Family Mosaic financial accounts 2012

annual accounts

2012

FINANCIAL STATEMENTS 2012 | 1

The Fast Read

Who We Are

Why We Exist

What We Think

Who runs Family Mosaic

Board membership and advisors

Chairman’s statement

Our results

Operating and financial review

How we behave

Statement of responsibilities of the Board

Corporate governance

Report of the independent auditors to the members

Our 2012 financial statements

Income and expenditure account

Balance sheet

Cash flow statement

Notes to the financial statements

Where to find us

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Family Mosaic Housing

Consolidated financial statements

for the year ended 31 March 2012

Contents

2 | FAMILY MOSAIC HOUSING

For a summary digest of this annual report please read the next 3 pages.

The full story is on pages 7 to 63.

WHO WE ARE Family Mosaic is a leading housing association providing affordable homes

and Care and Support services to those on low incomes, or in need.

We have a wide range of services including:

Low cost affordable rented housing;

Shared Ownership schemes;

Support services for

Adults with learning disabilities;

Mental health;

Older people;

Young people;

Homeless singles;

Families.

We have over 23,000 properties, serve over 45,000 residents and support a further 8,000

people through our supported housing services.

It is important that we deliver quality homes and services, and we aim to be in the top quartile

performance amongst our peers in all the areas we operate in.

We have around 2,250 staff operating across London, Essex and the south of England.

WHY WE EXIST Our mission and values are:

5 Star Services – aiming beyond Government standards;

Big but Local – benefiting from being a large organisation but applying that at a local level;

We Can – demonstrating a can-do culture;

More Homes and Stronger Communities – growth through more new homes each year and expansion of

Supported Housing activities which add value to local communities.

We are a not for profit business. As such we reinvest all our surplus into our housing stock, and use our financial strength

to finance the construction of new homes.

We want our homes and communities to be the localities of choice and to that end we use all the skills and technology

we can harness to make it happen. We apply the highest design principles, as expressed in our Design Guide, to reduce

running costs and create desirable homes.

We are also driving efficiencies so we can invest the maximum possible in front line repairs, maintenance and services.

This applies to back office functions (where we have one of the lowest cost bases) and procurement, so we achieve value

for money and more works.


The fast read

The fast read


WHAT WE THINK We have a very strong financial position with plenty of funding and scope for growth.

2011–12 saw the introduction of the Government’s new Affordable Homes Programme which completely changes rent

setting, and funding for housing. We are increasing the amount of development for sale in order to keep rents low. Our

tenants are going to be affected by changes to how benefits are paid. We have produced a Welfare Reform strategy to

guide us in making sure we and our residents manage these changes. As part of that, we are in a pilot scheme with the

Department for Work and Pensions to test new arrangements around payments.

Budget cuts to care and support services will continue to impact the provision of these services.

HOW WE’RE DOING Financial summary

Operating surplus as % of turnover

26%

27%

Interest cover ratio

2.8

3.3

Arrears

5.1%

4.6%

Void turnaround time (days)

29

27

Number of new homes

889

1,111

Turnover

£165m

£181m9% change

Operating surplus

£43m

£48m11% change

Borrowings

£586m

£653m11% change

Gearing

41.2%

43.5%5.5% change

Net surplus before taxation

£34m

£38m12% change

The fast read


2012 RESULTS This was another good year for us. We reduced costs in our repair programmes and improved our operational efficiency.

As a result operating surplus increased from 26% to 27%.

CASH FLOW During the year we borrowed a further £67m from our loan book, which has been used to finance the delivery of new

homes. Our high operating surplus, combined with sales proceeds, helps keep our borrowing to a minimum. We improved

cash collection on rent arrears and debtors.

We ended the year with low gearing (compared to sector accepted averages) and £204m of borrowing facilities and cash

available for future funding.

On a simple basis the cash flows are as follows:

Surplus £38m

Spend on Charitable donations (£2m)

Development of new homes (£82m)

Improvements to our stock (£15m)

We had more cash at year end (£6m)

And increased borrowing by (£67m)

WHERE DOES THE RENT GO?

Management costs

Development/ Other services

Repairs and maintenance

Financing

Average rent £98 per week

£16

£29

£17

£36


Chair

Deputy Chair

Treasurer

appointed December 2011

appointed May 2012

resigned March 2012

resigned September 2011

resigned September 2011

Group Chief Executive

Group Development and Asset Management Director

Group Director of Corporate Services

Group Director of Research & Development

Group Finance Director

Group Operations Director

BankersBarclays Bank plc

1 Churchill Place

London,

E14 5HP

BOARDIan Peacock

John Owen

Mike Verrier

Barry McNamara

Brendan Sarsfield

Cath Shaw

Claire Tiney

Ian Vaughan

Janine Desmond

Keith Clancy

Pam Aujla

Richard Capie

Richard Stevens

Sam Hall

MANAGEMENT TEAM

Brendan Sarsfield

Dick Mortimer

John Gibbons

John Schofield

Ken Youngman

Yvonne Arrowsmith

COMPANY SECRETARYHeather Renton

REGISTERED OFFICEAlbion House

20 Queen Elizabeth Street, London, SE1 2RJ

Registered under the Industrial and Provident Societies Act, No: 30093R

Registered by the Homes and Communities Agency: L4470

ADVISORSAuditors KPMG LLP

1 Forest Gate

Brighton Road

Crawley, RH11 9PT

Who runs Family Mosaic


Family Mosaic aims to be a strong organisation helping those in greatest need.

The changes to the social housing sector which I described in my Statement last year are beginning to have an

effect on the way in which we provide housing and other services. Government grant for new building has fallen

sharply and that for fully subsidised rental properties has been cut particularly severely. These grant reductions,

delays in the new grant system being introduced and delays in land purchase and planning have led to a precipitate

fall in our new starts from over 1,100 units in 2010-11 to 160 in 2011-12. We expect the new build figure to recover,

but it is not going back to 1,100 homes unless funding from the government changes.

Constraints on local authority budgets have put pressure on supported housing contracts. Where we can make

efficiency improvements we will do so and thereby lower costs. However we are not prepared to cut service levels

below those we consider to be appropriate, nor will we cross subsidise supported housing from our general needs

housing business. If necessary we will not re-tender for contracts.

Financially we are in a strong position. Our surplus for the year was £38 million. This surplus is principally used to

reinvest in new properties for rent, though we also increased our community development budget from £1 million

to £2 million. We hope, through this increased community development spend, to help more of our tenants into

jobs and to build flourishing communities for the benefit of our own tenants and their neighbours. Gearing is low

at 44%, though this percentage is likely to rise as we fund more of our new build from our own resources rather

than Government grant, and interest cover is comfortable. We were pleased to receive a Aa2 credit rating from

Moody’s in March 2012.

During the year we acquired the ‘In Touch’ Supported Housing business from Hyde Housing Association. This

acquisition extends our activities throughout the South East region and helps to give our supported housing

business critical mass. The ‘In Touch’ business includes a Handyman service, which provides small scale repairs

and other similar jobs for tenants and others. We are considering whether such a service can be introduced into

other parts of Family Mosaic, in particular for our own tenants. Also during the year we sold our Temporary Housing

activity to Notting Hill Housing Trust. Your Board believes that the sale and purchase of businesses and properties to

and from other Housing Associations can improve the efficiency of both parties, to the long term benefit of residents

and service users, and we shall continue to search actively for these opportunities.

We have devoted considerable management resources to repairs performance. Tenant satisfaction, which is strongly

influenced by satisfaction with repairs, failed to improve as expected. During the year our repairs contract with

Morrisons came to an end. We are in productive discussions with Mears on amending their contract to our mutual

benefit and we are using a greater variety of contractors for specific work. The maintenance sector is operating on

low margins and we have to ensure we benefit from both savings and improved quality.

The social housing sector is a dynamic, rapidly changing one. While data is collected on many aspects of the sector,

there is little evidence of tenants’ likely reactions to the changes which are taking place. We have tried to address

this gap by producing research documents on Lifetime Tenancies; Affordable Rent and Personalisation. We hope that

these contributions will help inform the debate on these crucial questions.




Our staff often work in difficult and demanding conditions. Furthermore current economic conditions have put more

pressure on wages and other benefits. We are most grateful for the dedication which our staff show to those in their

care, who are often the most vulnerable and needy in society.

There were several changes to the Board in 2011-2012. Sam Hall retired after 7 ½ years as a tenant Member and

Richard Capie left to take up a post in New Zealand. I am extremely grateful to both Sam and Richard for their energy,

wisdom and counsel. Family Mosaic has benefitted greatly from their work. Barry McNamara and Janine Desmond both

joined us during the year. Barry has a great deal of experience of Family Mosaic having been a tenant for many years

and Janine brings expertise on the supported housing sector. We welcome both of them to the Board.

Ian Peacock


The Board presents this report and Financial Statements

for the year ended 31 March 2012. These results once

again show us as being financially strong. We use

our resources to reinvest in the business and realise

our ambitions.

DESCRIPTION OF THE BUSINESSAs a Group we own and manage 23,245 properties,

across 27 London Boroughs, and in Essex. These are

mostly provided at very low rents, made possible

through capital grants from government, and private

sale activity.

We have a significant Supported Housing business

providing nursing, care and support services to around

8,000 people. These are funded through Supporting

People, Health, Adult Social Care and other grants.

KEY OBJECTIVESOur vision is to provide

QUALITY HOMES and THRIVING COMMUNITIES.

OUR VALUES ARE CLEARCustomer Focus, Learning, Effective,

Ambitious, Responsive

WE HAVE FOUR KEY OBJECTIVES TO ENABLE THIS VISION TO BE MET:To have a WE CAN attitude.

To deliver a 5 STAR service.

To be BIG BUT LOCAL

MORE HOMES, STRONGER COMMUNITIES.

STRATEGYWe will continue to influence and lead sector thinking

on delivery and strategic issues. This will include

looking at the links to health, wealth and well being,

and increasing employment for our residents.

The sector has and is being subject to big changes,

and we are trying to react to these in a thoughtful

and considered way.

Our results – Operating and financial review

Recent reductions in the level of grant funding available

for new homes and the option to charge higher rents

on social housing, have changed the sectors’ dynamic.

This, combined with welfare reform changes, which

will have significant effects on our residents (including

in some cases their ability to pay), has resulted in

considerable debate as to how we deliver new homes,

what we charge for them, and indeed our purpose.

We have decided to maintain rents at ‘target’, rather

than move to the higher ‘affordable’ levels now

available. This has required a big change in our

development programme, which now includes

private sale to provide the subsidy previously coming

from government grant. Because of this increased

dependence on sales, and the higher borrowing to

support it, our new homes programme is much smaller

than previously, and we are more dependant on our

sales success to achieve it.

We are planning to deliver around 1,600 homes for

2012–15. Roughly half will be Social rent, the rest will

be Shared Ownership and private sale. The overall level

of new build is roughly half our previous targets.

We will monitor outcomes and amend our approach as

needed, particularly if we do not achieve expected sales

proceeds, since these are vital to our delivery model.

Our Care and Support business has been subject to cuts

in funding over the past few years. We believe that the

services we provide will continue to be needed in the

long term and will probably increase. That, combined

with the excellence of our services and our confidence

in our ability to manage these financially, has led us to

continue to target growth opportunities.

Repairs and maintenance are key to our customers.

We are introducing new partners and management

processes to improve service and satisfaction levels.

A trial Handyman type service aimed at low level

repairs and preventative maintenance is part of this.

OPERATING AND FINANCIAL REVIEW


We are targeting G15 top quartile performance for voids

and rent arrears. We have trialled back to back tenant

turnaround to minimise void periods with the intention

to roll it out across the business.

We have a clear strategy to manage Welfare Reform

changes to ensure our tenants can pay their rent and

sustain their tenancies. As part of that we are one of six

Government pilots across the country to trial parts of the

new Universal Credit system. This will run up to June

2013, followed by the staged introduction of the new

arrangements from October 2013.

Our management of service charges and leasehold

services has improved, and will continue,

through staffing and investment in new

systems and processes.



PERFORMANCE IN THE PERIODWe are pleased with the financial performance of

the Group.

Overall Net Surplus for the period was £38.4m before

tax, 12% up on the previous year.

Our Care and Support business had a tough year

dealing with Supporting People budget cuts. This

necessitated a restructure of pay and conditions to

our staff, the costs of which have been provided for

in the accounts. As part of our long term growth

strategy for this business we acquired In Touch,

a Care and Support business based in Kent, Sussex

and Hampshire. This reflects our belief in this market,

despite the current difficult trading conditions.

We sold our London based Temporary Accommodation

business at the year end, having decided that we were

sub scale in this area and that services would be better

provided by a larger player.

40000

60000

80000

100000

120000

140000

160000

180000

200000

2009/102008/92007/8 2011/122010/11

20500

21000

21500

22000

22500

23000

23500

UnitsIncome

£000s

Units and Income

Repairs costs reduced under our changed contracting

arrangements. Service levels have been less than

we’d have liked but are beginning to improve.

During the year our maintenance expenditure in total

(including capitalised expenditure) amounted to £1,664

per unit (2011: £1,857). Recoverable service charge cost

amounted to £377 per unit in the year (2011: £308).

We spent £156m on new homes in the year. This

represents a spend of £6,796 (2011: £5,029) per unit on

new supply.

During the year we drew down £67m on our loans to

fund our development programme bringing total loans

drawn down to £653m. This level of debt equates to

£28,636 per unit owned (2011: £26,497).

We continue to benefit from the low interest rate

environment, maintaining a high proportion of

variable rate loans to maximise this advantage.

Interest cover excluding disposals

20112010200920081.0

1.5

2.0

2.5

3.0

3.5

2012



FINANCIAL REVIEWThe Association’s investment in homes is financed

predominantly by long term loans, capital grants

and its own reserves.

We have loan facilities totalling £845m (2011:

£797m) with maturity dates running out to 2048

(2011: 2048).

Our major lenders are Barclays Bank, Lloyds TSB,

Nationwide and Santander. All bank debt is fully

secured against housing assets.

We have a Treasury policy which sets out, among

other things, how new loans can be raised, the

profiling of repayments and the exposure to variable

interest rates.

At year end variable interest rate loans were 43%

(2011: 37%) of our loan book. This is in line with

our policy, which is to have a maximum of 80%

fixed. We increased the variable element this year in

order to retain more flexibility, and we have again

benefited from low short term interest rates as a

result. One of the key decisions for us is when, or if,

to fix, so this is being monitored.

Our bank loans have a variety of covenant provisions

and definitions which are particular to the loan in

question. Financial covenants include interest cover

and gearing ratios.

Group Repayment analysis

less than 1 year 0.2%

between 1 and 5 years 5.2%



more than 20 years 39.8%

Our Gearing is 43.5% (2011: 41.2%) measured as

housing loans net of deferred loan issue costs

compared to reserves plus capital grants. This is

well within our financial covenants and fairly

conservative for the sector.

Interest cover is 3.3, again well above the minimum

required by our covenants, and up on the previous

years.

In anticipation of a potential capital market bond

issue, we had our business credit rated by Moody’s

during the year. We were scored as Aa2, among

the best in sector, and higher than many financial

institutions. At present we have adequate loan

facilities, having secured an additional £50m from

Clydesdale Bank in the year, so the timing of any

Bond issue remains to be agreed. This will be

determined by market conditions and our forecast

requirement for funds.



KEY INDICATORSMeasures Used By The BoardWe monitor our performance through the use of financial

and non financial indicators, which are produced

monthly. The following are the key indicators.

• Resident Satisfaction

• Operating Surplus

• Net surplus as a % of Income

• Current Arrears %

• Net Development Spend

• Central Overhead as a % of Income

• Management Cost per Unit per Week

Resident SatisfactionWe measure three components of satisfaction.

1 Overall General Needs satisfaction

2 Repairs satisfaction

3 Supported Housing satisfaction

Each month 200 residents are interviewed by an

independent specialist about the quality of our housing

management service. The results for the current year

showed that overall satisfaction for General Needs

tenants taken cumulatively over the year is 65%. This

is largely static compared to previous years, and we

believe is affected by repairs and issues with Service

Charge management. The last official STATUS survey (a

sector wide consultation done on the same basis by

all housing associations) in 2010 showed satisfaction

levels of 74% with Family Mosaic as a landlord.

A separate independent monthly tracking survey of 200

tenants who have received a Repair in the last month

shows satisfaction with this service at 73%. The official

STATUS survey in 2010 showed 68% satisfaction with this

service. Although this suggests that the repairs service

has improved, tenants who have recently received a

repair consistently rate the service more highly than

tenants as a whole, which is what STATUS measures.

In Supported Housing we measure overall satisfaction

by surveying every person who receives support

over the year. The overall average this year was 97%,

maintaining the excellent result achieved last year (97%).

The average of these three satisfaction surveys (i.e.

General Needs, Repairs, and Supported Housing) is a

lead driver for performance. A stepped target is set each

year which, if met, will allow performance bonuses to

be paid to all staff. The target this year was not met.

The table below shows this average tenant satisfaction

for the last five years, and shows a generally improving

trend, until this year. We believe we have actions in

place to improve this. The target for 2013 is 84%.

Operating SurplusThis measures our surplus before property disposals and

interest. It is used to measure controllable performance

at cost centre and department levels as well as for the

organisation as a whole, and we would expect to see

this increase over time. As a percentage of turnover our

operating surplus is 26.6%. We compare this against

the G15 group of fifteen leading London Housing

Associations which in 2011 reported an average of 23.3%.

Current Arrears % This measures the amounts of rent owed by current

tenants compared to their annual rent charge. Our

rent arrears reduced once again in 2012 in a tough

environment where income levels are declining

and benefit levels are changing. More changes are

coming in the future, as the Government seeks to

Operating Surplus Actual (£000’s)

2008 2009 2010 2011 2012£27,229 £25,537 £31,351 £43,150 £48,086

Resident Satisfaction

2008 2009 2010 2011 201277% 80% 82% 83% 82%



introduce Universal Credit and the direct payment

of benefits to tenants. We are part of a pilot

scheme to test out these new arrangements.

Our medium term target remains as 5% or less, which

we are pleased to report has now been achieved. In

2011 we were in the second quartile in the HouseMark

G15 peer group benchmarking report, the same as

the previous year, as other Associations also improved

their performance. In terms of cash collection, we

achieved 100% against a target of 100%. Our bad

debt costs equates to £30 per unit per year. We are

pleased to report that while arrears performance

improved, we actually had fewer evictions in the year.

Net Development SpendWe target and measure Net Development Spend in the

year, which is the total spent on new development,

less grants received less proceeds on new build sales

units. This is important because this sum predominantly

drives the funding requirement of the business. The

development team are tasked with managing within

the parameters set, to ensure the business stays within

banking covenants and the facilities available.

During the year net spend amounted to £96m (2011:

£56m). Our spend was up as we acquired new sites

and progressed significantly on existing schemes.

Grant funding is down and will continue to be

low as part of the new regime. Grant is now back

ended also, paid on completion not acquisition.

Central Overhead %We measure the cost of central corporate services (which

includes HR, Finance, I.T., Facilities, Communications,

Insurance and others) as a % of total income (excluding

first tranche shared ownership sales). This gives a

measure of relative efficiency. Our target is to remain at

10% or less and this was again achieved. Costs this year

included costs associated with the acquisition of In Touch.

In the HouseMark G15 benchmarking report for 2011

we were in the second quartile for low overheads.

This G15 report uses a slightly different measure

from ours above, but it gives a good indication of

how we compare. Our competitors have generally

been getting more efficient in this area, and we

recognise the importance of maintaining value for

money. We have initiated reviews of our central costs,

specifically around the resource required for Care and

Support, where the demands have been growing.

Management cost per Unit per WeekThis measure looks at the weekly cost of managing our

general needs units by comparing the direct costs of

managing those units, (such as housing management

staff) plus indirect costs in the form of an appropriate

share of central overheads, with the number of General

Needs units being managed. It is reported monthly and

allows us not only to target internal efficiency but also to

compare against others. We wish to remain as efficient

as possible and with as low a cost base as possible

commensurate with service quality to tenants and users.

Our cost per unit was among the lowest within the

G15 in 2011 (as disclosed in the published accounts)

well under the average of £20 per week, but some way

off the best performers at around £10/£11 per week.

Current Arrears %

2008 2009 2010 2011 20128.3% 6.9% 5.7% 5.1% 4.6%

Central Overhead %

2008 2009 2010 2011 20128.8% 9.5% 9.5% 9.2% 9.2%

Management Cost per Unit per Week

2008 2009 2010 2011 2012£13.57 £14.20 £15.43 £16.13 £16.41



HOUSING SERVICESThis year we continued to roll out personalisation

through our Neighbourhood Managers, offering greater

choice and control to our residents. This has meant that

we have been able to support more people with housing

moves, helping them link in with health and social

services and referring them to our tenancy support

team where needed.

We have continued to review value for money by

re-tendering our Estate gardening and cleaning services.

With input from residents we have been able to better

specify the service we wish them to receive. We now

have a contract manager in post to ensure that quality

services are being delivered.

Our Neighbourhood Managers have been reviewing

the way in which we carry out tenancy audits to stop

sub-letting of our properties, this will see a much more

targeted approach being adopted in future.

We increased the number of residents sitting on our

anti-social behaviour forum, this has given us a much

better insight into how this impacts on our residents,

and the tenant scrutiny panel carried out a review into

how we manage anti-social behaviour, both of these

initiatives will help us to provide more tailored services

in future.

In tough economic times we have tailored our

social and financial inclusion work to give greater

opportunities for our residents, we expanded our

employment and training services to give people

more opportunities for volunteering, work placements,

apprenticeships and employment, and have been

building community relationships through our

‘Greening communities’ and ‘Get connected’ projects.

Our volunteering service was recognised as providing

innovative opportunities by the Mayor of London.

We launched our Youth Academy and the Youth team

have worked with over 1,000 young people in the year;

this has led to some gaining employment and starting

their own businesses. They received an award for

innovation in youth services by the Tenant Participation

Advisory Service. We have also increased the number

of our welfare rights officers and now employ a licenced

debt advisor to support our residents through the

welfare reform changes impacting their benefits.

In terms of our housing we took an extra 500 units

into management and have helped a further 300 people

move from our transfer list. We also carried out a review

of our transfer list in terms of value for money and

agreed a change in criteria for tenants wanting to join

the list to enable the team to concentrate on reducing

overcrowding and under-occupation in our properties.

SUPPORTED HOUSING 2011/12 has been a difficult year for our Care and

Supported Housing services, with significant pressure

on public spending, and we have experienced cuts in

contract values for almost all of our services. These have

ranged from 6-17%. We have worked hard to ensure

that the cuts are not felt by our customers and that the

quality of services remains high. We embarked on a

full Terms & Conditions change process to ensure our

services are providing value for money and that all

of our care and support contracts are independently

financially viable.

Despite the pressure on budgets, we have been

successful in securing significant new business in the

year. The transfer of In Touch Care and Support brought

£14m worth of contracts into the Group and expanded

our area of operation into the South of England. We

were also successful in securing £1.9m of new business

for mental health in Hackney and Lambeth, Care

Navigator in Kent and have retained £3.9m of existing

contracts re-tendered in the year. On the negative side

we have lost £1.3m worth of contracts through re-

tendering including our long established TST service in

North London, Homelessness service in Southampton

and some of our Mental Health services in Lambeth.



We have been expanding our personalisation work,

increasing the choice and control our customers have

over the services they receive, with over 100 customers

now ‘purchasing’ their service through individual service

funds and personal budgets.

Due to the funding cuts we have had to carry out a large

re-organisation in Care and Support with significant

redundancy payments in the year, and this, alongside

the buy out option for terms and condition changes, has

meant losses on some contracts in the financial year.

The surplus on our properties has offset this.

SUBSIDIARIESCharlton Triangle has just embarked on a major re-

investment programme. This year has seen projects

commence on replacing lateral mains to all our blocks,

upgrading communal lighting, refurbishment of six lifts,

major fire safety improvements to all our blocks above

six stories and replacement of an old communal boiler in

Valiant House, a tower block of 93 flats.

Community development continues to be a major

strategic priority as we adapt our services to meet the

needs of residents in a changing and challenging

environment of welfare and housing reform. Our New

Leaf Centre opened in July 2011. Services being offered

include employment and training advice, volunteering,

health and well being courses with the Primary Care

Trust, welfare rights advice, debt advice, counselling

and reiki therapy. A local resident is now employed as

receptionist/ administrator, and the centre is proving

extremely popular with residents. Charlton Triangle was

also a key partner with Charlton Athletic Community Trust

in a successful bid to run local authority youth services

in the area and an expanded range of year round

activities is being rolled out in 2012 /13.

Value for money has been a theme throughout the year.

Our volunteering programme, where local residents gain

work experience in the local office, now means we rarely

have a need for temporary agency staff. Digitisation of

files and processes has also been a priority delivering

both service efficiencies and savings on office supplies.

Void turnaround has also been reduced significantly

with the successful implementation of a ’back to back’

lettings initiative and has seen some properties let on a

one day turnaround. More significantly, Charlton Triangle

continues to work with over 20 local partner agencies

enabling us to lever in a wide range of neighbourhood

services which go far beyond a traditional housing

management model.

Old Oak has concentrated on achieving value for

money this year with a thorough governance review to

understand what value the Old Oak Board can continue

to bring to the Old Oak Ward, now that the stock transfer

agreement from Hammersmith and Fulham has expired

and the regeneration programme is nearly complete. As

part of this process the Board has set out some proposals

that represent a new and coherent strategy for Old Oak

that will enable it to maximise the advantages it has as a

community based Association providing services beyond

pure housing management. The proposals link well with

Hammersmith and Fulham’s aspirations for Old Oak to

take the lead role in deprivation in the local area.

In addition to the governance review, Old Oak has

reviewed its ground maintenance services to obtain

better value for residents. The Board has looked to gain

economies of scale and share resources with Family

Mosaic Housing, by joining their procurement of new

cleaning and grounds maintenance contractors. The

grounds maintenance costs are now also charged to

the whole of the estate and not just Old Oak tenants,

in line with the original intentions of the stock transfer

agreement. Both of these initiatives have substantially

reduced the service charges to our tenants in line with

their requests.

The Community and Children’s Centre has also continued

to grow its services increasing revenue funding and

attendance figures, most notably with the development

of our new job club, senior and junior youth clubs, and



health service provisions. Working with our partners on

various initiatives and services, and by sharing resources,

we have been able to provide the Old Oak Ward with high

quality value for money services that actively engage and

help the communities within our Ward to thrive.

VALUE FOR MONEY The Board has adopted a Value for Money strategy, which

has been in place for two years. The approach is to ensure

all staff are aware of the need to deliver effective services,

which is a balance of service quality and cost. A range

of measures has been agreed to monitor our success,

including an overall value for money index. Pleasingly this

has shown an improving trend overall. Some individual

examples of outcomes during the year include – saving

through buying bulk waste containers instead of renting

from Local Authorities; a new process for rent statement

production (including an electronic version); bringing

some training in house that was previously outsourced;

and introducing Dulux paint packs for tenants to decorate

their own properties when moving in.

There is now a new regulatory code for assessment of our

Value for Money activities. Board and Management will be

reviewing our approach in light of this.

FACTORS THAT MAY AFFECT FUTURE PERFORMANCE• The government has introduced a programme

of welfare reforms, which will affect our tenants

financially. This may affect their ability to pay rent,

with consequent increases in bad debt losses.

We are putting resources in to help our tenants

manage the changes, and are part of a pilot

scheme being run by the Department for Work

and Pensions to test the new arrangements, where

we have partnered with Southwark Council.

• The ability to raise finance, either from banks or

in the capital markets, is by no means certain. We

are financially strong, have a good credit rating

and are well placed with potential funders. We

continue to manage relationships carefully to

maintain our strength as a lending proposition.

• As part of our new ‘Affordable Homes’

development programme, we are increasing

the number of units for sale, either as

Shared Ownership or for Private Sale. Our

ability to sell these units at the right price

is a risk to the business. Whilst we have

demonstrated our ability to do so, we continue

to monitor and manage this closely.

• Acquisition of land and properties for

development has risks. There are uncertainties in

development, with the risk that land purchased

may be overvalued, costs overrun or sales are

not achieved. As a result we can face write-offs

of cost and write-downs in value. Our scheme

and management assessment processes are

aimed at minimising such occurrences.

• Our Responsive repair service is largely

dependant on one contractor. This represents a

risk in delivery terms should that partner fail. We

monitor their position, and have back up options.

• Supported Housing is funded by grants

such as Supporting People. Grants have

been cut, which has affected the viability

of schemes. We have robust processes in

place to react to and manage such issues.

• Auto-enrolment of staff in pension schemes as

required by legislation may increase our costs,

as will funding deficits on existing pension

arrangements.

PENSION COSTSThe Association participates in the Social Housing

Pension Scheme (SHPS). This is a multi-employer

scheme, so we do not recognise any fund deficits in

our accounts. The Income and Expenditure charge

represents only the employer contributions payable. The

scheme has a funding deficit which increased following

the most recent revaluation and this led to increased

contribution rates.

Employees who joined us prior to 1 April 2010, if they

elected to join, are in the SHPS Career Average Earnings



based final salary scheme. Employees joining since

then have access to a defined contribution scheme,

also under the SHPS umbrella.

A number of employees are members of the NHS

pension scheme. We pay fixed contributions and the

Exchequer funds the scheme.

We also have a small number of employees in the Local

Government Pension Scheme under which funding

deficits or surpluses are recognised in our accounts.

PAYMENT OF CREDITORSOur policy is to pay suppliers in accordance with

contractual arrangements.

EMPLOYEESIt has been an important and eventful year for Family

Mosaic. We acquired the Supported Housing division

of Hyde Group, known as In Touch. This meant we

added a further 500 staff to the 1,700 already employed

by the Group.

In people management terms our year was also

defined by the project which changed the Terms and

Conditions for all Family Mosaic staff. This meant that

90 staff saw salaries go up, 400 saw their salaries

reduce and weekly hours were standardised at 37 ½

hours per week.

Our staff have remained focused and true to the

We Can spirit of service delivery, throughout this

period. We now look forward to a period of morale

building to move on from this eventful year to a

more stable period.

We are committed to equal opportunities for all

employees, and this is particularly central to our

success because of the diverse communities we serve.

We hold the status of Disability Symbol User by the

Department for Work and Pensions, recognising our

positive approach to employing disabled people.

We see communication as a big part of employee

relations. We do this in a number of ways, some

of which are ‘cascade’ bulletins which share the

issues of the day, successes and items from the

Management Team agenda, Group meetings, and

other social events.

Attracting and retaining good staff is key to our

success. We have HR policies and practices that

support this. Increasingly we are employing good

quality staff from outside the housing sector.

HEALTH AND SAFETYThe Board recognises its responsibilities on all

matters relating to Health and Safety. We have

appropriate policies, and provide staff training

and education through dedicated Health and

Safety officers.

BOARD MEMBERS AND MANAGEMENT TEAMMembers of the Board and Management Team are

set out on page 7.

Board Members are drawn from a wide background

bringing together professional, commercial and local

tenant experience to provide both challenge and

support to the Management Team. The Chief Executive

of the Association is a member of the Board.

Management Team members hold no interest in the

shares of the Association and act as Executives within

authority delegated by the Board.

We have insurance policies that indemnify Board

Members and Management Team against liability

when acting for the Association.

SERVICE CONTRACTSManagement Team are employed on the same terms

as other staff, their notice periods ranging from 3 to 6

months. Remuneration details are included in note 6

to the Financial Statements.



NHF CODE OF GOVERNANCEWe are pleased to report that Family Mosaic complies

with the principal recommendations of the NHF Code

of Governance (revised 2009), with the exception of

the fixed terms of appointment for Board Members

which will be clarified at the AGM in September 2012

with the proposal to adopt the National Housing

Federation 2011 Model Rules.

TENANT INVOLVEMENTWe have a wide range of ways that our tenants and

customers can participate in decision making across

the Group. These include a customer panel, forums

and groups, Panel Plus and a Scrutiny Panel. Panel

Plus is made up of tenant representatives from each of

the Regions we work in, and they have been formally

involved in policy changes and strategies in the last

year. The Scrutiny Panel are tenant representatives

charged with scrutinising the work we carry out, to

help us to continuously improve. They have carried

out three inspections in the last year; access and

customer care, anti-social behaviour and repairs.

We have a clear and simple complaints policy that we

issue to all tenants. During the year we received 1,082

(2011: 793) formal complaints. We attempt to resolve

all complaints as quickly as possible, however, 158

(2011: 96) remained outstanding at year end. We

continue to investigate and take action in respect of

these, with a view to resolving them professionally

and amicably.

INTERNAL CONTROLS ASSURANCEThe Board acknowledges that it has overall responsibility

for establishing and maintaining the whole system of

internal control and for reviewing the effectiveness of

the system of internal control, both for the Group and

for the Association.

The system of internal control is designed to manage,

rather than eliminate, the risk of failure to achieve

business objectives, and can only provide reasonable,

and not absolute, assurance against material

misstatement or loss.

The process for identifying, evaluating and managing

the significant risks faced by the Group is ongoing,

and has been in place throughout the year and up to

the date of approval of the annual report and financial

statements. The Board receives and considers reports

from management on these risk management and

control arrangements at meetings throughout the year.

The key elements of the internal control framework

include:

• Board approved terms of reference and

delegated authorities for all Committees

• clearly defined management responsibility

for the identification, evaluation

and control of significant risks

• robust strategic and business planning processes

• annual review of the Group’s risk map by the

Board, with updates at each Board meeting

• detailed financial budgets and

forecasts for subsequent years

• formal recruitment, retention, training

and development policies

• formal authorisation and appraisal procedures for

all significant new initiatives and commitments

• regular reporting of key performance indicators

to assess progress towards the achievement of

key business objectives, targets and outcomes

• Board approved whistle blowing and

anti-theft and corruption policies

• detailed policies and procedures in

each area of the Group’s work

• a programme of internal audits every year

We have a clear policy on fraud, which has been

approved by Board, and distributed to all staff. This

policy requires a register to be maintained of actual and

attempted fraud, with all cases reported to Board. We

have had two fraud cases reported, one in the year, and

one since year end.



The Board has ultimate responsibility for the system

of internal control but, within this, it has delegated

authority to the Risk Management and Audit Committee

to regularly review the effectiveness of the system of

internal control. The Board receives reports from this

Committee together with minutes of the meetings.

The means by which the Risk Management and Audit

Committee reviews the effectiveness of the system of

internal control include considering risk reports, internal

audit reports, management assurances and the external

audit management letter.

Failings or weaknesses identified from internal

audit reports and other work are reported with

recommendations to the Risk Management and Audit

Committee, and implementation plans are monitored.

The Risk Management and Audit Committee has

received the Chief Executive’s annual review of the

effectiveness of the system of internal control for the

Association and its subsidiaries, together with the

annual report of the internal auditor, and has reported

its findings to the Board.

GOING CONCERNAfter making enquiries the Board has a reasonable

expectation that the Group has adequate resources to

continue in operational existence for the foreseeable

future. For this reason, it continues to adopt the going

concern basis in the financial statements.

DISCLOSURE OF INFORMATION TO AUDITORSThe Board Members who held office at the date of

approval of this Board Report confirm that, so far

as they are each aware, there is no relevant audit

information of which the Association’s auditors are

unaware, and each Board Member has taken all the

steps that they ought to have taken as a Board Member

to make themselves aware of any relevant audit

information and to establish that the Association’s

auditors are aware of that information.

ANNUAL GENERAL MEETINGThe Annual General Meeting will be held on

20 September 2012.

AUDITORSA proposal to re-appoint KPMG LLP as auditors of

Family Mosaic Housing will be tabled at the forthcoming

Annual General Meeting.

THE FUTUREOur main objective is to continue to improve our

services. Most of our services are currently operating

at higher levels of service quality than in the past.

A key area for us is Leaseholder services and service

charge management generally, where we have made

significant progress which will continue. We will also be

ensuring our repairs and maintenance contracts provide

top quality service. Development of new homes will

continue, and with a greater requirement for sales to

subsidise low rent, sales risks will be managed closely.

We are also open to opportunities for stock transfers or

mergers that may arise.

A key part of our activities is to maintain our financial

strength. Accordingly we will be continuing our

approach of monitoring and managing income and

costs carefully.

The changes to welfare being introduced by the

Government will impact us and our tenants. We have

a strategy to deal with this including involvement in

a payments pilot with the Department for Work and

Pensions running

to June 2013.

HOW WE BEHAVE


HOW WE BEHAVE


STATEMENT OF THE BOARD’S RESPONSIBILITY IN RESPECT OF THE BOARD’S REPORT AND THE FINANCIAL STATEMENTS

The Board is responsible for preparing the Board’s

Report and the financial statements in accordance

with applicable law and regulations.

Industrial and Provident Society law requires the

Board to prepare financial statements for each

financial year. Under those regulations the Board

have elected to prepare the financial statements in

accordance with UK Accounting Standards.

The financial statements are required by law to give

a true and fair view of the state of affairs of the Group

and the Association and of the surplus or deficit for

that period.

In preparing these financial statements, the Board

is required to:

• select suitable accounting policies

and then apply them consistently;

• make judgements and estimates that

are reasonable and prudent;

• state whether applicable UK Accounting

Standards and the Statement of Recommended

Practice 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 do so.

The Board is responsible for keeping proper

accounting records that disclose with reasonable

accuracy at any time the financial position of the

Group and the Association and enable them to ensure

that its financial statements comply with the Industrial

and Provident Societies Acts 1965 to 2003, the

Industrial and Provident Societies (Group Accounts)

Regulations 1969, the Housing and Regeneration

Act 2008 and the Accounting Requirements for

Statement of responsibilities of the Board

Registered Social Landlords General Determination

2006. The Board has general responsibility for taking

such steps as are reasonably open to it to safeguard

the assets of the Group and the Association and to

prevent and detect fraud and other irregularities.

The Board is responsible for the maintenance and

integrity of the corporate and financial information

included on the Association’s website. Legislation in

the UK governing the preparation and dissemination

of financial statements may differ from legislation in

other jurisdictions.

Ian Peacock

Chair of the Board

18 July 2012

HOW WE BEHAVE


CORPORATE GOVERNANCE The Board is committed to high standards of corporate

governance and has adopted the National Housing

Federation’s code of governance. Family Mosaic meets

the Homes and Communities Agency performance

standards relating to governance.

The organisation is managed and monitored by the

Board, a number of Committees (which are listed

below) and a Management Team. Membership of the

Board and Committees is principally of non-executive

members, drawn from all walks of life, including

relevant professionals and our tenants. Appointments

are made via selection panels. The non-executives

receive no remuneration for their services.

COMPOSITION OF THE BOARDThe Board consists of a maximum of twelve members.

The Chief Executive of the Management Team is a

member of the Board.

COMMITTEE STRUCTURE The Board has set up the following Committees to

facilitate the direction of the Association’s affairs:

FINANCE AND DEVELOPMENT COMMITTEEThis Committee consists of a maximum of eight

non-executive members, with Mike Verrier

(Treasurer and Board member) as Chair, and meets

at least three times a year.

The principal function of this Committee is to

assess, monitor and maintain the financial viability

of the Group, and oversee development activities.

RISK MANAGEMENT AND AUDIT COMMITTEEThis Committee consists of a maximum of five

non-executive members with Richard Stevens

(Board Member) as Chair and meets at least three

times a year. The Committee ensures that Family

Mosaic has in place and operates appropriate

controls to safeguard its assets and manage

risks. It recommends to the Board the annual

report and financial statements. It appoints

the internal auditors and recommends to the

Board the appointment of external auditors.

APPOINTMENTS AND REMUNERATION COMMITTEEThis Committee comprises three Board

members and meets at least once a year, and

as and when required. It has responsibility

for the Chief Executive’s remuneration

and appraisal, and the appointment of

Management Team and Board members.

MANAGEMENT TEAM This Team has executive responsibility for the day

to day running of the business, and its members

are listed on page 7.

Corporate governance

HOW WE BEHAVE


REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF FAMILY MOSAIC HOUSING We have audited the financial statements of Family

Mosaic Housing for the year ended 31 March 2012

set out on pages 26 to 63. The financial reporting

framework that has been applied in their preparation

is applicable law and UK Accounting Standards

(UK Generally Accepted Accounting Practice).

This report is made solely to the Association’s

members, as a body, in accordance with section

128 of the Housing and Regeneration Act 2008

and section 9 of the Friendly and Industrial and

Provident Societies Act 1968. Our audit work has

been undertaken so that we might state to the

Association’s members those matters we are

required to state to them in an auditor’s report and

for no other purpose. To the fullest extent permitted

by law, we do not accept or assume responsibility

to anyone other than the Association and the

Association’s members, as a body, for our audit

work, for this report, or for the opinions we

have formed.

RESPECTIVE RESPONSIBILITIES OF THE BOARD AND AUDITORAs more fully explained in the Statement of Board’s

Responsibilities set out on page 23, the Association’s

Board is responsible for the preparation of financial

statements which give a true and fair view. Our

responsibility is to audit, and express an opinion

on, the financial statements in accordance with

applicable law and International Standards on

Auditing (UK and Ireland). Those standards require

us to comply with the Auditing Practices Board’s

(APB’s) Ethical Standards for Auditors.

SCOPE OF THE AUDIT OF THE FINANCIAL STATEMENTSA description of the scope of an audit of financial

statements is provided on the APB’s website at:

www.frc.org.uk/apb/scope/private.cfm.

Report of the independent auditors

OPINION ON FINANCIAL STATEMENTSIn our opinion the financial statements:

• give a true and fair view, in accordance with

UK Generally Accepted Accounting Practice, of

the state of affairs of the Group and Association

as at 31 March 2012 and of the Group and

Association surplus for the year then ended; and

• have been properly prepared in accordance

with the Industrial and Provident Societies

Acts 1965 to 2003, the Industrial and Provident

Societies (Group Accounts) Regulations 1969,

the Housing and Regeneration Act 2008 and

the Accounting Requirements for Registered

Social Landlords General Determination 2006.

MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTIONWe have nothing to report in respect of the following

matters where the Industrial and Provident Societies

Acts 1965 – 2003, the Industrial and Provident Societies

(Group Accounts) Regulations 1969, the Housing and

Regeneration Act 2008 and the Accounting Requirements

for Registered Social Landlords General Determination

2006 require us to report to you if, in our opinion:

• a satisfactory system of control over

transactions has not been maintained; or

• the Association has not kept proper

accounting records; or

• the financial statements are not in

agreement with the books of account; or

• we have not received all the information

and explanations we need for our audit.

D A Bowen (Senior Statutory Auditor)

for and on behalf of KPMG LLP, Statutory Auditor

KPMG LLP, Chartered Accountants,

1 Forest Gate, Brighton Road, Crawley, RH11 9PT

19 July 2012

Group Association

2012 £000

2011 £000

2012 £000

2011 £000

Turnover 3 180,587 165,366 166,658 159,218

Operating Costs 3 (132,501) (122,216) (119,602) (116,816)

Operating Surplus 3 48,086 43,150 47,056 42,402

Surplus on property sales 5 8,655 9,123 8,655 8,301

Net interest payable and similar charges 8 (18,327) (18,037) (17,622) (16,761)

Surplus on ordinary activities before taxation 9 38,414 34,236 38,089 33,942

Charitable Donations (2,000) (1,100) (2,000) -

Taxation on ordinary activities 10 - 3 - -

Surplus on ordinary activities after taxation 36,414 33,139 36,089 33,942

All activities are classed as continuing.

There is no material difference between the historical cost surplus for the year and the surplus for the year reported in the above Consolidated Income and Expenditure Account.

�� Group Association

2012 £000

2011 £000

2012 £000

2011 £000

Surplus for financial year 36,414 33,139 36,089 33,942

Actuarial (loss)/gain on pension scheme25 (749) 1,631 (749) 1,631

Total Recognised Surpluses since last report 35,665 34,770 35,340 35,573

Reconciliation of Movements in the Association’s funds

2012 £000

2011 £000

2012 £000

2011 £000

Opening funds as previously stated 253,824 219,054 231,646 196,073

Total recognised surpluses relating to year 35,665 34,770 35,340 35,573

Closing Total Funds 289,489 253,824 266,986 231,646

Consolidated income and expenditure account

Financial statements for the year ended 31 March 2012


Group Association

2012 £000

2011 £000

2012 £000

2011 £000

Fixed Assets: Housing properties – net cost 11 2,053,146 1,917,638 1,972,327 1,852,610

Social Housing Grant 11 (1,172,142) (1,125,056) (1,141,729) (1,099,931)

881,004 792,582 830,598 752,679

Other tangible fixed assets 13 19,140 17,892 17,975 17,748

Investment in subsidiary 28 - - 3,585 11

Homebuy Loan - net 57 57 - -

900,201 810,531 852,158 770,438

Current Assets: Properties for sale 14 54,863 50,565 10,927 24,394

Debtors 15 34,914 23,184 102,540 65,893

Cash at bank and in hand 12,654 6,579 12,411 5,796

102,431 80,328 125,878 96,083

Creditors: Amount falling due within one year 16 (53,858) (47,700) (52,183) (45,987)

Net Current Assets 48,573 32,628 73,695 50,096

Total Assets Less Current Liabilities 948,774 843,159 925,853 820,534

Creditors: Amounts falling due after more than one year 17 658,536 589,263 658,118 588,816

Provisions for Liabilities and Charges 20 749 72 749 72

659,285 589,335 658,867 588,888

Capital and Reserves: Non equity share capital 21 - - - -

Reserves 22 289,489 253,824 266,986 231,646

289,489 253,824 266,986 231,646

948,774 843,159 925,853 820,534

The notes on pages 30 to 63 form an integral part of these financial statements.

The financial statements were approved by the Board on 18 July 2012 and signed on its behalf by:

Chairman Board Member Company Secretary

Consolidated balance sheet



Group

2012 £000

2011 £000

�� !�� 61,436 38,093

��!��!��

Interest received 1,518 313

Interest paid (25,689) (23,329)

��!��!�� (24,171) (23,016)

Taxation and charitable donations

Corporation tax paid - -

Charitable donations (2,000) (1,100)

��"��#�� (2,000) (1,100)

��"��!��

Acquisition of subsidiary (1,324) -

Cash balance acquired in subsidiary 1,186 -

Acquisition and construction of housing properties (156,772) (120,659)

Purchase of other tangible fixed assets (2,692) (1,134)

Sales of housing properties and other fixed assets 19,880 15,120

Social Housing Grant received 43,430 48,419

��"�� (96,292) (58,254)

Management of liquid resources (61,027) (44,277)

Financing

Housing loans received 68,700 17,672

Annual repayments of housing loans (1,598) (767)

�� 67,102 16,905

INCREASE/(DECREASE) IN CASH IN THE PERIOD 6,075 (27,372)

Consolidated cash flow statement



��!��#� Group

2012 £000

2011 £000

Increase / (Decrease) in cash and short term deposits 6,075 (27,372)

Increase in loans (67,102) (16,905)

Movement in net debt (61,027) (44,277)

Net debt at beginning of year (575,277) (531,000)

Net debt at end of year (636,304) (575,277)

�� !�� Group

2012 £000

2011 £000

Operating surplus 48,086 43,150

Depreciation movement 15,973 11,590

Goodwill movement 1,000 -

Impairment movement 750 (1,992)

Increase in debtors (5,455) (16,987)

Increase in creditors 1,082 2,332

�� !�� 61,436 38,093

Analysis of net debt Group

As at 1 Apr 2011

£000

Cash Flow £000

As at 31 Mar 2012

£000

Cash and short term deposits 6,579 6,075 12,654

Debt due within 1 year (803) (275) (1,078)

Debt due after 1 year (581,053) (66,827) (647,880)

(575,277) (61,027) (636,304)

Consolidated cash flow statement – continued



LEGAL STATUSThe Association is registered under the Industrial and Provident Societies Acts 1965 to 2003 and is registered with the Homes

and Communities Agency as a social landlord.

ACCOUNTING POLICIESThe following accounting policies have been applied in dealing with items which are considered material in relation to the

financial statements.

Basis of accountingThe financial statements are prepared under the historical cost convention and in accordance with applicable accounting

standards, with special regard to the Statement of Recommended Practice: ‘Accounting by Registered Social Housing

Providers: update 2010’ (the ‘SORP’), and comply with the Accounting Requirements for Registered Social Landlords General

Determination 2006. The SORP was adopted in the year, but had no material impact.

Basis of consolidationThe consolidated accounts incorporate the financial statements of Family Mosaic Housing and its subsidiaries. Please see

note 28 for details of the subsidiaries.

The acquisition method of accounting is used for acquisitions, whereby the purchase consideration is allocated to the

identifiable assets acquired and liabilities assumed on the basis of fair value at the date of acquisition. The results of any

acquisitions are brought into the financial statements from the date of acquisition.

Where the fair value of consideration paid exceeds the fair value of the net assets acquired, the difference is treated as

purchased goodwill. This is amortised over its useful economic life.

TurnoverTurnover comprises rental income receivable in the year, revenue grants, recharges to other Associations, first tranche

proceeds from Shared Ownership and income from service charges. All income is recognised on a receivable basis.

Pension costsThe expected cost of providing pensions is charged to the income and expenditure account in order to spread the cost over

the service lives of employees in such a way that the pension cost is a substantially level percentage of current and expected

future pensionable payroll.

Housing propertiesFreehold housing properties are stated at cost. The cost of housing properties is their purchase price together with any costs

of acquisition, including the incidental costs of development, interest capitalised up to the date of practical completion and

directly attributable development costs.

The major separate components that make up a housing property are accounted for separately. Housing properties are split

between the structure and those major components which require periodic replacement. Expenditure to replace, enhance

or refurbish major components is assessed against life cycle costing principles, and is depreciated in line with the useful

1

2

Notes to the financial statements for the year ended 31 March 2012


economic life of the component to which it relates.

If the components have an estimated life in excess of 10 years they are capitalised and depreciated over their useful life. If

the useful life is less than 10 years costs are charged directly to the income and expenditure account.

Costs of responsive repairs and planned cyclical maintenance are, to the extent that such cost does not relate to replacing a

component, recognised in the income and expenditure account as incurred.

Shared Ownership Shared Ownership properties are split proportionately between current and fixed assets based on the element relating to

expected first tranche sales. The first tranche proportion is classed as a current asset until sold. Sales proceeds are then

included in turnover. The unsold balance is classed as a fixed asset with any subsequent sale treated as a disposal of the

fixed asset. In mixed tenure schemes which include shared ownership, profits arising from first tranche sales are first applied

to reduce any subsidy required on general needs rented housing and thus credited to the cost of those housing properties.

Profits over and above the subsidy requirement or on stand alone shared ownership schemes are recognised in the income

& expenditure account.

Depreciation and Impairment Depreciation is charged so as to write down the value of freehold housing properties, other than freehold land, to their

estimated residual value on a straight line basis over their remaining expected useful economic lives as follows:

• housing properties 120 years

• building envelope and structure 30 years

• bathrooms and kitchens 15 years

• heating systems 10 years

Properties held on long leases are depreciated over their estimated useful economic lives or the life of the lease if shorter.

Depreciation is not charged on shared ownership assets.

Impairment reviews are carried out on an annual basis in accordance with FRS 11 ‘Impairment of fixed assets and goodwill’.

Where necessary appropriate write downs are made.

Social Housing Grant (SHG)Social housing grant (SHG) is receivable from the Homes and Communities Agency and is utilised to reduce the capital

costs of housing properties, including land costs. SHG due from the Homes and Communities Agency or received in advance

is included as a current asset or liability. SHG received in respect of revenue expenditure is credited to the income and

expenditure account in the same period as the expenditure to which it relates.

SHG is subordinated to the repayment of loans by agreement with the Homes and Communities Agency. SHG released on

sale of a property may be repayable but is normally available to be recycled and is credited to a Recycled Capital Grant Fund

or Disposal Proceeds Fund and included in the balance sheet in creditors.

ACCOUNTING POLICIES – continued2



Other tangible fixed assets Other fixed assets are included at cost to the Association less depreciation, which is provided on a straight line basis over

the periods shown below.

• Freehold office premises 50 years

• Leasehold office premises remaining life of lease

• Renewable energy assets 20 years

• Other fixed assets from 3 to 25 years

InvestmentsInvestments are shown at cost.

Leases Rents payable under operating leases are charged to the income and expenditure account on a straight-line basis over the

lease term. Rental income under operating leases is credited to the income and expenditure account as it falls due.

AgenciesThe transactions incurred directly by agencies managing the Association’s hostels are not consolidated in the financial

statements.

Provisions for liabilities and chargesThe Association makes provision for dilapidations to leasehold office accommodation where the lease has expired.

Stocks of properties for resale Shared Ownership first tranche sales, completed properties for outright sale and property under construction are valued at

the lower of cost and net realisable value. Cost includes acquisition and development cost together with interest payable.

Net realisable value is based on estimated sales price after allowing for further costs of completion and disposal.

Sale of housing properties Sales of housing properties are taken into account on the completion date. Where houses are sold, the surplus or deficit in

the income and expenditure account is calculated by comparing sales proceeds and the carrying amounts.

Temporary Accommodation Temporary Accommodation licences properties from local authorities. Expenditure on properties (including that on bringing

properties up to a satisfactory standard initially) is written off over the agreed licence period.

VATMembers of the Family Mosaic Housing Group are registered as a VAT group excluding Family Mosaic Thurrock Limited and

Family Mosaic Housing Services Limited. A large proportion of Family Mosaic’s income comprises rental income, which is

exempt for VAT purposes and gives rise to a partial exemption calculation. Expenditure is therefore shown inclusive of VAT.

Recoverable VAT arising from partially exempt activities is credited to the income and expenditure account.




Interest payable The cost of raising loans is amortised over the period of the loan. The deferred cost is offset against the liability and

included within creditors: amounts falling due after more than one year, in accordance with FRS 26 ‘Financial instruments:

measurements’.

The actual interest payable on these loans is charged to the income and expenditure account together with amortisation

charges. Interest on loans to finance specific developments is capitalised to the date of practical completion of the scheme.

Estimates Provision is made for debts where there is a risk of non-recovery. Former tenants’ arrears are provided for in full.

TaxationFamily Mosaic Housing along with Old Oak HA, Charlton Triangle Homes HA and In Touch have charitable status and

therefore are not subject to Corporation Tax on surpluses derived from their charitable activities.

All other subsidiaries are subject to Corporation Tax. These

subsidiaries include Family Mosaic Home Ownership

Limited, Family Mosaic Housing Services Limited,

Family Mosaic Thurrock Limited and Family Mosaic

Housing Development Company Limited. The

charge for taxation is based on the

surplus for the year and takes into

account taxation deferred because

of timing differences between

the treatment of certain items for

taxation and accounting purposes.

Where possible taxable subsidiaries

will make gift aid payments to

mitigate Corporation Tax.

Deferred tax liabilities are recognised,

without discounting, in respect of

all timing differences between the

treatment of certain items for taxation

and accounting purposes which have

arisen but not reversed by the balance

sheet date, except as otherwise required

by FRS 19. Deferred tax assets are only

recognised if management believe they

will crystallise in the foreseeable future.




3

2012 Turnover

£000

2012 Operating

costs

£000

2012 Operating Surplus/ (deficit)

£000

2011 Turnover

£000

2011 Operating

costs

£000

2011 Operating Surplus/ (deficit)

£000

Group

Social housing lettings 4 155,971 110,565 45,406 138,680 97,781 40,899

Other social housing activities

First tranche Shared Ownership sales 18,696 17,262 1,434 20,053 17,528 2,525

Leaseback schemes - - - 995 139 856

Care Homes providing Nursing Care 3,363 3,967 (604) 3,781 3,745 36

Other 452 707 (255) 329 1,467 (1,138)

Non-social housing activities

Commercial rental income/Other 484 - 484 652 855 (203)

Market Sales/other development income 1,621 - 1,621 876 701 175

Total 180,587 132,501 48,086 165,366 122,216 43,150

Association

Social housing lettings 4 141,702 98,215 43,487 131,575 94,372 37,203

Other social housing activities

First tranche Shared Ownership sales 18,696 17,262 1,434 20,053 17,528 2,525

Leaseback schemes - - - 995 139 856

Care Homes providing Nursing Care 3,362 3,965 (603) 3,781 3,745 36

Gift aid from subsidiaries 1,650 - 1,650 1,854 - 1,854

Other 747 160 587 396 1,032 (636)

Non-social housing activities

Commercial Income 484 - 484 564 - 564

Lease extension premia 17 - 17 - - -

Total 166,658 119,602 47,056 159,218 116,816 42,402

PARTICULARS OF TURNOVER, COST OF SALES, OPERATING COSTS AND OPERATING SURPLUSES/(DEFICITS)



Group

Housing Accom

£000

Supported Housing

£000

Shared Ownership

Accom

£000

Temporary Accom

£000

Residential Care

Homes

£000

2012

Total

£000

2011

Total

£000

Rent receivable 87,503 12,144 6,697 4,575 49 110,968 103,567

Service and Support income

4,851 5,656 545 427 - 11,479 9,516

Gross rental income 92,354 17,800 7,242 5,002 49 122,447 113,083

Voids (619) (540) (57) (328) (6) (1,550) (1,669)

Net rental income 91,735 17,260 7,185 4,674 43 120,897 111,414

Supporting people income - 33,337 - - - 33,337 25,695

Other revenue grants - - - 2 1,735 1,737 1,571

Turnover from social housing lettings 91,735 50,597 7,185 4,676 1,778 155,971 138,680

Support services and recoverable service charges

6,031 24,705 43 321 1,477 32,577 31,666

Management 14,427 16,526 2,915 844 337 35,049 25,072

Routine maintenance 8,226 1,560 27 691 12 10,516 12,573

Planned maintenance 10,657 1,631 (1) 235 39 12,561 14,212

Bad debts 414 395 34 (154) - 689 1,199

Property lease charges 350 319 - 2,245 23 2,937 4,089

Depreciation of housing properties

12,097 1,862 41 461 25 14,486 9,670

Goodwill write-off - 1,000 - - - 1,000 -

Impairment of housing properties

750 - - - - 750 (700)

Operating costs on social housing lettings 52,952 47,998 3,059 4,643 1,913 110,565 97,781

Operating ��$%��&��social housing lettings

38,783 2,599 4,126 33 (135) 45,406 40,899

% 42.3% 5.1% 57.4% 0.7% (7.5%) 29.1% 29.5%

Operating cost per unit – General Needs £3,131

PARTICULARS OF INCOME AND EXPENDITURE FROM SOCIAL HOUSING LETTINGS 4a



Association

Housing Accom

£000

Supported Housing

£000

Shared Ownership

Accom

£000

Temporary Accom

£000

Residential Care

Homes

£000

2012

Total

£000

2011

Total

£000

Rent receivable 82,992 12,144 6,697 4,575 49 106,457 96,872

Service and Support income

4,495 4,178 545 427 - 9,645 9,012

Gross rental income 87,487 16,322 7,242 5,002 49 116,102 105,884

Voids (540) (540) (57) (328) (6) (1,471) (1,575)

Net rental income 86,947 15,782 7,185 4,674 43 114,631 104,309

Supporting people income - 25,334 - - - 25,334 25,695

Other revenue grants - - - 2 1,735 1,737 1,571

Turnover from social housing lettings 86,947 41,116 7,185 4,676 1,778 141,702 131,575

Support services and recoverable service charges

5,107 24,654 43 321 1,476 31,601 30,902

Management 15,594 7,392 2,126 865 348 26,325 24,964

Routine maintenance 7,770 1,560 27 691 12 10,060 11,640

Planned maintenance 9,216 1,631 (1) 235 39 11,120 13,241

Bad debts 358 270 34 (154) - 508 1,092

Property lease charges 350 315 - 2,245 23 2,933 4,089

Depreciation of housing properties

11,526 1,862 41 464 25 13,918 9,144

Goodwill write-off - 1,000 - - - 1,000 -

Impairment of housing properties

750 - - - - 750 (700)

Operating costs on social housing lettings 50,671 38,684 2,270 4,667 1,923 98,215 94,372

Operating ��$%��&��social housing lettings

36,276 2,432 4,915 9 (145) 43,487 37,203

% 41.7% 5.9% 68.4% 0.2% (8.1%) 30.7% 28.3%

Operating cost per unit – General Needs £3,310

PARTICULARS OF INCOME AND EXPENDITURE FROM SOCIAL HOUSING LETTINGS 4b



Group

2012 £

2011 £

Maintenance expenditure 1,664 1,857

Management cost – General Needs 856 841

Service charges 337 308

Overhead costs 633 585

% %

Overhead costs as a percentage of income 9.2 9.2

SURPLUS ON PROPERTY SALES

Group

Sales Proceeds

£000

Cost of Sales £000

2012 Surplus

£000

2011 Surplus

£000

Sales of properties 9,734 2,973 6,761 7,492

Sale of properties to other RPs 3,020 3,172 (152) (187)

Staircasing of shared ownership properties 5,005 2,959 2,046 1,818

Total 17,759 9,104 8,655 9,123

Association

Sales Proceeds

£000

Cost of Sales £000

2012 Surplus

£000

2011 Surplus

£000

Sales of properties 9,734 2,973 6,761 7,492

Sale of properties to other RPs 3,020 3,172 (152) (187)

Staircasing of shared ownership properties 5,005 2,959 2,046 996

Total 17,759 9,104 8,655 8,301

SPEND PER SOCIAL HOUSING UNIT4c

5



DIRECTORS EMOLUMENTS AND LOANSThe remuneration paid to the directors (who for the purposes of this note include the members of the Board and the

Management Team) was as follows:

2012 £000

2011 £000

Total emoluments to directors and former directors (including salaries, fees, expense allowances chargeable to UK tax, and other benefits)

819 941

Emoluments (excluding pension contributions) payable to the highest paid director 184 172

Total expenses reimbursed not chargeable to income tax 8 13

No members of the Board (except the Chief Executive) received any emoluments. The Chief Executive is an ordinary

member of the SHPS scheme. Contributions to this scheme are made as per the pension costs note.25

The Chief Executive’s salary equates to £7.92 per unit owned and/or managed (2011: £7.37)

The emoluments (excluding pension contributions) of the Management Team are as follows:

2012 £000

2011 £000

Brendan Sarsfield Group Chief Executive 184 172

Ken Youngman Group Finance Director 141 129

Yvonne Arrowsmith Group Operations Director 133 125

Dick Mortimer Group Development & Asset Management Director 132 121

John Schofield Group Director of Research & Development 104 102

John Gibbons Group Director of Corporate Services 76 101

6



EMPLOYEE INFORMATION

Staff numbers Group Association

2012 2011 2012 2011

The average monthly number of employees (including Directors) employed in the year was:

2,191 1,730 1,794 1,708

Full Time Equivalents 1,573 1,277 1,276 1,256

Employee costs Group Association

2012 £000

2011 £000

2012 £000

2011 £000

Wages and salaries 49,128 42,004 41,582 41,255

Social security costs 4,078 3,492 3,496 3,427

Pension costs 1,648 951 1,557 923

Redundancy and compensation for loss of office 333 830 229 830

55,187 47,277 46,864 46,435

Average salary per employee £24,905 £25,926

Number of staff paid over £60,000 p.a. Salary Bandings Number of Staff

2012 2011

£60,000 - £69,999 15 19

£70,000 - £79,999 7 5

£80,000 - £89,999 3 4

£90,000 - £99,999 3 1

£100,000 - £109,999 1 2

£110,000 - £129,999 - 3

£130,000 - £139,999 2 -

£140,000 - £149,999 1 -

£180,000 – £190,000 1 1

The gross salary of the highest earner represents 13 times that of the lowest earner (2011: 11 times)

7



NET INTEREST PAYABLE AND SIMILAR CHARGES

Group Association

2012 £000

2011 £000

2012 £000

2011 £000

Interest receivable 1,519 313 1,448 1,800

Interest payable on loans and overdrafts 25,619 23,337 24,189 22,956

Other finance costs of pension scheme 71 (8) 71 (8)

25,690 23,329 24,260 22,948

Less: capitalised (5,844) (4,979) (5,190) (4,387)

19,846 18,350 19,070 18,561

Net interest payable 18,327 18,037 17,622 16,761

Interest is capitalised at 4.35% per annum on the net costs of projects under construction.

SURPLUS ON ORDINARY ACTIVITIES

Group Association

The surplus is stated after charging:

2012 £000

2011 £000

2012 £000

2011 £000

Depreciation of tangible assets 1,446 1,848 1,436 1,839

Depreciation of housing properties 14,528 9,742 13,958 9,215

Operating lease charges 3,231 4,392 3,231 4,392

Auditors’ remuneration:

Audit of the financial statements 67 64 67 64

Audit of subsidiary financial statements 40 26 - -

Other services:

Tax Compliance 12 9 5 9

Tax advice 20 33 4 33

Sundry assurance 33 29 28 29

9

8



TAXATION ON ORDINARY ACTIVITIESFamily Mosaic Housing is an exempt charity and not therefore liable to Corporation Tax on charitable activities.

Group Association

2012 £000

2011 £000

2012 £000

2011 £000

UK Corporation Tax charge - - - -

Removal of tax provision relating to prior years - (3) - -

Tax charge/(credit) - (3) - -

Factors affecting tax charge for the current period

The tax charges for both periods are different to the standard rate of corporation tax of 26% (2011: 28%). The differences are

explained below.

Surplus on activities before tax and after charitable donations

36,414 33,136 36,089 33,942

Tax charge at 26% (2011: 28%) 9,468 9,278 9,383 8,825

Exempt activities of charitable entity (9,546) (9,648) (9,383) (8,825)

Disallowed expenses - 1 - -

Depreciation in excess of capital allowances - 2 - -

Surplus on property sales in excess of chargeable gain - (31) - -

Tax effect of Joint Venture profits 12 60 - -

Charges on income in relation to prior periods 7 95 - -

Unrelieved tax losses and other deductions arising in the period

59 243 - -

Corporation tax charge/(credit) - - - -

A deferred tax asset is only recognised

on losses arising if management

believe they will crystallise in the

foreseeable future.

10



HOUSING PROPERTIES Group

Cost

Social housing

properties held for letting £000

Social housing

properties under

construction £000

Completed shared

ownership housing

properties £000

Shared Ownership

under construction

£000

Total

£000

At 1 April 2011 1,615,242 144,016 173,424 50,188 1,982,870

Schemes completed in the year 110,138 (110,138) 46,424 (46,424) -

Additions 29,828 101,626 - 53,621 185,075

Disposals (15,500) - (20,106) - (35,606)

Reclassification (25,838) (3,771) 30,167 (558) -

At 31 March 2012 1,713,870 131,733 229,909 56,827 2,132,339

DEPRECIATION

At 1 April 2011 60,641 - 79 - 60,720

Charge for the year 14,629 - (79) - 14,550

Disposals (1,339) - - - (1,339)

At 31 March 2012 73,931 - - - 73,931

IMPAIRMENT

At 1 April 2011 - 1,750 567 2,195 4,512

Charge for the year - 500 - 250 750

At 31 March 2012 - 2,250 567 2,445 5,262

SOCIAL HOUSING GRANT

At 1 April 2011 930,150 91,380 78,901 24,625 1,125,056


Additions - 35,198 - 22,194 57,392

Disposals (9,049) - (1,257) - (10,306)

Reclassification (9,818) (2,582) 16,531 (4,131) -

At 31 March 2012 967,859 67,420 113,500 23,363 1,172,142

NET BOOK VALUE

At 31 March 2012 672,080 62,063 115,842 31,019 881,004

At 1 April 2011 624,451 50,886 93,877 23,368 792,582

Interest of £5,844,000 has been capitalised in the year to 31 March 2012 (2011: £4,979,000). The additions to housing

properties during the year include £15,508,000 (2011: £16,320,000) in respect of improvement to the existing property

stock. The spend per social housing unit on completed social rented schemes was £6,796 (2011: £5,029).

11



Association

Cost

Social housing

properties held for letting £000

Social housing

properties under

construction £000

Completed shared

ownership housing

properties £000

Shared Ownership

under construction

£000

Total

£000

At 1 April 2011 1,547,885 144,520 173,423 49,343 1,915,171


Transfers to/from group entities (2,379) (4,468) - (4,691) (11,538)

Additions 26,656 103,846 - 49,681 180,183

Disposals (15,451) - (20,105) - (35,556)

Reclassification (25,838) (3,771) 30,166 (557) -

At 31 March 2012 1,641,011 129,989 229,908 47,352 2,048,260

DEPRECIATION

At 1 April 2011 57,970 - 79 - 58,049

Charge for the year 14,037 - (79) - 13,958

Disposals (1,336) - - - (1,336)

At 31 March 2012 70,671 - - - 70,671

IMPAIRMENT

As at 1 April 2011 - 1,750 567 2,195 4,512

Charge for the year - 500 - 250 750

At 31 March 2012 - 2,250 567 2,445 5,262

SOCIAL HOUSING GRANT

At 1 April 2011 905,026 91,379 78,901 24,625 1,099,931


Transfers to/from group entities (1,022) - - - (1,022)

Additions - 34,925 - 18,185 53,110

Disposals (9,033) - (1,257) - (10,290)

Reclassification (9,818) (2,582) 16,531 (4,131) -

At 31 March 2012 941,729 67,146 113,500 19,354 1,141,729

NET BOOK VALUE

At 31 March 2012 628,611 60,593 115,841 25,553 830,598

At 1 April 2011 584,889 51,391 93,876 22,523 752,679

Interest of £5,190,000 has been capitalised in the year to 31 March 2012 (2011: £4,387,000). The additions to housing properties

during the year include £12,773,000 (2011: £14,985,000) in respect of improvement to the existing property stock.

HOUSING PROPERTIES – continued11



ACCOMMODATION IN MANAGEMENT Group Association

2012 2011 2012 2011

Social housing:

General needs 17,034 16,637 15,433 15,032

Supported housing 2,463 2,361 2,463 2,361

Shared ownership 2,918 2,680 2,918 2,525

Temporary Accommodation 112 425 112 425

Care Homes providing Nursing Care 93 109 93 109

Total units in management 22,620 22,212 21,019 20,452

Accommodation managed by others 625 525 1,242 1,142

OTHER TANGIBLE FIXED ASSETS Group

Freehold office

premises £000

Leasehold office

premises £000

Renewable Energy Assets £000

Other fixed

assets £000

Total

£000

COST

At 1 April 2011 16,133 178 - 5,961 22,272

Additions 173 - 1,029 1,490 2,692

Disposals (8) (105) - (2,634) (2,747)

At 31 March 2012 16,298 73 1,029 4,819 22,219

DEPRECIATION

At 1 April 2011 937 101 - 3,342 4,380

Charge for year 288 14 - 1,144 1,446

Disposals (8) (105) - (2,634) (2,747)

At 31 March 2012 1,217 10 - 1,852 3,079

NET BOOK VALUE

At 31 March 2012 15,081 63 1,029 2,967 19,140

At 1 April 2011 15,196 77 - 2,619 17,892

12

13



OTHER TANGIBLE FIXED ASSETS – continued

Association

Freehold office

premises £000

Leasehold office

premises £000

Other fixed

assets £000

Total

£000

COST

At 1 April 2011 16,133 177 5,598 21,908

Additions 173 - 1,490 1,663

Disposals (8) (105) (2,536) (2,649)

At 31 March 2012 16,298 72 4,552 20,922

DEPRECIATION

At 1 April 2011 937 114 3,109 4,160

Charge for year 288 2 1,146 1,436

Disposals (8) (105) (2,536) (2,649)

At 31 March 2012 1,217 11 1,719 2,947

NET BOOK VALUE

At 31 March 2012 15,081 61 2,833 17,975

At 1 April 2011 15,196 63 2,489 17,748

PROPERTIES FOR SALE

Group Association

2012 £000

2011 £000

2012 £000

2011 £000

First Tranche Shared Ownership completed 569 - 569 -

First Tranche Shared Ownership under construction 11,963 13,267 9,560 12,850

Open market properties for sale – Cost 65,613 56,327 1,208 11,731

Open market properties for sale – Grant (23,282) (19,029) (410) (187)

54,863 50,565 10,927 24,394

14

13



DEBTORS

Group Association

2012 £000

2011 £000

2012 £000

2011 £000

a) Amounts due within one year

Rental debtors 8,652 8,661 8,044 8,175

Less: provision for bad debts (3,948) (4,084) (3,616) (3,885)

4,704 4,577 4,428 4,290

Trade debtors 2,155 2,051 1,349 1,840

Other debtors 4,353 1,653 4,311 1,634

Prepayments and accrued income 2,584 2,525 2,037 2,525

Grant receivable 20,521 12,378 20,521 12,377

Amount owed by subsidiaries - - 50,114 28,082

34,317 23,184 82,760 50,748

b) Amounts due after more than one year

Amount owed by subsidiaries - - 19,183 15,145

Other debtors 597 - 597 -

34,914 23,184 102,540 65,893

CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

Group Association

2012 £000

2011 £000

2012 £000

2011 £000

Housing loans 1,078 803 1,078 803

Recycled Social Housing Grant 1,874 - 1,874 -

Trade creditors 7,195 9,080 7,195 9,080

Other creditors 13,845 12,259 12,015 11,574

Deferred consideration 500 - 500 -

Accruals and deferred income 28,753 25,114 26,880 24,016

Disposal Proceeds Fund 613 444 507 309

Amount owed to subsidiary undertaking - - 2,134 205

53,858 47,700 52,183 45,987

Housing loans are secured by fixed charges on the Association’s housing properties.

16

15



CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR

Group Association

2012 £000

2011 £000

2012 £000

2011 £000

Housing loans 652,334 585,494 652,334 585,494

Less: deferred loan issue costs (4,454) (4,441) (4,454) (4,441)

647,880 581,053 647,880 581,053

Recycled Social Housing Grant 5,114 4,271 5,114 4,271

Disposals Proceeds Fund 5,542 3,939 5,124 3,492

658,536 589,263 658,118 588,816

Housing loans repayable by instalments:

Between one and two years 1,664 958 1,664 958

Between two and five years 17,130 12,661 17,130 12,661

In five years or more 585,298 528,548 585,298 528,548

Housing loans repayable other than by instalments 48,242 43,327 48,242 43,327

Housing loans are secured by fixed charges on the Association’s housing properties. Interest is payable at rates ranging from

0.95% to 12.84%.

Debt per unit owned at the end of the year was £28,636 (2011: £26,497).

At 31 March 2012 the Group had loan facilities of £845m (2011: £797m).

17



RECYCLED GRANT FUND

Group Association

2012 2011 2012 2011

£000 £000 £000 £000

Opening Balance 4,271 7,319 4,271 3,999

Inputs to reserve:

Grants recycled 2,689 2,360 2,689 2,360

Interest accrued 28 37 28 37

New build - (5,146) - (5,146)

Major repairs and works to existing stock - (299) - (299)

Transfer from other Group companies - - - 3,320

Closing Balance 6,988 4,271 6,988 4,271

Part of the fund is repayable within one year and part is due after more than one year. Disclosure of the closing balance is

shown in both the Notes 16 & 17.

DISPOSAL PROCEEDS FUND

Group Association

2012 £000

2011 £000

2012 £000

2011 £000

Opening Balance 4,383 4,783 3,801 4,495

Inputs to reserve:

Grants recycled 2,171 3,298 2,096 2,957

Interest accrued 28 28 24 28

Works to existing stock - (544) - (544)

Purchase and development of properties for letting (444) (3,182) (444) (3,182)

Transfers from other Group Company - - 135 47

Other movements 19 - 19 -

Closing balance 6,155 4,383 5,631 3,801

Part of the fund is repayable within one year and part is due after more than one year. Disclosure of the prior year balance

is shown in both notes 16 and 17.

18

19



PROVISIONS FOR LIABILITIES AND CHARGES

Group and Association

Pension Liability Total 25

£000

Pension Liability

Main Scheme

£000

Pension Liability

Supporting People

Scheme £000

At 1 April 2011 72 94 (22)

Movement in year 677 617 60

At 31 March 2012 749 711 38

NON EQUITY SHARE CAPITAL

Group and Association

Shares £

Opening Balance 85

Shares cancelled in the year (32)

Shares issued in the year -

Closing Balance 53

The shares are all issued and fully paid shares of £1 each. Each member of the Board is entitled to hold one share of £1 in the

Association. The shares have limited rights. They carry no entitlement to dividend, they are not repayable and do not participate

in a winding up. They carry an entitlement to vote at the Association’s Annual General Meeting and Special General Meetings.

RESERVESThe Association plans its financial affairs to ensure that each year revenue income exceeds revenue expenditure. This policy

ensures that the Association has a margin of safety to manage unexpected expenditure or shortfalls in income. The annual

surpluses ensure that Family Mosaic is able to meet its commitment to providers of private finance and to continue to provide

social housing. Unlike commercial organisations, the Association’s rules prevent the distribution of reserves. Instead, these are

applied to furthering our aims and objectives. In particular they are invested in our housing stock. As at 31 March 2012 the

Group and Associations’ reserves were as follows:

Revenue Reserves Group Association

£000 £000

At 1 April 2011 253,824 231,646

Surplus for year 36,414 36,089

Actuarial loss on pension scheme liability (749) (749)

At 31 March 2012 289,489 266,986

21

20

22



LEASE COMMITMENTS The total rental due under operating leases in the next 12 months is as follows:

Group Association

2012 £000

2011 £000

2012 £000

2011 £000

Leases which expire:

Within one year 191 1,812 191 1,812

Between two and five years 395 616 395 616

Over five years 1,000 844 1,000 844

1,586 3,272 1,586 3,272

CAPITAL COMMITMENTS

Group Association

2012 £000

2011 £000

2012 £000

2011 £000

Capital expenditure that has been contracted for but has not been provided for in the financial statements 120,381 285,387 98,430 222,170

Capital expenditure that has been authorised by the Board but has not yet been contracted for 71,034 5,170 16,379 5,170

The commitments will be met out of existing and new loan facilities, grants, and sales proceeds. These Group total

commitments of £191,415,000 represent 21% of our total tangible fixed assets at year end. (2011: £290,577,000, 36%). The

Group has grants of £31m (2011: £74m) to offset against these commitments, while the Association has £28m (2011: £69m).

PENSIONSSocial Housing Pension Scheme Family Mosaic Housing participates in the Social Housing Pension Scheme (SHPS). The Scheme is funded and is contracted

out of the State Pension Scheme.

It is not possible in the normal course of events to identify on a consistent and reasonable basis the share of underlying

assets and liabilities belonging to individual participating employers. This is because the Scheme is a multi-employer

scheme where the Scheme assets are co-mingled for investment purposes, and benefits are paid from total Scheme assets.

Accordingly, due to the nature of the Scheme, the accounting charge for the period under FRS17 represents the employer

contribution payable.

25

23

24



The Trustee commissions an actuarial valuation of the Scheme every three years. The main purpose of the valuation is to

determine the financial position of the Scheme in order to address the level of future contributions required so that the

Scheme can meet its pension obligations as they fall due.

The last formal valuation of the Scheme was performed as at 30 September 2008 by a professionally qualified actuary

using the projected unit method. The market value of the Scheme’s assets at the valuation date was £1,527 million.

The valuation revealed a shortfall of assets compared with the value of liabilities of £663 million, equivalent to a past service

funding level of 69.7%.

The Scheme actuary has prepared an actuarial report that provides an approximate update on the funding position of

the Scheme as at 30 September 2010. Such a report is required by legislation for years in which a full actuarial valuation

is not carried out. The funding update revealed an increase in the assets of the Scheme to £1,985 million and indicated

a reduction in the shortfall of assets compared to liabilities to approximately £497 million, equivalent to a past service

funding level of 80%.

The Scheme’s 30 September 2011 valuation is currently in progress and will be finalised by 31 December 2012. The results

of the valuation will be included in next year’s disclosure note. Early indications show an increasing deficit, which will need

to be considered.

Pensions Trust – Growth PlanFamily Mosaic Housing also participates in the Pensions Trust’s Growth Plan (the Plan). The Plan is funded and is not

contracted out of the state scheme. The Plan is a multi-employer pension plan.

Contributions paid into the Plan up to and including September 2001 were converted to defined amounts of pension

payable from Normal Retirement Date. From October 2001 contributions were invested in personal funds which have a

capital guarantee and which are converted to pension on retirement, either within the Plan or by the purchase of an annuity.

The rules of the Plan allow for the declaration of bonuses and / or investment credits if this is within the financial capacity

of the Plan assessed on a prudent basis. Bonuses / investment credits are not guaranteed and are declared at the discretion

of the Plan’s Trustee.

The Trustee commissions an actuarial valuation of the Plan every three years. The purpose of the actuarial valuation is to

determine the funding position of the Plan by comparing the assets with the past service liabilities as at the valuation date.

Asset values are calculated by reference to market levels. Accrued past service liabilities are valued by discounting expected

future benefit payments using a discount rate calculated by reference to the expected future investment returns.

The rules of the Plan give the Trustee the power to require employers to pay additional contributions in order to ensure

that the statutory funding objective under the Pensions Act 2004 is met. The statutory funding objective is that a pension

scheme should have sufficient assets to meet its past service liabilities, known as Technical Provisions.

PENSIONS – continued25



If the actuarial valuation reveals a deficit, the Trustee will agree a recovery plan to eliminate the deficit over a specified

period of time either by way of additional contributions from employers, investment returns or a combination of these.

The rules of the Plan state that the proportion of obligatory contributions to be borne by the Member and the Member’s

Employer shall be determined by agreement between them. Such agreement shall require the Employer to pay part of such

contributions and may provide that the Employer shall pay the whole of them.

Family Mosaic paid contributions at the rate of nil% during the accounting period. Members paid contributions at a rate they

determine under additional voluntary conditions.

As at the balance sheet date there were 12 active members of the Plan employed by Family Mosaic. Family Mosaic continues

to offer membership of the plan to its employees.

It is not possible in the normal course of events to identify on a reasonable and consistent basis the share of underlying

assets and liabilities belonging to individual participating employers. The Plan is a multi-employer scheme where the assets

are co-mingled for investment purposes, and benefits are paid from the total plan assets. According, due to the nature of the

Plan, the accounting charge for the period under FRS17 represents the employer contribution payable.

The valuation results at 30 September 2008 were completed in 2009 and have been formalised. The valuation of the

scheme was performed by a professionally qualified actuary using the Projected Unit Method. The market value of the Plan’s

assets at the valuation date was £742 million and the Plan’s Technical Provisions (i.e past service liabilities) were £771

million. The valuation therefore revealed a shortfall of assets compared with the value of liabilities of £29 million, equivalent

to a funding level of 96%.

The financial assumptions underlying the valuation as at 30 September 2008 were as follows:

% p.a.

Investment return pre retirement 7.6

Investment return post retirement

Actives/Deferreds 5.1

Pensioners 5.6

Bonuses on accrued benefits 0.0

Rate of price inflation 3.2

In determining the investment return assumptions the Trustee considered advice from the Scheme Actuary relating to the

probability of achieving particular levels of investment return. The Trustee has incorporated an element of prudence into the

pre and post retirement investment return assumptions such that there is a 60% expectation that the return will be in excess

of that assumed and a 40% chance that the return will be lower than that assumed over the next 10 years.

The preliminary triennial valuation results as at 30 September 2011 were received in March 2012 but, as the valuation will not be

finalised until later this year, this disclosure note must still refer to the 2008 valuation results as the last completed valuation.




PENSIONS – continued

The Scheme actuary’s preliminary result for 30 September 2011 shows that the Plan’s assets at that date were £780m and

the Plan’s Technical Provisions (i.e. past service liabilities) were £928m. The valuation therefore revealed a shortfall of assets

compared with the value of liabilities of £148m, equivalent to a funding level of 84%.

If an actuarial valuation reveals a shortfall of assets compared to liabilities the Trustee must prepare a recovery plan setting

out the steps to be taken to make up the shortfall.

The Pensions Regulator has the power under Part 3 of the Pensions Act 2004 to issue scheme funding directions where

it believes that the actuarial valuation assumptions and / or recovery plan are inappropriate. For example the Regulator

could require that the Trustee strengthens the actuarial assumptions (which would increase the scheme liabilities and

hence impact on the recovery plan) or impose a schedule of contributions on the Plan (which would effectively amend the

terms of the recovery plan). A copy of the recovery plan in respect of the September 2008 valuation was forwarded to The

Pensions Regulator on 18 December 2009, as is required by legislation.

Following a change in legislation in September 2005 there is a potential debt on the employer that could be levied by the

Trustee of the Plan and the Pensions Act 2011 has more recently altered the definition of Series 3 of the Growth Plan so that

a liability arises to employers from membership of any Series except Series 4. The debt is due in the event of the employer

ceasing to participate in the Plan or the Plan winding up.

The debt for the Plan as a whole is calculated by comparing the liabilities for the Plan (calculated on a buy-out basis i.e. the

cost of securing benefits by purchasing annuity policies from an insurer, plus an allowance for expenses) with the assets of

the Plan. If the liabilities exceed assets there is a buy-out debt.

The leaving employer’s share of the buy-out debt is the proportion of the Plan’s liability attributable to employment with

the leaving employer compared to the total amount of the Plan’s liabilities (relating to employment with all the currently

participating employers). The leaving employer’s debt therefore includes a share of any ‘orphan’ liabilities in respect

of previously participating employers. The amount of the debt therefore depends on many factors including total Plan

liabilities, Plan investment performance, the liabilities in respect of current and former employees of the employer, financial

conditions at the time of the cessation event and the insurance buy-out market. The amounts of debt can therefore be

volatile over time.

Family Mosaic Housing has been notified by the Pensions Trust of the estimated employer debt on withdrawal from the Plan

based on the financial position of the Plan as at 30 September 2011. As of this date the estimated employer debt was £0.2m.

Local Government Pension SchemeFamily Mosaic Housing also is one of a number of employers that participates in the Local Government Pension Scheme,

which is a defined benefit scheme based on final pensionable salary. There are 39 active members, 15 deferred members

and 8 pensioners in the main scheme, plus 5 active members in a separate supporting people scheme.

This scheme is closed to new members of staff. Family Mosaic Housing Association’s contribution rate over the accounting

period was 19% of Pensionable Pay for the main scheme and 15% for the supporting people scheme.

25



The fund is valued every three years and the most recent actuarial valuation was carried out as at 31 March 2010. Liabilities

are valued on an actuarial basis using the projected unit method which assesses the future liabilities discounted to their

present value.

The principal assumption used by the actuaries for FRS17 purposes were:

31 March 2012 31 March 2011 31 March 2010

% p.a. Real% % p.a. Real% % p.a. Real%

Price Increases (RPI) 3.3 - 3.5 - 3.9 -

Salary Increases 4.7 1.4 5 1.5 5.4 1.5

Pension Increases 2.5 -0.8 2.7 -0.8 3.9 -

Discount Rate 4.6 1.3 5.5 1.9 5.5 1.5

CPI has been assumed at 0.8% below RPI.


LOCAL GOVERNMENT PENSION SCHEME – continued

25




AssetsThe return on the Fund, on a bid value basis, for the year to 31 March 2012 is estimated to be 8% for the main scheme and

8% for the supporting people scheme.

Local Government Pension Scheme, Main Scheme

The estimated employer asset share (bid value) is as follows:

31 March 2012 31 March 2011

£000 % £000 %

Equities 2,990 57 2,738 55

Gilts 105 2 647 13

Cash 52 1 100 2

Other 2,098 40 1,494 30

Total 5,245 100 4,979 100

The expected return on assets was as follows.

Asset Class 1 April 2012 % p.a

1 April 2011 % p.a.

1 April 2010 % p.a.

Equities 6.3 7.4 7.5

Gilts 3.3 4.4 4.5

Cash 3.0 3.0 3.0

Other 6.3 7.4 7.5

Assets and liabilities on the balance sheet of Family Mosaic Housing are analysed below:

Net Pension Asset as at 31 March 2012 £000

31 March 2011 £000

31 March 2010 £000

Present Value of Funded Obligation 5,941 5,060 6,446

Fair Value of Scheme Assets (bid value) 5,245 4,979 4,186

Net liability 696 81 2,260

Present value of unfunded obligation 15 13 16

Net liability in Balance Sheet 711 94 2,276

25



Local Government Pension Scheme , Main Scheme – continued

The balance sheet amounts for the previous four years were as follows:

Amounts for the current and previous four periods 31 March 2012 £000

31 March 2011 £000

31 March 2010 £000

31 March 2009 £000

31 March 2008 £000

Defined Benefit Obligation (5,956) (5,073) (6,462) (3,289) (3,340)

Scheme Assets 5,245 4,979 4,186 2,456 2,619

%��& (711) (94) (2,276) (833) (721)

Experience adjustments on scheme liabilities 1 786 - - (311)

Experience adjustments on scheme assets 38 152 736 (441) 329

Amounts recognised in Income and Expenditure and reconciliations of reserve movement:

Year to 31 March 2012

£000


£000

Current service cost 107 153

Interest on obligation 276 313

Expected return on Scheme assets (341) (322)

Past service cost - (580)

Total 42 (436)

Actual return on Scheme assets 380 238

The actuarial losses/gains recognised are as follows:

Actual return less expected return on scheme assets 38 (83)

Experience (loss)/gain (1) 1,021

Changes in assumptions underlying the present value of the Scheme liabilities (724) 651

Actuarial (loss)/gain recognised (687) 1,589

Employer Contributions 112 157

Net movement in reserves 617 (2,182)





Local Government Pension Scheme, Supporting People Scheme – continued

Assets and liability on the balance sheet of Family Mosaic Housing in respect of the Supporting People Scheme

are as follows:

Employer Asset share – Bid Value – Supporting People Scheme

31 March 2012 31 March 2011

£000 % £000 %

Equities 209 57 173 55

Gilts 7 2 41 13

Cash 4 1 6 2

Other 147 40 94 30

Total 367 100 314 100

Assets and liabilities on the balance sheet of Family Mosaic in respect of the supporting people scheme are as follows:


31 March 2011 £000

Present Value of Funded obligation 405 292

Fair Value of scheme assets (bid value) 367 314

Net liability/(asset) in Balance Sheet 38 (22)

The balance sheet amounts for the current and previous two periods were as follows:


31 March 2011 £000

31 March 2010 £000

Defined Benefit obligation (405) (292) (305)

Scheme Assets 367 314 272

Surplus/(Deficit) (38) 22 (33)

Experience adjustments on Scheme assets 2 (5) 43

25



Local Government Pension Scheme, Supporting People Scheme – continued

Amounts recognised in Income and Expenditure and reconciliation of reserve movement:


£000


£000

Current service cost 24 29

Interest on obligation 17 21

Expected return on Scheme assets (23) (20)

Past service cost - (24)

Total 18 6

Actual return on Scheme assets 25 288

The actuarial losses/gains recognised are as follows:

Actual return less expected return on scheme assets 2 (5)

Changes in assumptions underlying the present value of the Scheme liabilities (64) 47

Actuarial (loss)/gain recognised (62) 42

Employer Contributions 20 19

Net movement in reserves 60 (55)

NHS Pension We have 48 staff who are members of the NHS Pension Scheme. Staff pay between 5% and 6.5% in contributions and we

as the Employer pay 14%.

The NHS Pension Scheme does not have a real pension fund but as a statutory scheme benefits are fully guaranteed by the

Government. Contributions from both members and Employers are paid to the Exchequer which meets the cost of scheme

benefits. The Exchequer also pays for the cost of increasing benefits each year by the rate of inflation. This extra cost is not

met by contributions from scheme members and Employers.

CONTINGENT LIABILITIES At 31 March 2012 there were £nil of contingent liabilities in respect of claims arising in the ordinary course of business.

(2011: £nil).


26

25



RELATED PARTY TRANSACTIONSOne member of the Board during the year was an employee of the London Borough of Hackney, a local authority having

nomination rights over tenancies for certain Group properties. This member has now resigned. All transactions with the

council are on normal commercial terms and no advantage is provided by this position.

Tenants who are members of the Board have tenancies which are on normal commercial terms and as such their position

does not afford them any additional benefits compared with other tenants.

SUBSIDIARY UNDERTAKINGS

Group Association

2012 £000

2011 £000

2012 £000

2011 £000

Investment in assets and liabilities - - 824 -

Investment in shares - - 2,761 11

- - 3,585 11

Family Mosaic Housing exerts dominant influence over the affairs of:

Charlton Triangle Homes

This is a company registered under the Companies Act and also with the Charity Commission and the Homes & Communities

Agency. The Association took the transfer of 1,246 properties from the London Borough of Greenwich on 29th March 1999

and has undertaken a substantial programme of repairs, improvement and upgrade of the properties transferred. At the

current date over 1,000 properties have been refurbished and 173 new homes have been built. Family Mosaic Housing

exercises control through nominees on the Board.

Old Oak Housing Association

This is a company registered under the Companies Act, the Charity Commission and the Homes & Communities Agency. The

Association was established initially to manage 669 properties transferred to Family Housing Association on the 17th March

1999. The properties which were transferred were subject to refurbishment over a five year period. The original programme

of works has now been completed and the properties are to remain in the ownership of Family Mosaic, though further works

will be done on properties where tenants declined to have work done under the original programme. Family Mosaic Housing

exercises control through nominees on the Board.

Family Mosaic Home Ownership

This is a not-for-profit Registered Provider formed in 1989 under the Industrial and Provident Societies Act, specialising

in the development and sale of shared ownership homes and homes for sale on the open market. The appointment and

dismissal of all Board Members is controlled by Family Mosaic Housing.

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27



In Touch

This is a charity registered with the Charity Commission and under the Companies Act. In Touch was acquired in 2011 from

the Hyde Group and manages care and support contracts and Home Improvement Agencies across the south of England,

complementing Family Mosaic’s Care and Support business. Family Mosaic controls the appointment of the Trustees.

Service Charge Management Companies

Family Mosaic Housing has a majority shareholding in three small companies which exist to administer service charges on

three estates where there are owner-occupiers in addition to Family Mosaic tenants.

Harris Lodge Residents Company Ltd (Private Company limited by share guarantee with no share capital).

Oxley Close (Number Two) Residents Company Ltd (Family Mosaic Housing owns 91% of the share capital).

Maple Lodge Residents Company Ltd (Family Mosaic Housing owns 94% of the share capital).

Family Mosaic Housing Development Company Ltd

A development trading company limited by shares (£2,760,000 share capital).

Family Mosaic Thurrock Limited

A development company limited by guarantee (no shares).

Family Mosaic Housing Services Limited:

A trading company limited by shares (£1,000 share capital).

Family Mosaic Housing acquired In Touch with effect from 31 July 2011 for cash consideration of £1,324k, with up to a

further £500k of contingent consideration payable after one year.

Net Assets acquired £000

Debtors 1,824

Cash at bank and in hand 1,186

Creditors (2,186)

824

Goodwill 1,000

1,824

��#'

Cash 1,324

Deferred consideration 500

Total consideration 1,824

SUBSIDIARY UNDERTAKINGS – continued28



The Board has considered the fair value of the assets acquired and has concluded that this is equal to their book value.

During the year, the above acquisition contributed £9,480k of the Group’s income, £8,892k of expenses and £588k of

operating surplus.

In Touch made a deficit after tax of £68k in the year ended 31 March 2012 (2011: £55k deficit), of which a £410k deficit arose

in the period from 1 April 2011 to 31 July 2011. The summarised statement of financial activities for the period from 1 April

2011 to the effective date of acquisition is as follows:

£000

Total incoming resources 4,992

Net incoming resources before charitable donations (160)

Charitable donations (250)

Net incoming resources after charitable donations (410)

There were no recognised gains or losses in the period ended 31 July 2011 other than the deficit of £410k above.

The goodwill of £1,000k arising on the acquisition was fully written off in the year reflecting the short term nature of the

contracts acquired with In Touch.

INCORPORATIONThe Association is registered with the Homes and Communities Agency and prepares its financial statements under the

Accounting Requirements for Registered Social Landlords General Determination 2006. It is incorporated under the Industrial

and Provident Societies Act 1965 and registered in England.

SUBSIDIARY UNDERTAKINGS – continued28



29


Head Office Albion House

20 Queen Elizabeth Street

London

SE1 2RJ

Pitsea Pembroke House

11 Northlands Pavement

Pitsea

Essex

SS13 3DX

Charlton Triangle Homes9-10 Cedar Court

Fairlawn

Cherry Orchard Estate

London

SE7 7EH

Old Oak HAOld Oak House

43-45 Erconwald St

London

W12 0BP

In Touch

Frederick House

42 Frederick Place

Brighton

BN1 1EA

Where to find us

www.familymosaic.co.uk

Telephone: 020 7089 1000

Paintings by Christopher Corr

Concept and Design by

Andrew Kingham & Matthew Grenier

Family Mosaic financial accounts 2012

Documents

Transcript of Family Mosaic financial accounts 2012