Company registration number 07749192 (England and Wales)
HCA number: 4702
FIRST PRIORITY HOUSING ASSOCIATION LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2023
FIRST PRIORITY HOUSING ASSOCIATION LIMITED
CONTENTS
Page
Company information
1
Strategic report
2 - 5
Directors' responsibilities statement
6
Directors' report
7 - 8
Independent auditor's report
9 - 10
Statement of income and retained earnings
11
Balance sheet
12
Statement of changes in equity
13
Statement of cash flows
14
Notes to the financial statements
15 - 23
FIRST PRIORITY HOUSING ASSOCIATION LIMITED
COMPANY INFORMATION
- 1 -
Directors
Mr Kevin Joseph Kelly
Miss Zarina Naqvi
Mr Andrew John Newens
Mr Stephen John Pearson
Mr Robert Iain Sim
Mr John Bernard Higgins
Company number
07749192
Registered office
The Innovation Centre
Hornbeam Park
Hookstone Road
Harrogate
UK
HG2 8QT
Auditor
Xeinadin Audit Limited
Riverside House, Kings Reach Business Park
Yew Street
Stockport
Cheshire
United Kingdom
SK4 2HD
Business address
The Innovation Centre
Hornbeam Park
Hookstone Road
Harrogate
UK
HG2 8QT
FIRST PRIORITY HOUSING ASSOCIATION LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 2 -

The directors present the strategic report for the year ended 28 February 2023.

Fair review of the business

First Priority Housing Association Limited made a profit of £9.5k in the year ended 28th February 2023. While this is relatively small based on our turnover of £5.7m, it is better than our target for 2022/23 which was to break even.

 

Our turnover increased 13.8% to £5.7m reflecting a combination of increase in number of units in management as well as increase in occupancy. Income from void charges continues to decline reflecting increased level of occupancy.

 

During the year we secured an additional 63 beds replacing some 34 beds lost through a combination of end of lease, asset disposals and closure of services. As the changes occurred throughout the year the full year impact of these properties is not reflected in the numbers. Roughly 50% of the new units is from an existing landlord replacing units disposed of in previous years.

 

Operational Performance

The below table sets our Operational Key Performance Indicators for 2021/22, 2022/23 and comparison to average of our peers based on their published performance.

 

Description

2022

2023

Target

Rent Collection

100.95%

96.8%

99.0%

Arrears as % of Rent Charged

6.65%

7.68%

<=8%

Repairs completed within timescales

 

 

 

Emergency

98.7%

98.0%

100.0%

Urgent

96.8%

95.0%

97.5%

Routine

99.4%

94.3%

100.0%

Building Safety

 

 

 

Compliance – Fire

91.6%

100%

100.0%

Compliance – Gas

100.0%

99.3%

100.0%

Compliance – Water

98.9%

100%

100.0%

Compliance – Asbestos

100%

100%

100.0%

Compliance – Electricity

100%

100%

100.0%

Property Usage

 

 

 

Occupancy

84.8%

87.9%

87.5%

Unlettable Beds

16

3

0

 

 

Rent Collection

 

Income collection is down on previous year and on target for the year. Just under half of the shortfall relates to a single scheme where we had delays in getting the scheme into payment due to lack of resources in the local authority. We have subsequently got this and the other new schemes into payment.

 

 

Repairs

 

The level of repairs activity increased significantly in 2022/23 with over 30% increase in the volume of jobs on the previous year. This put a strain on our supply chain and consequently performance within timescales was lower than targeted.

 

There was only one gas safety check outstanding at the end of the year due access issues with the property. The check was completed after the year end.

 

FIRST PRIORITY HOUSING ASSOCIATION LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 3 -

Compliance with the HCA Governance and Viability Standard

The Board are not in a position to confirm First Priority has met the Governance & Viability Standard and continue to engage proactively with the Regulator with our stated aim of achieving compliance as soon as is possible.

 

Compliance with NHF Code of Governance

The Board has adopted the NHF Code of governance and following a review can confirm it is compliant with the Code.

 

Risks

The Board carried out regular reviews throughout the year to ensure it has appropriate mitigation and management in place to manage the risk it faces. In addition, after year end the Board carried out a comprehensive review of the risks to First Priority the outcome of which is reflected in the risk register set out below.

 

Risk

Risk Category

Short Description

Net Risk Score

1

Sustainability of business

Ability to achieve growth to establish critical mass

16

2

Sustainability of business

Lack of management capacity to manage growth

16

3

Sustainability of business

Poor Quality of Service to Customers

16

4

Health & Safety

Compliance with all statutory

12

5

Counterparty risk

Reliant on third parties for delivery of services to properties and to tenants, not all of which is within our control

12

6

Asset Management

Appropriateness of properties in management

12

7

Key person risk

Organisation is heavily dependent on single employee

12

8

Sustainability of business

Break Clause with largest senior landlords

12

9

Regulatory risk

Regulatory compliance

12

10

Reputational Risk

Rebuilding trust in First Priority's ability to deliver services following Creditor Voluntary Agreement

6

 

 

Post year end

 

Since the financial year end, we have secured a further 18 beds with 3 new counterparties and are in negotiations to manage a further 100 units which we hope to secure before the year end.

 

To address management capacity we have recruited a Head of Operations whose main focus will be to improve tenant engagement and ensure our services are delivered at a high standard.

FIRST PRIORITY HOUSING ASSOCIATION LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 4 -

Value for Money

The value for money standard 2018 sets out the required outcomes for registered providers, as well several specific expectations including requirements to publish value for money metrics in the annual accounts.

 

This strategy also considers specifically that First Priority has appropriate targets in place for measuring value for money in delivering strategic objectives and that these are regularly monitored, and performance is reported against these targets.

 

On an annual basis, First Priority will: -

•    Review its approach to VfM

•    Report progress against the key VfM metrics and

•    Report progress towards corporate improvement targets.

 

We have calculated the metrics and will use this information to set out the priority that First Priority now places on VFM and on its future priorities. We are determined to meet this current and any future standard and to evidence this to tenants and other stakeholders.

 

The table below sets out our performance for 2022/23 against prior years and budget together with targets for 2023/24.

 

Metric

2021

2022

2023

Targets for 2023

Targets for 2024 (Budget)

Reinvestment % of Lease Liability

0.20%

0.27%

0.24%

0.25%

0.25%

New Supply

12

1

63

35

20

New Supply Delivered

2.9%

0.0%

15.4%

8.3%

5.0%

Gearing %

100%

100%

100%

100%

100%

Operating Surplus before Lease costs as % Lease Costs

101.18%

101.57%

100.33%

>=100%

>=100%

Headline Social Housing Cost per unit £k

11.56

12.93

13.7

13.95

16.54

Operating Margin %

0.67%

0.79%

0.16%

>=0%

>=0%

Return on Capital Employed

6.6%

7%

2%

>=0%

>=0%

Occupancy Rate

83%

85%

87.70%

>=87.5%

>=90%

Overhead as % of Turnover

5.74%

5.96%

4.94%

6.20%

7.11%

 

As First Priority leases all of its stock we have amended some of the calculations to reflect the spirit of the VfM standard and establish a comparable figure against other similarly financed Housing Associations.

 

Reinvestment as % of lease liability is the total expenditure on major repairs expressed as a % of lease liability. Given the nature of the lease agreements this typically equates with 0.25% of lease liability at outset and grows over time as the average number of years reduces.

 

As First Priority leases all of its properties it is effectively operating at 100% gearing. We have used this figure instead of the one outlined in the standard as we believe this more accurately reflects the financing arrangement for the properties we manage.

 

Typically Housing Association’s measure Earnings before Interest, Taxation, Depreciation, Amortisation and Major repairs as a measure of cash generation. As First Priority leases all of its stock the measure is not relevant. Consequently, we have chosen to use Operating Surplus before Lease Costs as a reasonable proxy for this figure.

 

Our headline cost per unit was up on last year and reflects a significant increase in the level of repairs expenditure experienced within the year. As some of the cost, notably lease cost, is a function of occupancy levels we expect the overall cost per unit to increase in 23/24 to reflect higher occupancy.

 

Due to the nature of our business model, we do not expect to make significant surpluses and consequently we continue to budget based on a break-even position, which in turn means very low Return on Capital Employed.

FIRST PRIORITY HOUSING ASSOCIATION LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 5 -

VFM target 2022/23

Results

Increase occupancy on all lettable properties to 87.5%

We achieved 87.9%. We will retain the target of 87.5% as we expect to grow in 2023/24.

Reduce Cost of management to reflect number of tenancies in management

We renegotiated our management contract and reduced the overall cost of management from £1683 in 2021/22 to £1425 in 2022/23, a 15% reduction in the cost of management

Build on work to date in the Specialised Supported Housing Network (SSHN) on benchmarking costs

This proved difficult to achieve given the relatively high inflation and time instead was spent on managing tenant exposure to increase in utility costs.

 

VFM targets for 2023/24

 

 

 

Comparison to peers

 

The table below compares our performance against peers with less than 1000 units in management.

 

Metric

First Priority

Average of 4 Peers (members of SSHN)

Units in Management

408

736

New Supply Delivered

15.4%

0.6%

Headline Social Housing Cost per unit £000

12.9

15.1

Headline Social Housing Cost per unit £000 (excluding Lease Costs)

7.2

5.8

Operating Margin

0.16%

0.61%

Operating Surplus before lease costs as % Lease Costs

100.33%

101.07%

Return on Capital Employed

1.7%

14.3%

 

We have taken the results of 4 of our peers within the Specialist Social Housing Network (SSHN) who operate similar business model to us and have, on average, less than 1,000 units in management.

 

Operating margin before lease costs excludes non-housing income/expenditure to isolate the cash generated covering the lease. Unlike other we do not expect to be much higher than 100% as a result of the way we structured our business.

 

On behalf of the board

Mr John Bernard Higgins
Director
Mr Robert Iain Sim
Director
11 August 2023
FIRST PRIORITY HOUSING ASSOCIATION LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 6 -

The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

 

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

 

 

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

FIRST PRIORITY HOUSING ASSOCIATION LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 7 -

The directors present their annual report and financial statements for the year ended 28 February 2023.

Principal activities

The principal activity of the company continued to be that of the provision of specialised supported social housing accommodation.

 

The Company is a not-for-profit organisation. The Articles of Association of the Company prohibit any of the shareholders from participating in the distribution of any profits of the Company.

The results for the year are set out on page 11.

As this is a non-profit organization no dividends are payable.

Directors

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

Mr Kevin Joseph Kelly
Miss Zarina Naqvi
Mr Andrew John Newens
Mr Stephen John Pearson
Mr Robert Iain Sim
Mr John Bernard Higgins
Financial instruments

 

Objectives and policies

 

The Company holds or issues financial instruments in order to achieve three main objectives, being:

i) to finance its operations;

 

ii) to manage its exposure to interest, credit and liquidity risks arising from its operations and from its sources of finance; and

 

iii) for trading purposes.

 

In addition, various financial instruments (e.g. accounts receivable, accounts payable, accruals and prepayments) arise directly from the Company's operations.

 

Transactions in financial instruments result in the Company assuming or transferring to another party one or more of the financial risks described below.

Price risk, credit risk, liquidity risk and cash flow risk

 

Credit risk

The Company has no significant concentrations of credit risk. Amounts shown in the balance sheet best represent the maximum credit risk exposure in the event other parties fail to perform their obligations under financial instruments.

 

The Company is also potentially subject to concentration of credit risk in its accounts receivable, with significant balances due from a number of local authorities and care operators. The Company has made suitable provisions reflecting the collectability of these receivables.

 

Liquidity risk

Working capital and liquidity is managed as part of day to day business routines of the Company.

FIRST PRIORITY HOUSING ASSOCIATION LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 8 -
Future developments

We will continue to drive improvement on performance and key to this is to grow the total number of homes we manage. We will ensure that any growth is undertaken on a sustainable basis. We are already in discussions on a number of schemes which we hope to complete by end of 23/24.

Statement of disclosure to auditor

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.

On behalf of the board
Mr Robert Iain Sim
Mr John Bernard Higgins
Director
Director
11 August 2023
FIRST PRIORITY HOUSING ASSOCIATION LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF FIRST PRIORITY HOUSING ASSOCIATION LIMITED
- 9 -
Opinion

We have audited the financial statements of First Priority Housing Association Limited (the 'company') for the year ended 28 February 2023 which comprise the statement of income and retained earnings, the balance sheet, the statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

 

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

 

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

 

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of our audit:

FIRST PRIORITY HOUSING ASSOCIATION LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF FIRST PRIORITY HOUSING ASSOCIATION LIMITED
- 10 -
Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.

 

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

Responsibilities of directors

As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company'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 company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Philip Jones BA Hons (FCCA) (Senior Statutory Auditor)
For and on behalf of Xeinadin Audit Limited
11 August 2023
Accountants
Statutory Auditor
Riverside House, Kings Reach Business Park
Yew Street
Stockport
Cheshire
United Kingdom
SK4 2HD
FIRST PRIORITY HOUSING ASSOCIATION LIMITED
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 11 -
2023
2022
Notes
£
£
Turnover
3
5,740,016
5,042,805
Cost of sales
(4,824,277)
(4,070,046)
Gross profit
915,739
972,759
Administrative expenses
(906,279)
(933,001)
Profit before taxation
9,460
39,758
Tax on profit
9
-
0
-
0
Profit for the financial year
9,460
39,758
Retained earnings brought forward
537,797
498,039
Retained earnings carried forward
547,257
537,797

The profit and loss account has been prepared on the basis that all operations are continuing operations.

FIRST PRIORITY HOUSING ASSOCIATION LIMITED
BALANCE SHEET
AS AT 28 FEBRUARY 2023
28 February 2023
- 12 -
2023
2022
Notes
£
£
£
£
Current assets
Debtors
11
708,683
532,765
Cash at bank and in hand
776,714
634,574
1,485,397
1,167,339
Creditors: amounts falling due within one year
12
(938,138)
(629,540)
Net current assets
547,259
537,799
Capital and reserves
Called up share capital
15
2
2
Profit and loss reserves
547,257
537,797
Total equity
547,259
537,799
The financial statements were approved by the board of directors and authorised for issue on 11 August 2023 and are signed on its behalf by:
Mr Robert Iain Sim
Mr John Bernard Higgins
Director
Director
Company Registration No. 07749192
FIRST PRIORITY HOUSING ASSOCIATION LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 13 -
Share capital
Profit and loss reserves
Total
£
£
£
Balance at 1 March 2021
2
498,039
498,041
Period ended 28 February 2022:
Profit and total comprehensive income for the period
-
39,758
39,758
Balance at 28 February 2022
2
537,797
537,799
Year ended 28 February 2023:
Profit and total comprehensive income for the year
-
9,460
9,460
Balance at 28 February 2023
2
547,257
547,259
FIRST PRIORITY HOUSING ASSOCIATION LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 14 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from/(absorbed by) operations
17
142,140
(200,920)
Net increase/(decrease) in cash and cash equivalents
142,140
(200,920)
Cash and cash equivalents at beginning of year
634,574
835,494
Cash and cash equivalents at end of year
776,714
634,574
FIRST PRIORITY HOUSING ASSOCIATION LIMITED
STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 15 -
1
Judgements and key sources of estimation uncertainty

In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

 

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

2
Accounting policies
Company information

First Priority Housing Association Limited is a private company limited by shares incorporated in England and Wales. The registered office is The Innovation Centre, Hornbeam Park, Hookstone Road, Harrogate, UK, HG2 8QT.

2.1
Accounting convention

These financial statements have been prepared in accordance with UK Generally Accepted Accounting Practice (UK GAAP) including Financial Reporting Standard 102 (FRS 102) and the Housing SORP 2018: Statement of Recommended Practice for Registered Social Housing Providers and comply with the Accounting Direction for Private Registered Providers of Social Housing 2019.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

2.2
Going concern

Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

2.3
Turnover

Turnover comprises the fair value of the consideration received or receivable for the provision of services in the ordinary course of the Company’s activities.

 

The Company recognises revenue as it falls due under the contractual arrangements with customers. These considerations include -

The amount of revenue can be reliably measured;

it is probable that future economic benefits will flow to the entity;

and specific criteria have been met for each of the company's activities.

2.4
Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

FIRST PRIORITY HOUSING ASSOCIATION LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2023
2
Accounting policies
(Continued)
- 16 -
2.5
Financial instruments

Classification

Financial instruments are classified for, according to the substance of the contractual agreement, as financial assets, financial liabilities or equity instruments.

 

Recognition and measurement

An equity instrument is any contact that evidences a residual interest in the assets of the company after deducting all of its liabilities. Where shares are issued, any component that creates a financial liability in the balance sheet. The corresponding dividends relating to the liability component are charged as interest expense in the profit and loss account.

 

Impairment

Financial instruments are reviewed annually for any changes in value and/or written down if they are impaired.

Basic financial assets

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Other financial assets

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

Impairment of financial assets

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

 

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

 

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

FIRST PRIORITY HOUSING ASSOCIATION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
2
Accounting policies
(Continued)
- 17 -
Basic financial liabilities

Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

 

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

 

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Other financial liabilities

Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.

 

Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.

Derecognition of financial liabilities

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

2.6
Equity instruments

Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

2.7
Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

FIRST PRIORITY HOUSING ASSOCIATION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
2
Accounting policies
(Continued)
- 18 -
Deferred tax

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

 

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

2.8
Employee benefits

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

 

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

 

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

2.9
Retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

2.10

Borrowings

Interest-bearing borrowings are initially recorded at fair value, net of transaction costs. Interest-bearing borrowings are subsequently carried at amortised cost, with the difference between the proceeds, net of transaction costs, and the amount due on redemption being recognised as a charge to the Income Statement over the period of the relevant borrowing.

 

Interest expense is recognised on the basis of the effective interest method and is included in interest payable and similar charges.

 

Borrowings are classified as current liabilities unless the company has an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.

2.11

Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee.

 

Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefit from the leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.

2.12

Share capital

Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis.

FIRST PRIORITY HOUSING ASSOCIATION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 19 -
3
Turnover
2023
2022
£
£
Turnover analysed by class of business
Rental income
5,455,144
4,736,946
Voids income
166,029
219,699
Other revenues
118,843
86,160
5,740,016
5,042,805
4
Social housing turnover and costs

The analysis of the company's social housing split of turnover and costs for the year are as follows:

 

2023
2022
£
£
Rents receivable
2,020,268
2,042,138
Service charges receivable
1,426,850
1,242,852
Other revenue
113,148
182,376
Social housing activity expenditure
(3,560,266)
(3,467,366)
Operating surplus/(deficit) from social housing activities
-
-
During the year void losses were £170,780 (2022: £319,792), as a percentage of value this was 1.9% (2022: 8.9%)
Rooms rechargeable to care operators or recoverable from insurance claims have been excluded from the calculation of voids.
All income relating to such recharges and insurance claims has been included in the Rent receivable figure
above.
5
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
15,930
14,400
Non-audit services of the financial statements of the company
6,381
4,530
22,311
18,930

All fees above in relation to the Auditor are stated inclusive of VAT.

FIRST PRIORITY HOUSING ASSOCIATION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 20 -
6
Operating profit
2023
2022
Operating profit for the year is stated after charging:
£
£
Fees payable to the company's auditor for the audit of the company's financial statements
15,930
14,400
Auditor's remuneration - Other services
6,381
4,530
Operating lease expense - property
2,887,801
2,528,300
7
Employees

The average monthly number of persons (including directors) employed by the company during the year was:

2023
2022
Number
Number
CEO
1
1

Their aggregate remuneration comprised:

2023
2022
£
£
Wages and salaries
120,539
114,910
Social security costs
15,320
16,804
Pension costs
6,027
5,745
Directors fees and expenses
29,367
24,950
171,253
162,409

The Director who is on the payroll for the company is Mr John Higgins (CEO).

8
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
120,539
114,910
Company pension contributions to defined contribution schemes
6,027
5,745
Non-exec remuneration and fees
29,367
24,950
155,933
145,605

The number of directors for whom retirement benefits are accruing under defined contribution schemes is 1 (2022 - 1).

 

The Director who pension contributions were made for was Mr John Higgins (CEO).

FIRST PRIORITY HOUSING ASSOCIATION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 21 -
9
Taxation

The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:

2023
2022
£
£
Profit before taxation
9,460
39,758
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2022: 19.00%)
1,797
7,554
Effect of tax losses
(1,797)
(7,554)
Taxation charge for the year
-
-
10
Units under management

The company measures units under management at each balance sheet date, as at 28 February 2023 there were 408 (2022: 387).

11
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
441,084
301,929
Unpaid share capital
2
2
Other debtors
108,222
85,570
Prepayments and accrued income
159,375
145,264
708,683
532,765
12
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Trade creditors
185,939
177,938
Taxation and social security
6,057
8,887
Deferred income
155,272
76,931
Other creditors
50,607
53,501
Accruals and deferred income
540,263
312,283
938,138
629,540
FIRST PRIORITY HOUSING ASSOCIATION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 22 -
13
Cash and cash equivalents
2023
2022
£
£
Cash in hand
776,714
634,574
14
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
6,027
5,745

Contributions totaling £1,005 (2022 - £1,005) were payable to the scheme at the end of the year and are included in creditors.

 

15
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and not fully paid
of £1 each
2
2
2
2
16
Operating lease commitments

The amount of non-cancellable operating lease payments recognised as an expense during the year was £2,887,801 (2022 - £2,528,300).

 

The variation of the leases under the CVA has made quantification of minimum payment subjective and volatile dependent on assumptions. Consequently, we have maintained the basis of calculation as using the original lease terms.

 

At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

2023
2022
£
£
Within one year
5,761,446
5,434,715
Between two and five years
22,848,552
21,157,596
In over five years
53,473,602
54,850,669
82,083,600
81,442,980
FIRST PRIORITY HOUSING ASSOCIATION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 23 -
17
Cash generated from/(absorbed by) operations
2023
2022
£
£
Profit for the year after tax
9,460
39,758
Movements in working capital:
Increase in debtors
(175,918)
(83,230)
Increase/(decrease) in creditors
230,257
(214,672)
Increase in deferred income
78,341
57,224
Cash generated from/(absorbed by) operations
142,140
(200,920)
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