Company Information

Board of Directors:

Company Secretary

Paul Davey                              

Company Information (cont)

Executive Management Team

The members of the Executive Management Team who held office in the year are listed below with their current Directorate responsibilities.

Directors' report

The Directors present their report and the audited financial statements for the year ended 31 March 2017.   

Legal Status

Dividends

The company is limited by guarantee and does not have a share capital, or shareholders. 

Directors and directors' interests

The directors who held office during the period are detailed on page 3. The company has no shares or shareholders.

Political and charitable contributions

The Company made no contributions to political or charitable organisations.

Employment of Disabled Persons

THH promotes equality of opportunity in its recruitment, selection, training and development policies and practice.

We welcome applications from applicants with disabilities and evaluate solely on ability to carry out the duties of the job, taking into account any reasonable adjustments required.

Communications Policy

The Company communicates all matters of financial or other interest to staff through its weekly electronic in-house newsletter, through team meetings or through other media as appropriate.

Going Concern

The company has disclosed its business activities, principal risks and uncertainties in the strategic report on pages 7 & 8. The business has significant reserves and retains a contractual relationship with its main client until 2020. The directors have a reasonable expectation that the company is well placed to successfully continue its business while managing risk and uncertainty.

The company has reported a loss of £741,687 following the restructuring of the business. The business was well prepared to manage the loss this year with substantial reserves to ensure the restructuring does not impact on the viability of the business. 

Directors' declaration

The directors who held office at the date of approval of this directors' report confirm that, so far as they are each aware, there is no relevant audit information of which the Company's auditor is unaware; and each director has taken all the steps that they ought to have taken as a director to make themselves aware of any relevant audit information and to establish that the Company's auditor is aware of that information. 

Auditor

In accordance with section 489 of the Companies Act 2006 a resolution for the re-appointment of KPMG LLP as auditors to the Company is to be proposed at the forthcoming Annual General Meeting.

The Directors' Report was approved by the Board on 18 September2017 and signed on its behalf by:

Paul Davey 

Company Secretary

Jack Dash House

2 Lawn House Close

London E14 9YQ

Strategic Report

The Directors present their strategic report for the year ended 31 March 2017.

Business Review

Economic pressures and national austerity policies continue to drive resources lower. This is evident in Government policy to reduce rental income to the HRA which in-turn reduces the resources available to THH through the management fee. The implementation of a five-year saving strategy starting in 2017/18 has helped emphasise the need for THH to focus on efficiency and value-for-money, as a result THH has initiated a Company-wide transformational change programme including a review of resources and service delivery models in 2016/17. This will ensure resources are better focussed on the needs of our residents and meeting the Council's aspirations for the service.

Results & Performance

The Company's principal activity during the year is the provision of housing management services to residents of LBTH. The Company also manages delivery of the planned and responsive repairs and maintenance programme and manages delivery of the housing investment programme for LBTH.

Financial

The Company received a management fee of £33.376m (2015/16: £35.116m) to manage and maintain LBTH's HRA stock. Although managed by the Company, the cost of repairs and maintenance and investment programmes are shown in LBTH's financial accounts.

This year the Company generated a profit of £336,313 (2015/16: £600,960) before exceptional restructuring costs of £1.078m for redundancy, severance and pension liabilities from transformation projects resulting in a loss for the year of £741,687. 

Principal Risks and Uncertainties

The Board has overall responsibility for identifying and mitigating the principal risks it is willing to take to achieve the Company's strategic objectives. This is done within the Company's system of internal control including effective risk management.

Strategic risks are considered by their potential to impact on the delivery of the aims, objectives and the provision of services together with the predicted likelihood of the actual event or occurrence and the score registered on a risk matrix. A member of EMT is assigned as being the risk owner and assumes the responsibility of ensuring effective mitigation actions are in place.

The key risks faced by the business include changes in Central Government and / or Local Government policy which could impact on LBTH's decision to extend or award new contracts. Customer satisfaction and performance is fundamental to influencing LBTH when reviewing the contract; with recent, continued improvement in both these areas LBTH has recently extended the contract to 2020. 

The business has set aside appropriate provisions to meet its liabilities and has accumulated reserves to facilitate service delivery and protect the business against uncertain risk. 

Key Performance Indicators

Paul Davey 

Company Secretary

Jack Dash House

2 Lawn House Close

London E14 9YQ

Statement of Internal Control 

The Board of Directors acknowledges its ultimate responsibility for ensuring that the Company has in place a system of controls that is appropriate to the various business environments in which it operates. These controls are designed to give reasonable assurance with respect to:

• the reliability of financial information used within the Company or for publication;

• the maintenance of proper accounting records; and

• the safeguarding of assets against unauthorised use or disposal.

It is the Board of Directors' responsibility to establish and maintain systems of internal financial control. Such systems can only provide reasonable and not absolute assurance against material financial misstatement or loss. The system of financial control includes the following key elements:

• formal policies and procedures are in place, including the documentation of key systems and rules relating to the delegation of authorities, which allow the monitoring of controls and restrict the unauthorised use of the Company's assets. Within the Company's Financial Regulations & Standing Orders authority levels are specified for all authorised signatories and delegated authorities documented; 

• experienced and suitably qualified staff to take responsibility for important business functions. Annual employee development review procedures have been established to maintain standards of performance;

• regular internal audit to undertake reviews on the effectiveness of internal controls;

• the establishment of written policies and procedures and a scheme of delegated authorities designed to ensure that proper accounting records are maintained;

• a risk management framework in which priority risks are reviewed by the Chief Executive and senior managers;

• forecasts and budgets are prepared which allow the Board of Directors and management to monitor the key business risks and financial objectives and progress towards financial plans set for the period and the medium term. Regular management accounts are prepared promptly, providing relevant, reliable and up-to-date financial and other information and significant variances from budgets are investigated as appropriate;

• all significant new initiatives, major commitments and investment projects are subject to formal authorisation procedures, through the Board of Directors and officers of the Company;

• the Board of Directors reviews reports from management, from internal auditors and from the external auditors to provide reasonable assurance that control procedures are in place and are being followed. The report by management includes a general view of the major risks facing the Company and the Risk Management department  monitors these risks and provides countermeasures to the risks where necessary; 

• formal procedures have been established for instituting appropriate action to correct weaknesses identified from the above reports.

During the period management has received regular reports from the internal auditors covering the effectiveness of the systems of operational and financial controls. On behalf of the Board, management has reviewed the effectiveness of systems of internal financial control in existence for the year ended 31 March 2017. No weaknesses were found in the internal controls which resulted in material losses, contingencies or uncertainties which require disclosure in the financial statements. The Board of Directors is satisfied that this remains the case up to the signing of these documents. 

Statement of Directors' Responsibilities in respect of the Strategic Report, the Directors' Report and the Financial Statements

This letter was tabled and agreed at the meeting of the Board of Directors on 18 September 2017.

Independent Auditor's Report to the Members of Tower Hamlets Homes Ltd

Respective responsibilities of directors and auditor

As explained more fully in the Directors' Responsibilities Statement set out on page 11 the directors are responsible for the preparation of the financial statements and for being satisfied that they 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 Ethical Standards for Auditors.

Scope of the audit of the financial statements

A description of the scope of an audit of financial statements is provided on the Financial Reporting Council's website at-  www.frc.org.uk/auditscopeukprivate 

Opinion on financial statements

Opinion on other matters prescribed by the Companies Act 2006. 

In our opinion the information given in the Strategic Report and the Directors' Report for the financial year is consistent with the financial statements. 

Based solely on the work required to be undertaken in the course of the audit of the financial statements and from reading the Strategic report and the Directors' report:

• We have not identified material misstatements in those reports; and  

• In our opinion, those reports have been prepared in accordance with the Companies Act 2006.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

• adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

• the financial statements are not in agreement with the accounting records and returns; or

• certain disclosures of directors' remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit.

Harry Mears

(Senior Statutory Auditor)

 For and on behalf of KPMG LLP, Statutory Auditor

 Chartered Accountants

 15 Canada Square

 Canary Wharf

 London

 E14 5GL

Statement of Comprehensive Income

For the year ended 31 March 2017

The notes on pages 18 - 29 form part of these statements.  

Statement of Financial Position

At 31 March 2017

The notes on pages 18 - 29 form part of these statements.  

The financial statements were approved by the board on 18 September 2017 and were signed on its behalf by:

Ann Lucas

Chair

Jack Dash House, 2 Lawn House Close, London E14 9YQ

Reg. No. 06249790

Statement of Cash Flows

For the year ended 31 March 2016

The notes on pages 18 - 29 form part of these statements.

Statement of Changes in Equity

For the year ended 31 March 2017

The notes on pages 18 - 29 form part of these statements.

Notes

(forming part of the financial statements)

1. Accounting policies

The following accounting policies have been applied in dealing with items which are considered material in relation to the Company's financial statements. 

Status of Company & Composition of the Board

Basis of preparation

Turnover

Notes - continued

Fixed assets and depreciation

Leases

Operating lease rentals are charged to the Income & Expenditure Account on a straight line basis over the period of the lease.

Post-retirement benefits

Pension reimbursement rights

It has been agreed with The London Borough of Tower Hamlets that where a deficit arises that they will provide an indemnity in respect of the pension obligations of the company.  Accordingly where a deficit arises, an equivalent reimbursement right asset is recognised on the balance sheet to reflect the Council indemnity. The change in value of this reimbursement right asset over the year is shown in the statement of comprehensive income. 

Taxation

The charge for taxation is based on the result for the period and takes into account taxation deferred because of timing differences between the treatment of certain items for taxation and accounting purposes. Except where otherwise required, full provision is made without discounting.

Notes - continued

Cash and liquid resources

Cash, for the purpose of the cash flow statement, comprises cash in hand and bank deposits repayable on demand. Liquid resources are current asset investments which are disposable without curtailing or disrupting the business and are either readily convertible into known amounts of cash at or close to their carrying values or traded in an active market.  

2. Analysis of turnover on ordinary activities before taxation

Turnover is made up exclusively of the management fee, the sole activity being management of the Council's housing stock.

3. (Loss)/Profit on ordinary activities before taxation

4. Remuneration of directors

The Directors are defined as being members of Tower Hamlets Homes Limited Main Board. None of the Directors received any remuneration or taxable benefits, and none were members of the pension scheme.

Notes - continued 

5. Staff numbers and costs

The average number of full time equivalents employed by the Company during the period, analysed by service, was as follows:

The aggregate payroll costs of these persons were as follows:

No further termination benefits were agreed in the year.

Notes - continued

6. Interest receivable and similar charges

7. Taxation

A. Analysis of charge in period

B. Current tax reconciliation

Factors affecting the tax charge for the current period:

The tax assessed for the year differs from the standard rate of corporation tax. The differences are explained below.

Notes - continued

8. Tangible fixed assets

9. Debtors & Prepayments

10. Creditors: amounts falling due within year

Notes - continued

11. Provisions for Liabilities and Charges

Provisions have been increased during the year in light of the business transformation process that is in progress.

12. Reserves

Notes - continued

13. Pension Scheme

The required information is set out below:

Financial Assumptions

Mortality Assumptions

Projected Costs to 31 March 2018

Notes - continued

C. FRS102 Pension Scheme Disclosures at 31 March 2017

Notes - continued

D. FRS102 Pension Scheme Disclosures at 31 March 2016

Notes - continued

14.  Analysis of adjustments to cash flows

15. Analysis of movement of net funds

16.  Commitments

The company holds one property lease, on offices the Harford Centre, Harford Street, E1. THH signed a ten year lease for office space in May 2013 at a rent of £135,000 per year.

Notes - continued

17. Related party disclosures

The Company's main source of income is a management fee for the management of The London Borough of Tower Hamlets housing stock: this amounted to £33,375,996 (2015-16: £35,116,000), at the end of the financial period. Of this £2,558,000 relates to reimbursement of employer pension contributions (2015-16: £2,605,000)

There was a related party creditor balance of £949,268 at 31 March 2017 (£696,887 at 31 March 2016)

In the event of the Company being wound up, The London Borough of Tower Hamlets undertakes to contribute such amount as may be required for the payment of the debts and liabilities of the organisations providing this amount does not exceed one pound. The exception to this is the reimbursement rights asset relating to the pension liability which fully covers this. After the satisfaction of all debts and liabilities the remaining assets will be transferred to the Housing Revenue Account (as defined in the 1989 Act) of The London Borough of Tower Hamlets.

Three of the Board Members of Tower Hamlets Homes also hold senior management positions or Chair for organisations that THH transacts with throughout the year, as follows:

• Somali Integration Team - £44,919 expenditure

• Bromley by Bow Centre - £2,130 expenditure

• Collingwood Tenants and Residents association - £868 expenditure

18. Contingent Liability

The Company had no contingent liabilities as at 31 March 2017 (2016: Nil).

19. Ultimate parent company and parent undertaking of larger group of which the company is a member

The Company is a wholly owned subsidiary of The London Borough of Tower Hamlets, although the Council has determined that the accounts of Tower Hamlets Homes Ltd are not sufficiently material to warrant consolidation into its own accounts.