategy identifies the key risks facing the
Trust and strategies for monitoring and mitigating them. An Officer Risk
Committee, which meets quarterly, also plays an active part in embedding a
culture of risk awareness and risk management amongst staff.
The Group considers the following to be key risks during the business plan
period
• Build cost inflation increasing at a higher rate than underlying
inflation indicators;
• A significant downturn in the London housing market;
• An inability to fully recover service costs from residents;
• Interest rate exposure in a time of increasing interest rates;
• The need to ensure that development projects meet the Group's financial
requirements.
Further details of the Group's risk management activities are provided in the
Governors' statement on internal control.
CUSTOMER AND EMPLOYEE INVOLVEMENT AND DIVERSITY
The Group has developed policies for customer and employee involvement, as well
as for sustainability.
Customers
The Trust's Resident Liaison Committee, Homeowners' Forum and Diversity Forum
were all involved in the development of the business plan. The Customer Panel
has been involved in a number of key areas across the Trust, for example in the
development of the revised Customer Service Charter, the Rents Policy and the
DECENT and SOUND programmes of major works to homes and estates.
The Trust conducts resident surveys on an ongoing basis in a manner designed to
be consistent with the methodology used in our Resident Satisfaction Survey
(STATUS). The results are used to develop and continually improve our services.
Employees
The Group considers that employee involvement is essential to its success and
uses a variety of methods to inform, consult and involve its employees which
includes a staff forum. Union representation is recognised through the Joint
Negotiating Committee (JNC), Joint Consultative Committee (JCC) and the staff
consultation group (SCG).
The Group has a comprehensive learning and development policy and has been
awarded the Investors in People accreditation.
Equality and Diversity
The Group is committed to achieving equality of opportunities and values
diversity. Its policies and strategies reflect this. The Group recognises that
its ability to meet the diverse needs of both individuals and communities relies
on its diverse workforce which reflects local populations and has the necessary
skills to enable the Group to achieve its service objectives. The Group makes
efforts to extend its commitment through its governance structures and through
its use of suppliers and contractors. It seeks to involve residents and
customers in the design and delivery of its services. It has developed a menu of
involvement so that residents can become involved as much as they want and in a
way that they choose.
Applications for employment from disabled persons are given fair and full
consideration, having regard to their particular skills and abilities. In the
event of employees becoming disabled, every effort is made to retain them in
continued employment within the Group.
Health and Safety
The Group recognises and accepts its legal and moral responsibilities, as
defined in the Health and Safety at Work Act 1974 and other legislation to
ensure, as far as reasonably practicable, the health, safety and welfare of all
of its employees, customers and other persons who may be affected by the way it
carries out its activities.
FINANCIAL PERFORMANCE
The financial position and results for the year are set out on pages 15 to 56 of
these statements. The financial statements have been prepared in accordance with
the relevant provisions of the Peabody Donation Fund Act 1948 as amended by the
Charities (The Peabody Donation Fund Act) Order 1997, Schedule 1 to the Housing
Act 1996 and the Accounting Requirements for Registered Social Landlords General
Determination 2006.
Performance in the period
The Trust made a deficit for the year after tax of £10.6 million compared to a
surplus of £25.4 million in the previous year.
The consolidated results for the Group, which include the results of those
entities detailed above, show a deficit for the year after tax of £8.6 million
compared to a surplus of £27.6 million in the previous year.
The Trust's deficit for the year is entirely attributable to £52.3 million of
redemption penalties associated with the redemption of the £100 million 2018
bond, and the repurchase of £12.6 million of the 2023 bond during the year.
All of the Trust's surpluses are re-invested in the Charity with the surplus on
the sale of properties invested directly in a programme of works to meet the
Decent Homes Standard and to ensure that they remain desirable places to live.
The Trust also has a small development programme focussing on the provision of
new affordable homes for Londoners. During 2006/07 £32.3 million of major
repairs and refurbishment works were completed, of which £11.6 million was
invested in the ongoing programme of works required to meet the Decent Homes
Standard by 2010 and £1.5 million was incurred in relation to the Trust's SOUND
programme of external works.
On 2 June 2006, the Trust successfully redeemed its £100m First Mortgaged
Debenture Stock due 2018 and in December 2006 £12.6 million of the Guaranteed
Secured Debenture Stock due 2023 became available for repurchase. These
redemptions were funded through new borrowing facilities with Barclays Bank plc,
Royal Bank of Scotland plc and through existing cash reserves. Early redemption
premiums totalling £52.3m associated with these transactions are included within
the income and expenditure account for the year ended 31 March 2007.
Decent Homes
The age profile of the Trust's homes presents a particular investment challenge.
Just under £110 million is required between 2006/07 and 2010 to ensure that all
the Trust's homes meet the Decent Homes Standard, are maintained in good
condition and remain desirable places to live.
As noted above the Trust's Decent Homes programme is funded through
re-investment of annual surpluses. These amounts include surpluses on the
disposal of properties under a strategic disposal programme. During the year
ended 31 March 2007 surpluses totalling £38.0 million were generated by property
disposals.
As at 31 March 2007 80% of the Trust's homes met the Decent Homes Standard with
1616 homes being made Decent during the year ended 31 March 2007.
All of the properties owned and managed by CBHA meet the Decent Homes Standard.
Treasury Management
The Group's Treasury Management Strategy and Policy is updated and submitted
annually to the Group's Finance Committee for approval. Treasury Management
performance, which includes ongoing review of the loan portfolio and compliance
with financial covenants, is reviewed quarterly by the Committee.
At 31 March 2007 the Group complied with all financial covenants in place.
Interest
In accordance with the Group's Interest Rate Management Strategy, and in order
to mitigate the risk of rises in variable interest rates, at 31 March 2007
£283.5 million of the Group's debt was at fixed rates.
Financing
In June 2006 the Trust successfully redeemed its 10.25% First Mortgage Debenture
Stock due 2018. The redemption was largely funded through new borrowing
facilities totalling £135 million that had been arranged with Barclays Bank plc
and Royal Bank of Scotland plc, this redemption will deliver annual cash
interest savings of £3 million. Breakage costs of £45 million were incurred in
respect of this redemption.
During the year £12.6 million of the Trust's Guaranteed Secured Stock due 2023
became available for repurchase. The Trust took advantage of this opportunity
and breakage costs of £7.3 million were incurred in respect of this repurchase.
Payments totalling £10.0 million were made to investors in the SAGE investors
scheme during December 2006 and February 2007, these were loans made following
wind-up of the BES investment schemes.
In March 2007 the Trust repaid £10 million of the revolving Nationwide facility
using its existing cash reserves.
Liquidity
The Group's Treasury Management Policy dictates that the Group's available cash
should not at any time fall below the forecast outflow for the next calendar
month and sufficient facilities should be in place to fund it's business and
service objectives. The Group has been compliant with this policy throughout
2006/07 and is expecting to be compliant for the foreseeable future.
The Group has sufficient committed facilities available to meet known
requirements until 31 March 2008 and for the foreseeable future.
At the year end the Trust held cash balances totalling £18.3 million.
Accounting Policies
No new accounting policies have been adopted during the current financial year.
Reserves
The Board of Governors has reviewed the reserves of the Group taking into
consideration the nature of income and expenditure streams and has concluded
that the level of reserves shown at 31 March 2007 is commensurate with the
performance and investment profile of a housing charity.
Going Concern
After making all reasonable enquiries, the Governors have a reasonable
expectation that the Group 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 accounts.
Group Highlights - five year 2007 2006 2005 2004 2003
summary
For the year ended 31 March £m £m £m £m £m
Group income and expenditure
account
Total turnover 98.7 98.5 86.9 81.9 86.4
Income from lettings 82.0 78.4 72.9 70.7 66.4
Depreciation & amortisation of
housing properties 9.8 7.6 6.0 2.6 2.2
Operating surplus 25.0 25.7 24.3 22.1 23.3
Surplus before tax (excluding
redemption penalties) 43.7 32.7 18.4 12.9 10.3
(Deficit)/Surplus after interest
and tax (8.6) 27.6 18.4 12.9 10.3
Group balance sheet
Tangible fixed assets, at cost 986.9 964.4 924.8 894.8 830.3
Social Housing Grant (449.8) (445.0) (423.8) (413.4) (376.8)
Net current assets 6.9 38.2 (2.6) 17.3 14.0
Indebtedness 375.1 364.5 363.8 360.1 341.1
Total reserves 157.8 161.8 135.5 114.5 118.4
Key financial performance 2007 2006 2005 2004 2003
information % % % % %
Operating Surplus as a % of turnover 25 26 28 27 27
Void loss as % of rent & service
charges receivable 1.7 2.4 2.8 2.6 2.9
Gross current tenant arrears as %
of rent and service charges
receivable 8.4 8.5 7.6 7.6 7.9
Total loans as % of capital grants
plus reserves (Gearing) 65 66 65 71 74
Total debt less cash and short
term investments as % of total
debt plus capital and reserves
less intangible fixed assets
(Adjusted net leverage) 39 34 37 38 38
EBITDA as a % of interest payable 47 109 114 112 122
EBITDA as a % of interest payable
excluding loan redemption
penalties 156 125 118 112 122
STATEMENT OF GOVERNORS' RESPONSIBILITIES
The Governors are responsible for preparing the Annual Report and the financial
statements. The Governors have chosen to prepare accounts for the Trust and the
Group in accordance with United Kingdom Generally Accepted Accounting Practice
(UK GAAP). Housing Association legislation requires the Governors to prepare
such financial statements for each financial year which give a true and fair
view of the state of affairs of the Trust and of the Group and of the surplus or
deficit of the Trust and the Group for that period and comply with UK GAAP and
the Peabody Donation Fund Act 1948 as amended by the Charities (The Peabody
Donation Fund) Order 1997, Schedule 1 to the Housing Act 1996 and the Accounting
Requirements for Registered Social Landlords General Determination 2006. In
preparing these financial statements, the Governors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgments and estimates that are reasonable and prudent;
• state whether applicable accounting standards have been followed,
subject to any material departures disclosed and explained in the financial
statements; and
• prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Trust will continue in business.
The Governors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
Trust, for safeguarding the assets, for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
EXTERNAL AUDITORS
Deloitte & Touche LLP have expressed their willingness to continue in office.
Accordingly a resolution is to be proposed at the Annual General Meeting for the
re-appointment of Deloitte & Touche LLP as auditors of the Group.
Approved by the Board of Governors on 24 July 2007 and signed on their behalf
by:
Pam Alexander Stephen Howlett
Chair Chief Executive
GOVERNORS' STATEMENT ON INTERNAL CONTROL
The Governors acknowledge their ultimate responsibility for ensuring that the
Group has in place a system of controls that is appropriate to the various
business environments in which it operates. These controls are designed to give
reasonable assurance with respect to:
• The reliability of financial information used within the Group, or for
publication; and
• The maintenance of proper accounting records, and the safeguarding of
assets against unauthorised use or disposition.
It is the Governors' responsibility to establish and maintain systems of
internal control. Such systems can only provide reasonable, and not absolute,
assurance against material financial misstatement or loss in accordance with the
principles established in the Housing Corporation Circular R2-25/01 Internal
Controls Assurance. The following key elements of internal control have been in
place for all or part of the financial year 2006/7:
• The Trust has an Executive Team comprising functional directors which
meets fortnightly to consider ongoing operations, financial performance,
management and major new projects and initiatives.
• Experienced and suitably qualified staff take responsibility for
important business functions. Performance management processes including
annual appraisal procedures and training programmes have been established to
maintain standards of performance;
• Formal policies and procedures are in place, including the documentation
of key systems and rules relating to the delegation of authorities, which
allow the monitoring of controls and prevent the unauthorised use of the
Group's assets;
• Forecasts, budgets and operational targets are prepared which allow the
Governors and management to monitor the key business risks and financial
objectives, and progress towards financial plans set for the year and
medium term; regular management accounts are prepared promptly, providing
relevant, reliable and up-to-date financial and other information, and
significant variances from budgets are investigated as appropriate. Key
performance indicators are monitored monthly by management and quarterly by
the Board;
• The Group has a Project Approval Committee which meets monthly to
approve all investment decisions involving capital programme expenditure
and to review the ongoing management and control of capital projects;
• All other significant new initiatives, major commitments and investment
projects are subject to formal authorisation, through relevant Executive
Team and Governors' meetings;
• The Audit and Risk Committee reviews reports from management, from the
internal auditor and from the external auditor to provide reasonable
assurance that control procedures are in place and are being adhered to;
• The Group has a risk management strategy which is reviewed on an annual
basis and is reported to and approved by the Audit and Risk Committee. The
Audit and Risk Committee receive reports on all high ranking risks on a
rolling quarterly basis, in addition to reports concerning risks which have
crystallised during the quarter;
• The Group has an officer Risk Committee comprising senior staff which
meets quarterly to consider key risks and risk management reports. The
minutes of these meetings and risk monitoring reports are submitted to
Audit and Risk Committee for approval;
• The Group has a business continuity and disaster recovery plan;
• The Group has a dedicated Internal Audit service whose annual programme
of work is approved by Audit and Risk Committee. The findings of this work
are presented to the Audit and Risk Committee and formal procedures have
been established for instituting appropriate action to correct weaknesses
identified from the above reports.
On behalf of the Governors, the Audit and Risk Committee has reviewed the
effectiveness of the system of internal control in existence in the Group for
the year ended 31 March 2007 and until 24 July 2007. No weaknesses were found in
internal controls which resulted in material losses.
REPORT OF THE INDEPENDENT AUDITORS TO THE GOVERNORS OF PEABODY TRUST
We have audited the financial statements of Peabody Trust for the year ended 31
March 2007 which comprise the Trust and consolidated income and expenditure
accounts, the Trust and consolidated statements of total recognised surpluses
and deficits, the Trust and consolidated balance sheets, the Trust and
consolidated cash flow statements, the respective notes to the cash flow
statements a to c and the related notes 1 to 24. These financial statements have
been prepared under the accounting policies set out therein.
This report is made solely to the governors, as a body, in accordance with
Schedule 1 paragraphs 16 to 18 of the Housing Act 1996. Our audit work has been
undertaken so that we might state to the governors those matters we are required
to state to them in an auditors' report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone
other than the trust and the governors as a body, for our audit work, for this
report, or for the opinions we have formed.
Respective Responsibilities of the Board and Auditors
The Board's responsibilities for preparing the Annual Report and the financial
statements in accordance with applicable United Kingdom law and United Kingdom
Generally Accepted Accounting Practice are set out in the statement of the
Board's responsibilities.
Our responsibility is to audit the financial statements in accordance with
relevant United Kingdom legal and regulatory requirements and International
Standards on Auditing (UK and Ireland).
We report to you our opinion as to whether the financial statements give a true
and fair view in accordance with the relevant framework and are properly
prepared in accordance with the Peabody Donation Fund Act 1948 as amended by the
Charities (The Peabody Donation Fund Act) Order 1997, Schedule 1 to the Housing
Act 1996 and the Accounting Requirements for Registered Social Landlords General
Determination 2006. We also report to you if, in our opinion, the Report of the
Governors is not consistent with the Financial Statements, if the Group has not
kept proper accounting records, if we have not received all the information and
explanations we require for our audit, or if information specified by law
regarding board members' and directors' remuneration and transactions with the
Trust and other members of the Group is not disclosed.
We read the other information contained in the annual report for the above year
as described in the contents section and consider the implications for our
report if we become aware of any apparent misstatements or material
inconsistencies with the financial statements.
Basis of Audit Opinion
We conducted our audit in accordance with International Standards on Auditing
(UK and Ireland) issued by the Auditing Practices Board. An audit includes
examination, on a test basis, of evidence relevant to the amounts and
disclosures in the financial statements. It also includes an assessment of the
significant estimates and judgments made by the directors in the preparation of
the financial statements, and of whether the accounting policies are appropriate
to the circumstances of the Trust and the Group, consistently applied and
adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.
Opinion
In our opinion:
• the financial statements give a true and fair view, in accordance with
United Kingdom Generally Accepted Accounting Practice, of the state of the
Group's and the Trust's affairs as at 31 March 2007 and of the Group's and
the Trust's deficit for the year then ended; and
• the financial statements have been properly prepared in accordance with
the Peabody Donation Fund Act 1948 as amended by the Charities (The Peabody
Donation Fund Act) Order 1997, Schedule 1 to the Housing Act 1996 and the
Accounting Requirements for Registered Social Landlords General
Determination 2006.
Deloitte & Touche LLP
Chartered Accountants and Registered Auditors
St Albans
24 July 2007
TRUST INCOME AND EXPENDITURE ACCOUNT
Year ended 31 March 2007
Note 2007 2006
£'000 £'000
TURNOVER 2(a) 88,074 83,985
Operating costs 2(a) (65,681) (60,797)
OPERATING SURPLUS 22,393 23,188
Profit on sale of fixed assets 23 40,907 31,627
Interest receivable and 5 3,728 10,501
similar income
Other interest payable and 6 (25,325) (34,755)
similar charges
Cost of early redemption of 6 (52,341) (5,160)
loans
Total interest payable (77,666) (39,915)
(Deficit)/Surplus on ordinary
activities before and after
taxation (10,638) 25,401
The turnover and (deficit)/surplus for the current and prior years derive from
continuing operations.
These financial statements were approved by the Board of Governors on 24 July
2007 and signed on their behalf by:
Pam Alexander Stephen Howlett
Chair Chief Executive
TRUST STATEMENT OF TOTAL RECOGNISED SURPLUSES AND DEFICITS
Year ended 31 March 2007
2007 2006
£'000 £'000
(Deficit)/Surplus for the year (10,638) 25,401
Actuarial gain/(loss)
relating to the pension
scheme 17 4,032 (1,908)
Unrealised surplus on
revaluation of investments 200 903
Total recognised surpluses
and deficits in year (6,406) 24,396
TRUST BALANCE SHEET
31 March 2007
Note 2007 2006
£'000 £'000 £'000 £'000
FIXED ASSETS
Housing properties - 9(a) 927,649 907,128
depreciated cost
Less: Social Housing Grant (376,574) (372,951)
Other Public Grants (56,244) (432,818) (55,890) (428,841)
494,831 478,287
Other tangible fixed assets 10(a) 11,571 11,232
506,402 489,519
Fixed asset investments 11 13,257 12,781
519,659 502,300
CURRENT ASSETS
Debtor due in more than one 13 29,438 34,438
year
Debtors due in less than one 13 15,768 13,366
year
Cash at bank and in hand 18,347 35,680
63,553 83,484
CREDITORS: Amounts falling due
within one year
14 (36,766) (24,557)
NET CURRENT ASSETS 26,787 58,927
TOTAL ASSETS LESS CURRENT
LIABILITIES 546,446 561,227
PENSION DEFICIT 17 13,091 16,408
CREDITORS: Amounts falling due
after more than one year 15 392,490 397,548
RESERVES
Revenue reserve 16 131,073 137,673
Designated reserves 16 9,792 9,598
140,865 147,271
546,446 561,227
These financial statements were approved by the Board of Governors on 24 July
2007 and signed on their behalf by:
Pam Alexander Stephen Howlett
Chair Chief Executive
TRUST CASH FLOW STATEMENT
Year ended 31 March 2007
Note 2007 2006
£'000 £'000
Net cash inflow from operating (a) 35,096 39,646
activities
Net interest paid (24,609) (22,849)
Cost of early redemption of loans (52,341) (5,160)
Returns on investments and (b) (76,950) (28,009)
servicing of finance
Capital expenditure and financial (b) 18,134 810
investment
Net cash (outflow)/inflow before (23,720) 12,447
financing
Financing (b) 6,387 4,183
(Decrease)/Increase in cash (17,333) 16,630
Reconciliation of net cash inflow
to movement in net debt £'000 £'000 £'000 £'000
(Decrease)/Increase in cash in the (c) (17,333) 16,630
year
Cash inflow from financing (b) (6,387) (4,183)
Change in net debt resulting from (23,720) 12,447
cash flows
Non cash transactions (c) 6,579 425
Movement in net debt in the year (17,141) 12,872
Net debt at beginning of the year (320,970) (333,842)
Net debt at the end of the year (338,111) (320,970)
NOTES TO THE TRUST CASH FLOW STATEMENT
Year ended 31 March 2007
(a) RECONCILIATION OF OPERATING SURPLUS TO NET CASH INFLOW FROM OPERATING
ACTIVITIES
2007 2006
£'000 £'000
Operating surplus 22,393 23,188
Depreciation 10,715 8,749
Decrease in stocks - 160
Increase in debtors (2,402) (1,926)
Increase in creditors 3,788 9,111
Adjustment for pension funding 602 364
Net cash inflow from operating 35,096 39,646
activities
(b) ANALYSIS OF CASH FLOWS FOR HEADINGS NETTED IN THE CASH FLOW STATEMENT
2007 2006
£'000 £'000 £'000 £'000
Returns on investments and
servicing of finance
Interest received 3,464 4,504
Dividends received 264 234
Interest paid (28,337) (27,587)
Cost of early redemption of loans (52,341) (5,160)
Net cash outflow from returns on
investments and servicing of finance (76,950) (28,009)
Capital expenditure and
financial investment
Cash paid for construction of, (39,217) (52,790)
investment in, and purchase of
housing properties
Social Housing Grant received 8,022 12,063
Other grants received 40 2,551
Cash received on sale of 52,281 41,748
property
Cash paid for investments (276) (276)
Cash paid for purchase of other
tangible fixed assets
(1,256) (962)
Internal costs capitalised (1,460) (1,524)
Net cash inflow from capital
expenditure and financial investment 18,134 810
(b) ANALYSIS OF CASH FLOWS FOR HEADINGS NETTED IN THE CASH FLOW STATEMENT
(continued)
2007 2006
£'000 £'000 £'000 £'000
Financing
New loans 135,000 35,000
Loan to subsidiary undertaking - (2,800)
Repayment of loans made to
subsidiary undertaking
5,000 7,000
Repayment of loans (133,613) (35,017)
Net cash inflow from financing 6,387 4,183
(c) ANALYSIS OF NET DEBT
Other
At 1 Cash non-cash At 31
April Flow changes March
2006 2007
£'000 £'000 £'000 £'000
Cash at bank and in hand 35,680 (17,333) - 18,347
Debt due after one year (391,088) (1,387) 8,771 (383,704)
Debt due within one year - - (2,192) (2,192)
Debtor due after more 34,438 (5,000) - 29,438
than one year
(320,970) (23,720) 6,579 (338,111)
CONSOLIDATED INCOME AND EXPENDITURE ACCOUNT
Year ended 31 March 2007
2007 2006
£'000 £'000
Note
GROUP TURNOVER 2(a) 98,710 98,475
Group operating costs 2(a) (73,717) (72,783)
GROUP OPERATING SURPLUS 24,993 25,692
Profit on sale of fixed assets 23 41,695 33,021
Interest receivable and 5 2,382 8,470
similar income
Other interest payable and 6 (25,323) (34,388)
similar charges
Cost of early redemption of 6 (52,341) (5,160)
loans
Total interest payable (77,664) (39,548)
(Deficit)/Surplus on ordinary
activities before and after
taxation (8,594) 27,635
The turnover and operating surplus for the current and prior years derive from
continuing operations.
These financial statements were approved by the Board of Governors on 24 July
2007 and signed on their behalf by:
Pam Alexander Stephen Howlett
Chair Chief Executive
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED SURPLUSES AND DEFICITS
Year ended 31 March 2007
2007 2006
£'000 £'000
(Deficit)/Surplus for the (8,594) 27,635
year
Actuarial gain/(loss)
relating to the pension
scheme 17 4,416 (2,217)
Unrealised surplus on 200 903
revaluation of investments
Total recognised surpluses (3,978) 26,321
and deficits in year
CONSOLIDATED BALANCE SHEET
31 March 2007
2007 2006
£'000 £'000 £'000 £'000
Note
FIXED ASSETS
Housing properties - 9(b) 986,927 964,406
depreciated cost
Less: Social Housing Grant (376,574) (372,951)
Other Public Grants (73,217) (449,791) (72,083) (445,034)
537,136 519,372
Other tangible fixed assets 10(b) 12,120 11,737
549,256 531,109
Fixed asset investments
Shares in quoted securities 11 8,257 7,781
557,513 538,890
CURRENT ASSETS
Stocks 12 1,186 2,166
Debtors due in more than 1 13 120 620
year
Debtors due in less than 1 13 12,954 9,325
year
Cash at bank and in hand 30,755 51,948
45,015 64,059
CREDITORS: Amounts falling due 14
within one year (38,087) (25,869)
NET CURRENT ASSETS 6,928 38,190
TOTAL ASSETS LESS CURRENT
LIABILITIES 564,441 577,080
PENSION DEFICIT 17 14,591 18,220
CREDITORS: Amounts falling due
after more than one year 15 392,044 397,076
RESERVES
Revenue reserve 16 144,173 148,064
Designated reserves 16 9,792 9,598
Revaluation reserve 16 3,841 4,122
157,806 161,784
564,441 577,080
These financial statements were approved by the Board of Governors on 24 July
2007 and signed on their behalf by:
Pam Alexander Stephen Howlett
Chair Chief Executive
CONSOLIDATED CASH FLOW STATEMENT
Year ended 31 March 2007
Note 2007 2006
£'000 £'000
Net cash inflow from operating (a) 42,145 45,288
activities
Net interest paid (25,993) (24,471)
Cost of early redemption of loans (52,341) (5,160)
Returns on investments and (b) (78,334) (29,631)
servicing of finance
Capital expenditure and financial (b) 13,609 1,787
investment
Net cash (outflow)/inflow before (22,580) 17,444
financing
Financing (b) 1,387 (17)
(Decrease)/Increase in cash (21,193) 17,427
Reconciliation of net cash inflow £'000 £'000 £'000 £'000
to movement in net debt
(Decrease)/Increase in cash in the (c) (21,193) 17,427
year
Cash (inflow)/outflow from (c) (1,387) 17
financing
Change in net debt resulting from (22,580) 17,444
cash flows
Non cash transactions (c) 6,553 399
Movement in net debt in the year (16,027) 17,843
Net debt at beginning of the year (338,668) (356,511)
Net debt at end of the year (354,695) (338,668)
NOTES TO THE ACCOUNTS
Year ended 31 March 2007
(a) RECONCILIATION OF OPERATING SURPLUS TO NET CASH INFLOW FROM OPERATING
ACTIVITIES
2007 2006
£'000 £'000
Operating surplus for the year 24,993 25,692
Depreciation 10,757 8,790
Decrease in stocks 980 2,904
Increase in debtors (3,093) (668)
Increase in creditors 7,870 8,214
Adjustment for pension funding 638 356
Net cash inflow from operating activities 42,145 45,288
(b) ANALYSIS OF CASH FLOWS FOR HEADINGS NETTED IN THE CASH FLOW STATEMENT
2007 2006
£'000 £'000 £'000 £'000
Returns on investments and
servicing of finance
Interest received 2,382 2,707
Interest paid (28,375) (27,178)
Cost of early redemption of (52,341) (5,160)
loans
Net cash outflow from returns on
investments and servicing of finance
(78,334) (29,631)
Capital expenditure and
financial investment
Cash paid for construction of, (41,355) (56,911)
investment in and purchase of
housing properties
Social Housing Grant received 3,623 12,063
Other grants received 1,174 3,541
Cash received on sale of 53,245 45,872
property
Cash paid for the purchase of
other tangible fixed assets
(1,342) (978)
Cash paid for investments (276) (276)
Internal costs capitalised (1,460) (1,524)
Net cash inflow from capital expenditure
and financial investment 13,609 1,787
(b) ANALYSIS OF CASH FLOWS FOR HEADINGS NETTED IN THE CASH FLOW STATEMENT
(continued)
2007 2006
£'000 £'000 £'000 £'000
Financing
New loans 135,000 35,000
Repayment of loans (133,613) (35,017)
Net cash inflow/(outflow) from
financing
1,387 (17)
(c) ANALYSIS OF NET DEBT
Other
At 1 April Cash non-cash At 31 March
2006 flow changes 2007
£'000 £'000 £'000 £'000
Cash at bank and in hand 51,948 (21,193) - 30,755
Debt due after one year (390,616) (1,387) 8,745 (383,258)
Debt due within one year - - (2,192) (2,192)
(338,668) (22,580) 6,553 (354,695)
NOTES TO THE ACCOUNTS
Year ended 31 March 2007
1. ACCOUNTING POLICIES
The financial statements have been prepared in accordance with applicable United
Kingdom Accounting Standards, Statement of Recommended Practice and the
Accounting Requirements for Registered Social Landlords General Determination
2006 and under the historical cost convention as modified by the revaluation of
quoted investments and the £4,684,000 revaluation of properties repurchased from
a BES Company in 1999.
A summary of the more important accounting policies is set out below.
Basis of consolidation
The group accounts comprise those of the Trust and its subsidiaries, in
accordance with the requirements of FRS 2 - 'Accounting for subsidiary
undertakings'.
Turnover
Turnover represents rental income receivable, fees and revenue grants from local
authorities, the Housing Corporation and other funding bodies, and income from
the sale of housing properties built for sale.
Housing Properties and Stock for Sale
Housing properties developed for sale are stated at cost less any capital grant
received. Stock and work in progress is stated at the lower of cost and net
realisable value.
Housing Properties and Depreciation
Housing properties in the course of construction are stated at cost and are not
depreciated.
Freehold housing properties are transferred to completed properties when they
are ready for letting and are stated at cost.
Freehold land is not depreciated.
The Group depreciates housing properties by component on a straight line basis
over the estimated useful economic lives of component categories, these lives
range from 15 to 100 years.
Component categories used by the Trust include general structure, kitchens,
bathrooms, windows, doors, roofs, lifts, boilers and electrical installations.
Works to properties enabling their conversion from general needs rented to
market rent properties is capitalised and depreciated over 5 years.
Properties held on long leases are depreciated over their estimated useful
economic lives or the life of the lease if shorter.
Impairment reviews are carried out on an annual basis on assets whose useful
economic lives exceed 50 years, in accordance with Financial Reporting Standard
11.
Shared Ownership housing properties and staircasing
Shared ownership properties are included in fixed assets at their cost net of
social housing grant. Proceeds from first tranche sales are credited against
cost. Sales of subsequent tranches ('staircasing') are accounted for as
disposals of fixed assets, with the relevant proportion of cost being accounted
for as a cost of the disposal.
Shared ownership properties in the course of construction are stated at cost and
transferred to housing properties when completed.
Capital Grant
Where developments have been financed wholly or partly by Social Housing Grant
(SHG) or other capital grants the amount of grant received and receivable in
respect of housing properties is deducted from the cost of housing properties.
At the balance sheet date, if the capital grant received or receivable on the
development programme as a whole is greater than gross cost, the difference is
included within creditors falling due within one year and shown as grant
received in advance.
Capital grant is repayable indefinitely unless formally abated or waived. On the
occurrence of certain relevant events, primarily following the sale of property,
the capital grant repayable will be restricted to the net proceeds of sale where
applicable.
Recycled capital grant fund/Disposal Proceeds Fund
On disposal of relevant housing property the Trust is allowed to retain social
housing grant for eligible re-investment. This amount is disclosed separately
within creditors. If unused within a three year period, it will be repayable to
the Housing Corporation with interest.
Other Fixed Assets and depreciation
Other fixed assets are stated at cost less accumulated depreciation.
Depreciation is charged on a straight line basis over the estimated useful
economic lives of assets at the following annual rates:
Freehold offices 1.67%
Office and IT equipment 20%
Motor vehicles 25%
Depreciation is charged on the above assets from the month of purchase until the
month of disposal.
Capitalisation of Interest
Interest on borrowings is charged to housing properties under construction up to
the date of completion of each scheme. The interest charged is on net borrowings
to the extent that they are deemed to be financing a scheme. This treatment
applies irrespective of the original purpose for which the loan was raised.
Capitalisation of Development Administration Costs
The cost of housing properties comprises their purchase price, together with
directly attributable costs in bringing them into working condition for their
intended use. Directly attributable costs, in accordance with FRS 15, include
labour costs of own employees incurred directly on the construction or
acquisition of the property, and incremental costs that would have been avoided
only if individual properties had not been constructed or acquired.
Overheads and other indirect costs are written off as incurred.
Sale of housing properties
Where properties built for sale are disposed of during the year, the disposal
proceeds are included in turnover, and the attributable costs are included as
costs of sales within operating costs.
The surplus or deficit on the disposal of housing properties held as fixed
assets is shown on the face of the income and expenditure account.
Operating leases
Rentals paid under operating leases are charged to the income and expenditure
account in equal amounts over the lease term.
Investments
Fixed asset investments are stated at their market value except for investments
in subsidiary undertakings, which are carried at cost less any provision for
impairment.
Quoted investments are shown at market value. The movement in the difference
between the cost and market value of these investments is shown in as unrealised
gains or losses in the statement of total recognised surpluses and deficits when
in excess of the original cost.
Value Added Tax
Value added tax is accounted for on an accruals basis. The primary activities of
the Group, social housing lettings, constitute exempt supplies, and accordingly
no input tax borne is recoverable. For business supplies chargeable to tax, or
where special dispensations have been agreed, input tax directly relating to
goods and services that have enabled the supply, and relating to a fair
proportion of the cost of central services in support of these, are recovered
from Customs and Excise.
Pension costs
The Group provides membership of the Local Government Pension Scheme, the London
Pension Fund Authority, for its employees. This is a funded pension scheme. The
assets of the pension fund are managed by third-party investment managers and
are held separately in trust.
Regular valuations are prepared by independent professionally qualified
actuaries. These determine the level of contributions required to fund the
benefits set out in the rules of the fund and allow for the periodic increase of
pensions in payment. Following the full adoption of FRS 17, the regular service
cost of providing retirement benefits to employees during the year, together
with the cost of any benefits relating to past service is charged against the
operating surplus in the year.
A credit representing the expected return on the assets of the pension fund
during the year is included within other finance income. This is based on the
market value of the assets of the fund at the start of the financial year.
A charge within other finance charges representing the expected increase in the
liabilities of the pension fund during the year is included within net interest.
This arises from the liabilities of the fund being one year closer to payment.
The difference between the market value of assets and the present value of
accrued pension liabilities is shown as an asset or liability in the balance
sheet net of deferred tax.
Differences between actual and expected returns on assets during the year are
recognised in the statement of total recognised surpluses and deficits in the
year, together with differences arising from changes in assumptions.
Loans and other financial instruments
Loans and other financial instruments are stated in the balance sheet at the
amount of the net proceeds.
Where loans and other financial instruments are redeemed during the year, any
redemption penalty is recognised in the income and expenditure account of the
year in which redemption takes place.
Capitalisation of Loan Costs
The initial cost of raising finance is deducted from the loan proceeds and
amortised over the period of the loan.
Designated reserves
The Trust designates reserves for particular purposes with the expectation that
amounts from these reserves will be transferred back to general reserves to
match relevant expenditure in the income and expenditure account.
Revaluation reserve
The revaluation reserve records any appreciation in value of fixed asset
investments except where the revalued asset represents designated reserves, in
which case the revaluation element is shown separately as part of the designated
reserve. The revaluation reserve also records the revaluation of properties
repurchased from the BES Company as noted above in 1999.
Homes managed by other parties on behalf of the Trust
A number of the Trust's supported homes are managed by third parties on behalf
of the Trust. Where the risks and benefits of managing these homes have been
transferred to the third party the transactions relating to such homes are
excluded from the Trust's revenue account.
Related party transactions
The Trust has taken advantage of the exemption permitted by FRS 8 - 'Related
Party Disclosures', and does not disclose transactions with group undertakings
that are eliminated on consolidation.
Deferred taxation
Deferred taxation is provided in full on timing differences that result in an
obligation at the balance sheet date to pay more tax, or a right to pay less
tax, at a future date, at rates expected to apply when they crystallise based on
current tax rates and law. Timing differences arise from the inclusion of items
of income and expenditure in taxation computations in periods different from
those in which they are included in the financial statements. Deferred tax
assets are recognised to the extent that it is regarded as more likely than not
that they will be recovered. Deferred tax assets and liabilities are not
discounted.
2(a) TURNOVER AND OPERATING SURPLUS
TRUST 2007 2006
Operating Operating
surplus/ surplus/
(deficit) (deficit)
Operating £'000 Operating £'000
Turnover Costs Turnover Costs
£'000 £'000 £'000 £'000
Social housing
lettings
General needs 72,730 (54,562) 18,168 69,423 (48,993) 20,430
housing
Shared ownership 1,193 (686) 507 980 (570) 410
Key worker 2,004 (553) 1,451 2,255 (561) 1,694
75,927 (55,801) 20,126 72,658 (50,124) 22,534
Other social
housing activities
Donations received 2,654 - 2,654 2,099 - 2,099
Development costs 545 (2,317) (1,772) 751 (3,522) (2,771)
Supporting People
contract income
212 (210) 2 256 - 256
Non social-housing
activities
Market renting 2,835 (1,007) 1,828 1,702 (645) 1,057
Commercial lettings 2,547 (1,398) 1,149 2,656 (1,218) 1,438
Leasehold 791 (1,013) (222) 541 (755) (214)
properties
Community 2,563 (3,935) (1,372) 3,030 (4,370) (1,340)
regeneration
Sale of properties - - - 292 (163) 129
Total 88,074 (65,681) 22,393 83,985 (60,797) 23,188
In addition to the above the Trust administered income and expenditure during
the year totalling £2,243,000 (2006: £2,016,000) on behalf of the Local Network
Fund for Children and Young People (LNF). These figures are excluded from the
above results.
2(a) TURNOVER AND OPERATING SURPLUS
2007 2006
GROUP
Operating Operating
surplus/ surplus/
Operating (deficit) Operating (deficit)
costs £'000 costs £'000
Turnover £'000 Turnover
£'000
£'000 £'000
Social housing
lettings
General needs 78,806 (58,056) 20,750 75,195 (52,359) 22,836
housing
Shared ownership 1,193 (686) 507 980 (570) 410
Key worker 2,005 (553) 1,452 2,255 (561) 1,694
82,004 (59,295) 22,709 78,430 (53,490) 24,940
Other social
housing lettings
Donations received - - - 40 - 40
Development costs 545 (2,317) (1,772) 751 (3,522) (2,771)
Other 2,310 (2,109) 201 951 (808) 143
Supporting People
contract income 276 (283) (7) 320 (80) 240
Non social housing
activities
Market renting 2,835 (1,007) 1,828 1,702 (645) 1,057
Commercial lettings 2,773 (1,430) 1,343 2,656 (1,218) 1,438
Leasehold 791 (1,014) (223) 541 (755) (214)
properties
Community 2,563 (3,935) (1,372) 3,030 (4,370) (1,340)
regeneration
Sale of sites and 4,227 (2,185) 2,042 9,770 (7,856) 1,914
properties
Other 386 (142) 244 284 (39) 245
Total 98,710 (73,717) 24,993 98,475 (72,783) 25,692
2(b) PARTICULARS OF INCOME AND EXPENDITURE FROM SOCIAL HOUSING LETTINGS
TRUST
General Supported Shared Key Worker
Needs Housing Ownership Housing Total Total
Housing
2007 2007 2007 2007 2007 2006
£'000 £'000 £'000 £'000 £'000 £'000
Income from lettings
Rents receivable 61,205 4,025 766 1,981 67,977 65,170
Service charges receivable 4,666 892 377 65 6,000 5,481
Charges for support services - 489 - - 489 1,296
Other income 655 2,069 56 1 2,781 2,440
Gross rental income 66,526 7,475 1,199 2,047 77,247 74,387
Less: Rent losses from voids (1,070) (201) (6) (43) (1,320) (1,729)
Total income from social housing 65,456 7,274 1,193 2,004 75,927 72,658
Expenditure on letting activities
Services (6,780) (579) (228) (37) (7,624) (6,233)
Management (18,834) (3,405) (112) (165) (22,516) (18,038)
Routine maintenance (7,945) (948) (71) (144) (9,108) (8,053)
Cyclical maintenance (6,716) (384) (50) (37) (7,187) (9,482)
Rent losses from bad debts (732) (78) - (1) (811) (1,243)
Depreciation of housing properties (7,766) (395) (225) (169) (8,555) (7,075)
Operating costs on social housing (48,773) (5,789) (686) (553) (55,801) (50,124)
Operating surplus on social housing 16,683 1,485 507 1,451 20,126 22,534
lettings
2(b) PARTICULARS OF INCOME AND EXPENDITURE FROM SOCIAL HOUSING LETTINGS
GROUP
General Supported Shared Key Worker Total Total
Needs Housing Ownership Housing
Housing
2007 2007 2007 2007 2007 2006
£'000 £'000 £'000 £'000 £'000 £'000
Income from lettings
Rents receivable 67,222 4,025 766 1,982 73,995 70,911
Service charges receivable 4,666 892 377 65 6,000 5,481
Charges for support services - 541 - - 541 1,338
Other income 674 2,069 56 1 2,800 2,440
Gross rental income 72,562 7,527 1,199 2,048 83,336 80,170
Less: Rent losses from voids (1,082) (201) (6) (43) (1,332) (1,740)
Turnover from social housing 71,480 7,326 1,193 2,005 82,004 78,430
Expenditure on letting activities
Services (6,780) (630) (228) (37) (7,675) (6,275)
Management (21,231) (3,405) (112) (165) (24,913) (20,010)
Routine maintenance (9,063) (948) (71) (144) (10,226) (9,236)
Cyclical maintenance (6,716) (384) (50) (37) (7,187) (9,482)
Rent losses from bad debts (660) (78) - (1) (739) (1,412)
Depreciation of housing properties (7,766) (395) (225) (169) (8,555) (7,075)
Operating costs on social housing (52,216) (5,840) (686) (553) (59,295) (53,490)
Operating surplus on social housing 19,264 1,486 507 1,452 22,708 24,940
lettings
3. EMOLUMENTS OF GOVERNORS AND EXECUTIVE OFFICERS
None of the Governors received any emoluments during the year (2006: £nil).
Governors were reimbursed expenses totalling £1,163 (2006: £1,155).
The remuneration paid to the Chief Executive and Executive Officers (as listed
on page 1) was as follows:
2007 2006
£ £
Total emoluments (including pension
contributions and benefits in kind)
539,715 559,243
Amounts paid in respect of interim directors 189,544 212,691
Emoluments (excluding pension contributions) paid
to the Chief Executive 148,654 135,854
The Chief Executive is an ordinary member of the Trust's pension scheme. The
Trust paid £20,246 of employers contributions into the pension scheme on behalf
of the Chief Executive in the year ended 31 March 2007 (2006: £14,045) .
The Nominations and Remuneration Committee of the Governors meets at least three
times a year and fixes the remuneration of the Chief Executive and the Executive
Team.
4. EMPLOYEE INFORMATION
The average number of persons employed during the year was:
2007 2006
The average number of full-time No. No.
equivalent employees
Head office functions 122 145
Housing management 305 254
Maintenance workforce 86 94
Community regeneration 56 76
569 569
2007 2006
Staff costs for the above persons: £'000 £'000
Wages and salaries 14,924 15,186
Other staff costs 1,037 1,439
Social security costs 1,379 1,438
Other pension costs (note 17) 1,970 2,261
19,310 20,324
5. INTEREST RECEIVABLE AND SIMILAR INCOME
Trust Group
2007 2006 2007 2006
£'000 £'000 £'000 £'000
Income from listed investments 264 234 264 234
Other interest receivable and similar 1,178 7,579 2,118 8,236
income
Interest received from Group entities 2,286 2,688 - -
3,728 10,501 2,382 8,470
6. INTEREST PAYABLE AND SIMILAR CHARGES
Trust Group
2007 2006 2007 2006
£'000 £'000 £'000 £'000
Interest payable on loans 26,268 36,849 26,268 36,849
Amounts capitalised (1,056) (2,350) (1,094) (2,759)
Premium on repurchase of Debt 52,341 5,160 52,341 5,160
Interest cost of funding pension scheme 113 256 149 298
liability
77,666 39,915 77,664 39,548
7. DEFICIT/SURPLUS ON ORDINARY ACTIVITIES BEFORE TAXATION
Trust Group
2007 2006 2007 2006
£'000 £'000 £'000 £'000
Deficit on ordinary activities before
taxation is stated after charging/
(crediting):
Depreciation on tangible fixed assets 10,715 8,749 10,757 8,790
Auditors' remuneration:
In their capacity as auditors :
Group - - 93 107
Trust 72 82 - -
In respect of other services 8 15 8 15
8. TAXATION CHARGE
Trust Group
2007 2006 2007 2006
£'000 £'000 £'000 £'000
The taxation charge comprises:
Adjustment in respect of prior - - - -
years
United Kingdom corporation tax
at 30% (2006 - 30%) - - - -
- - - -
The tax assessed for the period is lower than that resulting from applying the
standard rate of 30% corporation tax in the UK. The differences are explained
below:
Group Group
2007 2006
£'000 £'000
(Deficit)/Surplus on ordinary activities
before taxation (8,594) 27,635
Tax on profit on ordinary activities at
standard rate of 30% - (8,291)
Factors affecting charge for the year:
Charitable surplus exempt taxation - 8,291
- -
A deferred tax asset has not been recognised in respect of the timing
differences relating to trading losses as there is insufficient evidence that
the asset will be recovered. The amount of the asset not recognised is £495,000
(2006: £530,000). The asset would be recovered if suitable taxable profits were
to arise in the future against which the losses could be offset.
9 (a) HOUSING PROPERTIES - TRUST
Housing
properties
Housing under
properties construction Total
£'000 £'000 £'000
Cost:
At 1 April 2006 892,394 40,293 932,687
Works completed 48,241 (48,241) -
Additions - 41,733 41,733
Disposals (11,649) - (11,649)
At 31 March 2007 928,986 33,785 962,771
Social housing grant:
At 1 April 2006 351,470 21,481 372,951
Works completed 10,474 (10,474) -
Received - 7,668 7,668
Disposals (4,045) - (4,045)
At 31 March 2007 357,899 18,675 376,574
Other public grants:
At 1 April 2006 50,552 5,338 55,890
Works completed 5,349 (5,349) -
Received - 354 354
At 31 March 2007 55,901 343 56,244
Depreciation:
At 1 April 2006 25,559 - 25,559
Charge for the year 9,838 - 9,838
Disposals (275) - (275)
At 31 March 2007 35,122 - 35,122
Net book value
At 31 March 2007 480,064 14,767 494,831
Net book value
At 31 March 2006 464,813 13,474 478,287
Additions during the year comprise £32.3 million (2006:£31.6 million) of major
repairs and refurbishment works, and £9.4 million (2006:£19.3 million) of
expenditure on new-build properties.
9 (a) HOUSING PROPERTIES - TRUST (continued)
Additions to housing properties in the course of construction during the year
included capitalised interest (at an average rate during the year of 7.6%) of
£1,056,000 (2006 - £2,350,000).
Housing properties includes shared ownership properties that have a cost of
£49,384,000 (2006:£45,185,000) and associated Social Housing Grant of
£12,832,000 (2006: £9,551,000).
Housing properties includes £168 million of land which has not been depreciated.
2007 2006
£'000 £'000
Housing properties comprise:
Freeholds 866,551 839,302
Long leaseholds 96,220 93,385
962,771 932,687
9 (b) HOUSING PROPERTIES - GROUP
Housing
properties
Housing under
properties construction Total
£'000 £'000 £'000
Cost:
At 1 April 2006 948,169 41,796 989,965
Works completed 50,099 (50,099) -
Additions - 43,909 43,909
Disposals (11,825) - (11,825)
At 31 March 2007 986,443 35,606 1,022,049
Social housing grant:
At 1 April 2006 351,470 21,481 372,951
Works completed 10,474 (10,474) -
Received - 7,668 7,668
Disposals (4,045) - (4,045)
At 31 March 2007 357,899 18,675 376,574
Other public grants:
At 1 April 2006 65,783 6,300 72,083
Works completed 5,843 (5,843) -
Received 39 1,095 1,134
At 31 March 2007 71,665 1,552 73,217
Depreciation:
At 1 April 2006 25,559 - 25,559
Charge for the year 9,838 - 9,838
Disposals (275) - (275)
At 31 March 2007 35,122 - 35,122
Net book value
At 31 March 2007 521,757 15,379 537,136
Net book value
At 31 March 2006 505,357 14,015 519,372
Additions during the year comprise £32.3 million (2006:£31.6 million) of major
repairs and refurbishment works, and £11.6 million (2006:£23.4 million) of
expenditure on new-build properties.
9(b) HOUSING PROPERTIES - GROUP (continued)
Additions to housing properties in the course of construction during the year
included capitalised interest (at an average rate during the year of 7.9 %) of
£1,094,000 (2006 - £2,759,000).
Housing properties include shared ownership properties that have a cost of
£53,482,000 (2006:£47,134,000) and associated Social Housing Grant of
£13,969,000 (£2006:£10,688,000).
Housing properties includes £180 million of land which has not been depreciated.
2007 2006
£'000 £'000
Housing properties comprise:
Freeholds 925,829 896,580
Long leaseholds 96,220 93,385
1,022,049 989,965
9(c) SOCIAL HOUSING GRANT
The total Social Housing Grant receivable to date is £376,574,000 (2006:
£372,951,000), as shown in note 9(b) with no amounts credited to the income and
expenditure account.
10 (a) OTHER TANGIBLE FIXED ASSETS - TRUST
Freehold Motor Office
offices vehicles equipment Total
£'000 £'000 £'000 £'000
Cost:
At 1 April 2006 13,565 115 11,227 24,907
Additions 384 - 872 1,256
Adjustment for fully
depreciated items (308) (115) (7,659) (8,082)
At 31 March 2007 13,641 - 4,440 18,081
Other public grants:
At 1 April 2006 - - 4,211 4,211
Received - - 40 40
Adjustment for fully
depreciated items - - (3,581) (3,581)
At 31 March 2007 - - 670 670
Depreciation:
At 1 April 2006 4,117 115 5,232 9,464
Charge for the year 477 - 400 877
Adjustment for fully
depreciated items (308) (115) (4,078) (4,501)
At 31 March 2007 4,286 - 1,554 5,840
Net book value
At 31 March 2007 9,355 - 2,216 11,571
Net book value
At 31 March 2006 9,448 - 1,784 11,232
During the year Peabody Trust has scrapped £8.1 million of Other Tangible Fixed
Assets which have been fully depreciated.
10 (b) OTHER TANGIBLE FIXED ASSETS - GROUP
Freehold Motor Office
offices vehicles equipment Total
£'000 £'000 £'000 £'000
Cost:
At 1 April 2006 14,007 115 11,569 25,691
Additions 384 - 958 1,342
Adjustment for fully
depreciated items (308) (115) (7,659) (8,082)
At 31 March 2007 14,083 - 4,868 18,951
Other public grants:
At 1 April 2006 - - 4,211 4,211
Received - - 40 40
Adjustment for fully
depreciated items - - (3,581) (3,581)
At 31 March 2007 - - 670 670
Depreciation:
At 1 April 2006 4,132 115 5,496 9,743
Charge for the year 484 - 435 919
Adjustment for fully
depreciated items (308) (115) (4,078) (4,501)
At 31 March 2007 4,308 - 1,853 6,161
Net book value
At 31 March 2007 9,775 - 2,345 12,120
Net book value
At 31 March 2006 9,875 - 1,862 11,737
During the year Peabody Trust has scrapped £8.1 million of Other Tangible Fixed
Assets which have been fully depreciated.
11. FIXED ASSET INVESTMENTS
Trust Shares in Shares in
subsidiary quoted
undertakings securities Total
£'000 £'000 £'000
Market Value
At 1 April 2006 5,000 7,781 12,781
Additions - 276 276
Change in market value of
Peabody Community Fund (PCF) - 200 200
At 31 March 2007 5,000 8,257 13,257
In addition to a £5 million investment in Peabody Enterprises Limited, Peabody
Trust fixed asset investments comprise shares in quoted securities held by the
Peabody Community Fund. The investment income generated from the Peabody
Community Fund shares is used to fund the activities of Peabody Community Fund.
The historic cost of these shares is £7,153,000 and the market value as at 31
March 2007 was £8,257,000 (2006: £7,781,000).
Group fixed assets investments comprise the above shares in quoted securities.
12. STOCKS AND WORK IN PROGRESS
Trust Group
2007 2006 2007 2006
£'000 £'000 £'000 £'000
Housing properties held for sale - - - 1,366
Land held for sale - - 1,186 800
- - 1,186 2,166
13. DEBTORS
Trust Group
2007 2006 2007 2006
£'000 £'000 £'000 £'000
Amounts falling due within
one year
Rent and service charges in 9,744 9,822 10,782 10,834
arrears
Less: provision for bad debts (3,850) (3,925) (4,231) (4,655)
5,894 5,897 6,551 6,179
Operating lease payments in 22 76 22 78
advance
Amounts owed by subsidiary
undertakings
3,782 4,883 - -
Loans to employees 55 62 55 62
Other debtors and prepayments 5,465 1,908 5,676 2,466
Loan to Charity Bank 550 540 550 540
Blue Hut Escrow account - - 100 -
15,768 13,366 12,954 9,325
Amounts falling due after one
year
Amounts owed by subsidiary
undertakings
29,438 34,438 - -
Blue Hut Escrow account - - - 500
Loan to SCORE - - 120 120
29,438 34,438 120 620
At the balance sheet date, a total of £29,438,000 (2006: £34,438,000) is on-lent
to CBHA at terms which reflect the terms of the main loan agreement between
Peabody Trust and Abbey plc, including a fixed rate of 6.79% applicable to £25
million of the loan, maintained as part of the refinancing of the original
facility. During the year CBHA repaid £5 million of this loan to the Trust. The
on-lending is disclosed above as a debtor due in more than one year in the
Trust's balance sheet.
During the year ended 31 March 2005 CBHA made an unsecured loan to Sporting Club
Orient (SCORE), a charitable organisation providing sports facilities in East
London. A fixed rate of interest at 5.5% applies to the loan, which is repayable
over five years with the first repayment being due on the third anniversary of
the loan.
14. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Trust Group
2007 2006 2007 2006
£'000 £'000 £'000 £'000
Rent and service charges received 3,958 2,881 4,184 3,127
in advance
Trade creditors 6,734 8,065 7,369 8,318
Amounts owed to subsidiary 758 686 - -
undertakings
Amounts owed to joint venture - 46 - 46
Loan from Peabody Pension Trust 28 26 28 26
Other taxation and social 569 786 575 801
security costs
Accruals and deferred income 22,527 12,067 23,739 13,551
SAGE investors' scheme 2,192 - 2,192 -
36,766 24,557 38,087 25,869
15. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
Trust Group
2007 2006 2007 2006
£'000 £'000 £'000 £'000
Bank and building society loans 297,080 173,869 296,634 173,397
Debenture stock - 150,000 - 150,000
Guaranteed secured debenture stock 78,485 91,085 78,485 91,085
Debenture stock held by Peabody Trust - (50,000) - (50,000)
Debenture and guaranteed debenture
stock premium 8,139 14,564 8,139 14,564
SAGE investors' scheme - 11,570 - 11,570
383,704 391,088 383,258 390,616
Recycled capital grant and
disposal proceeds fund 8,786 6,460 8,786 6,460
392,490 397,548 392,044 397,076
Bank and building society loans
Bank and building society loans represent loans from Nationwide Building
Society, Royal Bank of Scotland plc, Barclays plc and Abbey plc.
The Trust has a loan facility with Barclays plc providing a facility of £120
million. During the year the Trust drew £75 million of this facility to fund the
redemption of the 2018 First Mortgaged Debenture Stock.
Royal Bank of Scotland plc provide the Trust with a £100 million loan facility
and the Trust drew £60 million of this facility during the year to fund the
redemption of the 2018 First Mortgaged Debenture Stock.
The Trust has a £75 million loan facility with Abbey plc to provide general
finance for the Group. Of the total facility amount £60 million may be on-lent
to CBHA. At the balance sheet date, a total of £29,438,000 (2006: £34,438,000)
is on-lent to CBHA at terms which reflect the terms of the main loan agreement
between Peabody Trust and Abbey plc, including a fixed rate of 6.79% applicable
to £25 million of the loan, maintained as part of the refinancing of the
original facility. During the year CBHA repaid £5 million of this loan to the
Trust. The on-lending is disclosed as a debtor due in more than one year in the
Trust's balance sheet.
15. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR (continued)
All other loans are secured by specific charges on the Trust's housing
properties and are repayable at interest rates of between 4.59% and 10.25% and
are repayable in instalments due as shown on page 47.
Debentures
On 2 June 2006, the £100 million First Mortgage Debenture Stock due 2018 was
redeemed, in line with a resolution passed at an EGM of stockholders on 18 May
2006.
Guaranteed Secured Debenture Stock is 10.25% Guaranteed Secured Stock redeemable
in 2023. The stock is secured on selected housing properties. During the year
£12.6 million of this Stock became available for repurchase. The Trust took
advantage of this opportunity. A premium of £7.3 million was paid with
associated interest savings being reflected in future years' financial
statements.
The fair value (market value) of the Trust's Loan stock at 31 March 2007 was
£123.1 million, compared to a balance sheet value of £78.5 million.
Risks
The main risks arising from the Groups' financial instruments are interest rate
risk and liquidity risk. The Finance Committee reviews and agrees policies for
managing these risks and these are summarised below:
Interest rate risk
The Group borrows at both fixed and floating interest rates. £283.5 million of
the Group's borrowings are at fixed rates with the remainder at floating rates.
Liquidity risk
The Group's policy is to limit liquidity risks by a regular review by the
Finance Committee of the current situation. In broad terms, the Group ensures
that it has adequate short and long term negotiated facilities, together with
overdraft facilities and loans to provide the required level of funding
flexibility.
15. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR (continued)
2007 2006
Bank and
building
society Orchardbrook
loans Limited Total Total
TRUST £'000 £'000 £'000 £'000
At beginning of year 172,884 985 173,869 137,534
New loans 135,000 - 135,000 35,000
Assigned upon transfer of Clays
Lane Estate - - - 985
Reclassification of amounts due
within one year - - - 1,638
307,884 985 308,869 175,157
Less:
Instalments repaid during the (10,000) (985) (10,985) (1,000)
year
Loan arrangement fees (804) - (804) (288)
Repayable within one year - - - -
At end of year 297,080 - 297,080 173,869
Repayable in:
2-5 years - - - 9,710
More than 5 years 297,080 - 297,080 164,159
297,080 - 297,080 173,869
15. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR (continued)
2007 2006
Bank and
building
GROUP society Orchardbrook
loans Limited Total Total
£'000 £'000 £'000 £'000
At beginning of year 172,412 985 173,397 137,036
New loans 135,000 - 135,000 35,000
Assigned upon transfer of Clays
Lane Estate - - - 985
Reclassification of amounts due
within one year - - - 1,638
307,412 985 308,397 174,659
Less:
Instalments repaid during the (10,000) (985) (10,985) (1,000)
year
Loan arrangement fees (778) - (778) (262)
Repayable within one year - - - -
At end of year 296,634 - 296,634 173,397
Repayable in:
2-5 years - - - 9,710
More than 5 years 296,634 - 296,634 163,687
296,634 - 296,634 173,397
16. RESERVES
Designated Reserves
Peabody
Revenue Revaluation Subsidence Community
Reserve Reserve Reserve Fund Total
£'000 £'000 £'000 £'000 £'000
Trust
At 1 April 2006 137,673 - 1,000 8,598 147,271
Transfers 6 - - (6) -
Deficit in the year (10,638) - - - (10,638)
Other gains 4,032 - - 200 4,232
At 31 March 2007 131,073 - 1,000 8,792 140,865
Group
At 1 April 2006 148,064 4,122 1,000 8,598 161,784
Transfers 287 (281) - (6) -
Deficit in the year (8,594) - - - (8,594)
Other gains 4,416 - - 200 4,616
At 31 March 2007 144,173 3,841 1,000 8,792 157,806
The Peabody Community Fund designated reserve includes £200,000 in respect of
the revaluation of the Peabody Community Fund investment portfolio.
Any surpluses are reinvested in Peabody's own stock or in schemes which deliver
new social housing in London. This ensures that Peabody is able to continue to
deliver its mission of fighting poverty in London.
At 31 March 2007 the Trust's General Reserves, being those which are not
designated, were all used in financing investment in social housing.
17. PENSION LIABILITIES
The London Pensions Fund Authority
The Trust participates in the London Pensions Fund Authority Scheme (LPFA) for
those employees who elect to join.
The pension cost, which includes liability for pension increases, has been
determined in accordance with the advice of professionally qualified consulting
actuaries based on an actuarial valuation made as at 31 March 2004 using the
projected unit method. The most significant actuarial assumptions used in this
valuation were:
Rate of return on investments - 6.3% per annum
Rate of general pay increases - 4.40% per annum
Rate of increase in pensions in payment - 2.90% per annum
Valuation of assets - assets have been valued at a
12 month smoothed market value.
The actuarial valuation at 31 March 2004 showed that the market value of the
LPFA's assets represented 74% of the value of benefits that had accrued to the
Fund's pensioners, deferred pensioners and members based on past service,
allowing for assumed future pay and pension increases. The valuation has been
updated to 31 March 2007.
The Trust's service cost under the LPFA was £1,970,000 (2006 - £1,537,000).
The Group's service cost under the LPFA was £2,147,000 (2006 - £1,662,000)
The major assumptions used by the actuary to value the liabilities of the scheme
under FRS 17 are:
At 31 At 31 At 31
March March March
2007 2006 2005
% per % per % per
annum annum annum
Rate of increase in payment: 3.2 3.1 2.9
Rate of increase in salaries 4.7 4.6 4.4
Discount rate 5.4 4.9 5.4
Inflation assumptions 3.2 3.1 2.9
Valuation method Projected Projected Projected
unit unit unit
17. PENSION LIABILITIES (continued)
The London Pensions Fund Authority
The assets in the Scheme and expected rates of return were:
Expected Value at Expected Value at Expected Value at
long 31 March long 31 March long 31 March
term 2007 term 2006 term 2005
rate of rate of rate of
return £'000 return £'000 return £'000
Equities 7.7% 25,594 7.3% 23,613 7.7% 23,044
Target return funds/Bonds 6.4% 9,189 6.0% 7,134 4.8% 3,156
Alternative assets/Property 6.8% 5,211 6.5% 4,416 5.7% 2,080
Cash 4.9% 1,103 4.6% 2,302 4.8% 980
Total market value of assets 41,097 37,465 29,260
Present value of scheme liabilities (54,106) (53,791) (43,050)
Present value of unfunded liabilities (82) (82) (90)
Net pension liability (13,091) (16,408) (13,880)
2007 2007 2006 2006
Amounts Charged to Operating Profit £'000 (% of £'000 (% of
payroll) payroll)
Service cost 1,970 20.7 1,537 16.1
Curtailments and settlements 5 0.1 724 7.5
Total operating charge (A) 1,975 20.8 2,261 23.6
Projected amount credited to other finance £'000 (% of £'000 (% of
income payroll) payroll)
Expected return on employer assets 2,559 26.8 2,117 22.1
Interest on pension scheme liabilities (2,672) (28.0) (2,373) (24.7)
Net Return (B) (113) (1.2) (256) (2.6)
Net Revenue account cost (A) - (B) 2,088 22.0 2,517 26.2
Analysis of Amount Recognisable in
Statement of Total Recognised Surpluses
and Deficits (STRSD)
2007 2006
£'000 £'000
Annual return less expected return on
pension scheme assets 363 4,818
Experience gains and losses arising on the
scheme liabilities (4) 57
Changes in financial assumptions 3,673 (6,783)
underlying the present value of the scheme
liabilities
Actuarial gain/(loss) recognisable in the 4,032 (1,908)
STRSD
17. PENSION LIABILITIES (continued)
The London Pensions Fund Authority
Movement in deficit during the 2007 2006
year £'000 £'000
Deficit at beginning of the year (16,408) (13,880)
Current service cost (1,970) (1,537)
Employer contributions 1,365 1,890
Contributions in respect of 8 7
unfunded benefits
Impacts of settlements and (5) (724)
curtailments
Net return on assets (113) (256)
Actuarial gains/(losses) 4,032 (1,908)
Deficit at end of year (13,091) (16,408)
History of experience gains and 2007 2006 2005 2004 2003
losses £'000 £'000 £'000 £'000 £,000
Difference between the expected
and actual return on assets 363 4,818 806 3,203 (8,467)
Value of assets 41,097 37,465 29,260 25,209 19,438
Percentage of assets 0.9% 12.9% 2.8% 12.7% (43.6%)
Experience (losses)/gains on (4) 57 2,664 (18) (53)
liabilities
Total present value of liabilities 54,188 53,873 43,140 40,970 34,549
Percentage of the total present (0.0%) 0.1% 6.2% (0.0%) (0.2%)
value of liabilities
Actuarial gains/(losses) 4,032 (1,908) 2,648 808 (9,770)
recognised in STRSD
Total present value of liabilities 54,188 53,873 43,140 40,970 34,549
Percentage of the total present 7.4% (3.5%) 6.1% 2.0% (28.3%)
value of liabilities
17. PENSION LIABILITIES (continued)
The London Pensions Fund Authority
The following are the disclosures presented in the financial statements of the
Trust's wholly owned subsidiary CBHA in respect of the LPFA pension scheme.
Expected Value at Expected Value at Expected Value at
long 31 March long 31 March long term 31 March
term 2007 term 2006 rate of 2005
rate of rate of return
return return
£'000 £'000 £'000
Equities 7.7% 1,983 7.3% 1,769 7.7% 1,694
Target Return Funds/Bonds 6.4% 712 6.0% 535 4.8% 232
Alternative Assets/ 6.8% 404 6.5% 331 5.7% 153
Property
Cash 4.9% 85 4.6% 172 4.8% 72
Total market value of
assets (active sub fund) 3,184 2,807 2,151
Present value of
liabilities (4,684) (4,619) (3,620)
Net pension liability (1,500) (1,812) (1,469)
2007 2007 2006 2006
Amounts Charged to Operating Profit £'000 (% of £'000 (% of
payroll) payroll)
Service cost 177 23.1 125 18.4
Total operating charge (A) 177 23.1 125 18.4
Projected amount credited to other
finance income
Expected return on employer assets 195 25.5 157 23.2
Interest on pension scheme
liabilities (231) (30.2) (199) (29.4)
Net Return (B) (36) (4.7) (42) (6.2)
Net Revenue account cost (A) - (B) 213 27.8 167 24.6
17. PENSION COMMITMENTS (continued)
Analysis of Amount Recognisable in 2007 2006
Statement of Total Recognised Surpluses
and Deficits (STRSD)
£'000 £'000
Annual return less expected return on
pension scheme assets 28 358
Experience gains and losses arising on
the scheme liabilities (1) -
Changes in financial assumptions
underlying the present value of the
scheme liabilities 357 (667)
Actuarial loss recognisable in the
STRSD 384 (309)
Movement in deficit during the year 2007 2006
£'000 £'000
Deficit at beginning of the year (1,812) (1,469)
Current service cost (177) (125)
Employer contributions 141 133
Impact of settlements and curtailments - -
Net return on assets (36) (42)
Actuarial gains/ (losses) 384 (309)
Deficit at end of year (1,500) (1,812)
History of experience gains and 2007 2006 2005 2004 2003
losses £'000 £'000 £'000 £'000 £'000
Difference between the expected 28 358 58 208 (529)
and actual return on assets
Value of assets 3,184 2,807 2,151 1,670 1,233
Percentage of assets 0.9% 12.7% 2.7% 12.4% (42.9%)
Experience losses on liabilities (1) - (64) 1 (26)
Total present value of liabilities 4,684 4,619 3,620 2,970 2,455
Percentage of the total present
value of liabilities 0% - (1.8%) (0.0%) (1.1%)
Actuarial gains/(losses)
recognised in STRSD 384 (309) (85) (18) (674)
Total present value of
liabilities 4,684 4,619 3,620 2,970 2,455
Percentage of the total present
value of liabilities 8.2% (6.7%) (2.3%) (0.6%) (27.5%)
17. PENSION COMMITMENTS (continued)
Peabody Pension Trust Limited (PPT) and other pension commitments
Peabody Pension Trust acts as Trustee for the Governors of Peabody Trust for the
operation of a retirement benefits scheme for those Peabody employees who became
eligible by 31 December 1977. The Trust has entered into commitments to pay the
shortfall of pension payments over income for PPT for each year. The excess of
liabilities over commitments is measured with respect to RPI in April of each
year and in the year ended 31 March 2007 was £19,000 (2006: £18,000).
PPT is not a pension scheme under the terms of the Pension Scheme Disclosure
Regulations.
18. CAPITAL COMMITMENTS
Capital expenditure, contracted for and not provided for in the accounts,
amounts to £46,279,000 (2006: £28,313,000).
All of this anticipated expenditure is covered by Social Housing Grant, reserves
and private finance.
19. CONTINGENT LIABILITIES
There are no known material contingent liabilities as at 31 March 2007 (2006:
£nil).
20. LEGISLATIVE PROVISIONS, TAXATION, SUBSIDIARY UNDERTAKINGS AND JOINT VENTURES
The Trust is a registered charity formed under an Act of Parliament, and a
housing association registered with the Housing Corporation.
The Trust has the following wholly owned subsidiaries, all of which are
incorporated in Great Britain and have been included in the Group results:
• CBHA (a charitable company, limited by guarantee and a registered
social landlord)
• Peabody Enterprises Limited
• Peabody Land Limited
• Ladbroke Developments Limited
• Blue Hut Developments Limited
Peabody Land Limited, Peabody Enterprises Limited, Ladbroke Developments Limited
and Blue Hut Developments Limited are trading subsidiaries involved in the
development and sale of land and private residential property.
During the year, Safe in the City Limited, a charitable company limited by
guarantee, within which the Trust had a 50% interest, was placed into Members
Voluntary Liquidation.
21. ACCOMMODATION IN MANAGEMENT
Trust Group
Managed directly at 31 March 2007 2006 2007 2006
Social Housing Units Units Units Units
Housing accommodation 14,721 15,042 16,062 16,371
Shared ownership 448 424 474 450
Keyworker 338 312 338 312
Supported housing 562 558 617 613
16,069 16,336 17,491 17,746
Managed by others at 31 March
Social Housing
Housing accommodation 422 431 422 431
Supported housing 347 349 347 349
769 780 769 780
Non - social housing
Total non-social rented housing 313 202 313 202
22. TRANSACTIONS WITH RELATED PARTIES
At 31 March 2007 there were 5 members of the Board or other Committees of the
Trust who had tenancy agreements with the Trust. There were 8 residents involved
with the Governance of CBHA at 31 March 2007. The tenancy agreements have been
granted on the same terms as for all other residents, and the housing management
procedures, including those relating to management of arrears have been applied
consistently to these residents.
23. PROFIT ON SALE OF FIXED ASSETS
During the year the Trust sold 210 properties which were void and economically
unviable to retain generating a profit of £37.8 million. In addition the Trust
generated profit on the sale of other properties, (largely those previously
market rented, staircasing on shared ownership properties or under the preserved
right to buy or right to acquire) generating a profit of £3.1 million.
CBHA sold 6 properties during the year, under the preserved right to buy,
generating a profit of £0.8 million.
24. POST BALANCE SHEET EVENT
On 1 August 2005 the Trust took transfer of the assets and liabilities including
leasehold land and buildings at the Clays Lane Estate in Stratford. The Trust
has entered into a conditional contract for the sale of the site to the London
Development Agency; the sale is due to complete on 31 July 2007.
The value expected under the conditional contract is no lower than the book
value of £5m for the estate included within housing properties.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EAXXKAEPXEFE