Anchor Annual Report 2014

For the year ended 31 March 2014

Annual Report &

Happy living for the years ahead

Financial Statements

Anchor Trust

Cover photos: Main image: Resident Patricia Freeman with Activities Co-ordinator Liam KeatingTop right: Tenants George Metcalfe and Barbara HudsonBottom right: Tenants Nasamon Nadian and Patsy Ader

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Chairman’s and Chief Executive’s Statement

Operating and Financial Review incl. Strategic Report

Corporate Governance Report

Board, Directors and Advisors

Directors’ Report

Independent Auditor’s Report

Financial Statements

– Consolidated Income and Expenditure Account

– Consolidated Balance Sheet

– Company Balance Sheet

– Consolidated Cash Flow Statement

– Notes to the Financial Statements

The Board

Executive Management Board

Contents

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A feeling of belongingVera, 94, chose Anchor as her home 20 years ago. “I love it here,” she says of her Guardian Court home in York where she’s lived for the past 13 years.

Vera and her husband Fred were married for 67 years and, while Vera has found it difficult to adjust to life without him since he died a year ago, the community of friends and colleagues at Guardian Court is helping her to come to terms with her loss.

“I’m happy to go to the hairdressers here once a week, and the occasional tea party and coffee morning. I have everything I need here, and the surroundings and the people make me feel like I belong.”

Vera Turner Guardian Court, York

“I’ve always felt safe, happy and at home with Anchor.”

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Section 1Chairman’s and Chief Executive’s Statement

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Our promise of “Happy living for the years ahead” can only be delivered thanks to the kindness,

compassion and care shown by colleagues across our housing and care services, as the examples in these pages demonstrate.

We work hard to foster a culture of openness and transparency and were instrumental in establishing National Care Home Open Day and the ground-breaking Your Care Rating satisfaction survey. These initiatives are helping to drive quality and trust in the sector. At the same time they are shining a spotlight on the great care and housing provided at Anchor and demonstrating how our services reduce isolation.

While customer satisfaction remains high, we recognise we have more to do. We have worked hard over the past year to understand the key issues affecting customer satisfaction and this will influence our approach in the year to come.

We listen to our customers and gather feedback in a variety of ways, including through our Customer Services Committee and its regional forums. This focus on what older people want is central to our values and has ensured our housing and care services remain popular.

Chairman’s and Chief Executive’s Statement

We invested £43.6m in our existing properties in 2013/14. This and our ground-breaking work with iPads in our care homes are examples of our commitment to delivering happy living for customers. As a result, demand is strong in our care homes and in our rented housing we ended the year with tenants living in 21,973 properties out of a total of 22,365 available – the highest proportion recorded in recent years.

Anchor-commissioned research from the International Longevity Centre-UK showed the increasing need to employ people with the skills and attitude to work with older people in this time of demographic change. This presents significant challenges for organisations wishing to recruit and retain the best people. This is critical to the quality of the service we provide and is why we are

working hard to make Anchor an employer of choice while also demonstrating the brilliant

work carried out in our care homes and retirement housing across England. Linked to this, we are making strong progress on colleague engagement with a five per cent increase in

engagement in the past year.

We have invested significantly in training and developing our people and in maintaining our existing properties to ensure

we deliver on our promise of Happy living for the years ahead.

We have also made significant progress with our new developments, with contractors on-site at six locations which will

deliver almost 1,000 new homes when completed.

These new developments will offer a choice of great places and ways

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to live. Our retirement village model meets the strong need for integrated services to support an active, independent lifestyle in later life.

Our retirement villages include independent and assisted living apartments, a care home which includes support for people living with dementia, and a wide range of facilities typically including a bistro, delicatessen, gym and swimming pool, giving people the opportunity to participate in social activities and village community life. Two villages will open in 2014/15, with further sites in the pipeline.

Our new care home pipeline will provide residential care including specialist support for people living with dementia, in purpose built surroundings, enhancing the portfolio of homes around the country.

Thinking beyond our current business plan, we are also building a significant pipeline of sites across the country on which we will develop housing and care tailored to the needs of, and closely integrated with, their local communities.

The population is ageing, meaning more complex care needs and increasing levels of dementia. While our commitment to older people has not changed, needs and expectations have altered immeasurably as a result of this demographic shift and we continue to evolve to meet them. Anchor’s resilience lies in ensuring the older people we serve are at the heart of our organisation.

Continued pressure on public funding and consumer spending power has driven an ever-greater focus on value-for-money services shaped around customers’ needs. For us, value for money means delivering services as cost-effectively as possible while achieving high levels of customer satisfaction. We accomplish this by working in close partnership with older people, their families and commissioners to tailor person-centred services to individuals. We have also increased our use of benchmarking information.

While maintaining a strong customer service focus we’re pleased to say our operating surplus was in line with 2013 and we maintain a strong cash position.

In our rapidly-changing world it is vital that the Board monitors the environment to identify, quantify and manage risks. Through the Audit & Risk Committee the Board receives assurance that controls are

appropriate, and that the risk profile is reviewed regularly.

Concerns about issues such as care quality can be addressed quickly as a result of our robust approach to safeguarding and ‘whistle-blowing’, coupled with a culture which encourages colleagues to voice their views.

We continue to invest in new skills throughout Anchor, by providing great development opportunities for colleagues, and recruiting to new roles. This has included the new role of Director of Property, Development and Procurement created during the year.

We thank the great people in Anchor who work tirelessly to deliver on our promise of happy living, many of whom have been acknowledged this year through industry awards.

We thank Aman Dalvi OBE, whose tenure as Chairman ended last year, for his legacy of strong governance and Lesley James CBE, who was Chairman of the Executive Remuneration Committee, for her excellent contribution to the organisation.

The commitment to strong governance remains. Coupled with an unerring commitment to delivering what older people want, it will ensure our continued viability as an organisation and high-quality services for older people for many years to come.

Pamela Chesters CBE Chairman

Jane Ashcroft CBE Chief Executive

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Working in care isn’t for everyone and many young people don’t have it on their list of jobs they’d like to do after leaving education. But 20-year-old Care Assistant Craig, who works at Orchard Court care home in Surrey, disagrees.

Craig, a former showjumper, turned to caring to make a difference – and hasn’t looked back. “My great-grandma had dementia, and was cared for at a home. My grandfather also needed hospice care towards the end of his life. I have wonderful memories of the kind people who cared for them both.

“A few years ago I had an accident, and can’t ride any more. I reassessed what I want from life and became a carer so I can make a difference to people, like those who cared for my family. I love it,” says Craig. “I enjoy the challenges of working with people with dementia, and I’ve talked to my home manager about specialising in this area.”

Craig Young pictured with resident Edith Glegg Care Assistant, Orchard Court, Lingfield, Surrey

“A career in care is a great option for young people,” says Craig. “It gives you a unique perspective and you gain valuable life experience.”

Making a difference

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2Section 2Operating and Financial Review including Strategic Report

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Anchor Trust Annual Report & Financial Statements

Overview of the business

Anchor is England’s largest not-for-profit provider of housing and care for older people. We celebrated our 45th anniversary during the financial year 2013/14.

We maintain the same commitment to supporting older people as we did when we began life in 1968 as Help the Aged (Oxford) Housing Association. That commitment is best expressed in our statement “Happy living for the years ahead”.

Our passion is giving older people a choice of great places and ways to live. We do this by treating our customers and our colleagues as individuals and by building meaningful, long-term relationships based on happiness, openness and respect.

Today, services include rented and leasehold retirement properties, residential care homes, specialist dementia care homes and retirement villages across England and we have ambitious

Operating and Financial Review including Strategic Report

This section includes the requirements of the Strategic Report: Principal activities, the business model, review of the year’s performance, key performance indicators, key risk disclosures and future developments.

plans for further growth. We provide homes to more than 37,000 older people at almost 1,000 locations nd employ more than 8,400 people.

Retirement housing: We provide retirement housing to rent at 667 locations, some of which provide extra care. Our leasehold property management activity provides services to leaseholders at 223 estates.

Residential care homes: We operate 93 care homes, making Anchor one of the largest not-for-profit providers of residential care homes in England.

Charitable purposeEach year Anchor’s Board (the Board) reviews the organisation’s aims, objectives and activities to ensure that the organisation remains focused on its charitable activities. This review looks at what we achieved and the outcomes of the Company’s work in the previous 12 months. The review looks at the success of each key activity and the benefits they have brought to those groups of people we are set up to help. We have referred to the guidance contained in the Charity Commission’s general guidance on public benefit when reviewing our aims and objectives and in planning future activities. The Board believes that the provision of specialist retirement housing and residential care to older people, generally those more than 65 years old, delivers a valuable public benefit. There are no restrictions on who is available to benefit from Anchor’s activities based on sexuality, ethnicity, disability, religion or gender. Anchor is a national organisation and provides services throughout England.

All of our surpluses are reinvested in the business for the benefit of customers. As a charity, Anchor does not pay dividends.

Anchor’s Chief Executive Jane Ashcroft was made a CBE in the New Year Honours for her services to older people.

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For year ending 31 March 2014

The year under review

£43.6minvested

993additional homes

Focusing on serving the needs of older people – a rapidly increasing group spanning several generations as people live longer and have increasingly complex needs.

With increasing numbers of people living with dementia, we have been working on pilots to inform an enhanced dementia offering utilising global best practice. Alongside this, we have begun using iPads to support meaningful activity for our care home residents. Initial feedback has been extremely positive and we plan to do further research on the impact.

At a time of unprecedented economic, demographic and regulatory change, it is crucial that we focus on meeting older people’s changing needs and

business plan involved exiting from the provision of local authority-funded home care services and creating a regional structure to make us easier for customers to navigate. In 2013/14 we announced our intention to exit from the small number of nursing care homes in our portfolio as we focus on and grow our retirement housing to rent and to buy, assisted living and residential care homes.

Continuously improving our affordable housing offer.

existing housing.

enabling us to replace more than 900 bathrooms, almost 800 kitchens and install new windows at more than 900 properties.

This investment is helping to ensure demand remains strong among potential customers.

With tenants living in 21,973 properties out of a total of 22,365 available, occupancy in our rented

the highest level we have recorded in recent years.

Building new models of housing for sale and

Construction work has begun at six sites:-

Bishopstoke Park retirement village in Eastleigh, Hampshire

Hampshire Lakes retirement village in Yateley, Hampshire

Moore Place care home in Esher, Surrey

e home in Southampton, Hampshire

An independent living development in Weybridge, Surrey

A new care home in Aylesbury, Buckinghamshire.

When completed, these developments will provide 993 additional homes, including care home rooms. Interest in the developments has been high, with more

of Bishopstoke Park and Hampshire Lakes, where construction is most advanced, being made off-plan.

of delivery.

Delivering value for money is a key focus of our business plan and our approach is summarised in the statement on pages 14-24 and the accompanying value for money report.

One example of smarter working is that location managers now have access to Northgate, our customer management system, ensuring they have up-to-date information on customer accounts.

We will continue to look at the structure of the

about the cost savings we have achieved this year is included in the value for money report on page 14.

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2.5%pay increaseBecoming an employer of choice.

The International Longevity Centre-UK’s report on workforce issues in social care, commissioned by Anchor, demonstrates how organisations will need to work hard to attract and retain great people.

Despite a challenging financial environment, we awarded a pay increase of 2.5 per cent to most colleagues in 2013/14. This means that over the last three years the majority will have seen a pay increase of around 10 per cent. We also committed to ensuring that, from April 2013, all Anchor colleagues were paid at above the National Minimum Wage and made a further commitment to progress and align Level 2 Care Assistants and Activity Co-ordinators to the Living Wage.

Pension auto-enrolment was introduced across the organisation – with a contribution from Anchor helping colleagues save for their future. We have also continued to provide free flu immunisation with a significantly higher uptake this year.

Changes to the way we gather information about why colleagues leave Anchor have enabled us to track trends and issues and identify ways to make Anchor a great place to work for existing and future colleagues.

Becoming synonymous with happy colleagues and happy customers.

We recognise that happy colleagues mean happy customers and we have made significant progress on colleague engagement, with a five per cent increase in engagement (to 77 per cent) since the 2012/13 survey. This is against an average for the housing sector of 72 per cent.

We have run our award-winning Anchor Way initiative annually since the launch of the business plan. This continued with sessions for managers on taking the organisation from good to great. A key theme of the events was how to work together more effectively across our services to achieve better outcomes for customers.

Overall satisfaction has been maintained in our care homes at 96 per cent, which is slightly above the average of all homes assessed using the independent Your Care Rating survey.

The score for satisfaction for our rented housing dropped slightly, from 90 per cent to 88 per cent. In our leasehold services, it has remained at 78 per cent.

We still want to improve our services and have conducted in-depth analysis to understand the main issues impacting on satisfaction. We have developed a plan to act on this in 2014/15.

96% 77%

CARE HOME CUSTOMER SATISFACTION

COLLEAGUE ENGAGEMENT

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£36.6m on housing£7.0m on care homes

£44.0m on housing£10.0m on care homes

2013/142014/15

Property investment

TOTAl wORkS invESTMEnT (excluding responsive repairs):

840 properties at 23 housing schemes and 75 bedrooms at two care homes

1,538 properties at 40 housing schemes and 282 rooms at seven care homes

properties properties

886 housing schemes and 33 care homes

58 housing schemes plus 29 care homes

Bathrooms at Bathrooms at

locations locations

Internal redecorations at Internal redecorations at

919 2,201

£54.0m£43.6m

inClUDinG:

177housing schemes

187housing schemes

13care homes

28care homes

Windows at

properties915

Windows at

properties1,820

190 215

housing properties784

Kitchens at

housing properties675

Kitchens at

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The year ahead

The financial challenges facing many older people and commissioners of services for them give further impetus for us to maintain our customer focus and provide excellent value for money.

This will be achieved by driving further efficiencies which release more time for colleagues to spend with customers. We will make significant strides towards our key performance indicators being among the best 25 per cent in the sectors in which we work.

We will continue to invest in our existing services, with plans to spend a further £54m in planned works over the coming year. The results of our colleague and customer satisfaction surveys will continue to inform priorities.

Our ambitious development plans will continue, with further sites planned in Church Crookham in Hampshire, Sidcup in Kent, Sunningdale in Berkshire, Princes Risborough in Buckinghamshire and Haywards Heath in Sussex. We also have a pipeline of further sites for development.

New people and payroll systems are due to come online, enabling greater automation of processes and we will continue to invest in training for customer-facing colleagues and leadership development.

The Manager Direct helpline to support managers with people issues will grow into a service offering expert advice to all colleagues. We will also be bringing our executive search function in-house, extending the apprenticeship programme and plan to have a small number of management trainees.

As a result of retendering our voice and data contract, our housing customers and their families will get free Wi-Fi access in communal areas and care home customers and their families will have free access throughout the homes. This builds on the introduction of iPads to support meaningful activity for our care home residents. With 61 homes already using iPads, we will roll them out to all homes in 2014/15.

We will also build on our work to bring volunteers into our care homes, something which has had a very positive impact for residents. We will also be looking at how we can develop volunteering in our housing activities.

Value for moneySavings which don’t impact detrimentally on the quality of services allow us to deliver more for our customers at the same cost. We are very pleased therefore that through our procurement activities in the last year we saw a £150,000 direct reduction in costs (on security and water systems), a £325,000 saving against budgets, (on IT, phones, stationery and catering supplies) and a one off rebate of £204,000 (provision of food). This £679,000 is complimented by the work done through the ‘Big Four’ programmes which will realise savings of £800,000 per annum from next year.

How we are working to deliver value for money

Value for money to us is about delivering services as cost-effectively as possible while achieving high levels of customer satisfaction. These two drivers underpin our business plan. Through the implementation of that plan we have streamlined our service offer and integrated the management of our care and housing services. These steps have made us a more focused organisation and one better able to deliver efficiencies. Over time we believe it will help make us leaner and more aligned to delivering on the retirement and care village model of housing.

The Board is accountable for the delivery of value for money and will, in pursuance of that role, expect the Executive Management Board to evidence this, through the delivery of the business plan. A review of the organisation’s

Estate Manager Pauline Tyler with leaseholder Brenda Baker

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The ‘Big Four’ programmes transforming our business

The Tools for Managing People Programme – our new online HR and payroll system, known as myHR, makes it quick and easy for colleagues to manage a wide range of HR processes, from booking days off to checking their pay. The introduction of myHR will allow colleagues to spend more time with customers. The system will save approximately £500,000 a year on existing costs. Other efficiencies include sickness absence monitoring, a reduction in payroll queries and freeing up colleagues’ time, are additional gains saving us time and money.

The Business Performance Programme is designed to improve our ability in making key business decisions. It does this through providing managers with the right performance information at the right time. It ensures decision-making is supported by a budget process which facilitates effective long-term financial planning and the day-to-day management of resources. This programme through enhanced automation of reporting will save £290,000 a year.

The Customer Experience Programme reviews and challenges how we provide services to customers to ensure that every step adds value. The programme is led by our Head of Customer Service and Engagement under whose direction the Customer Centre (the contact point for customers with enquiries) has become increasingly efficient. It has seen a 33 per cent increase in activity and a 5 per cent reduction in staff costs since 2011/12.

Our Standards Programme was refocused in the last year to look at improving the ‘look and feel’ of our properties. We were aware of inconsistencies across the business in the physical standards delivered as part of our planned works programme. With the help of customers we have now delivered a revised and consistent standard in relation to bathroom and kitchen replacements and in the periodic redecoration of the communal areas within our schemes. These revised standards will deliver a product customers value and through greater consistency increase our ability to obtain value for money in the contracts we award.

The current catalysts of change making the business plan a reality are our Big Four programmes. Led by a change team of project managers and closely tracked by the Executive Management Board these programmes are realising significant benefits.

Tenant David Hartley with Scheme Manager Ellen Swanston

strategic approach to value for money and how we understand it has been undertaken by the Board and this has also been endorsed by our Customer Services Committee in the last year.

Day-to-day delivery of value for money has been further strengthened by the creation of a value for money review group. The group’s objectives are to raise the profile of value for money, explain what we mean by it and ensure it is built into the plans of each of our core services and that gains are well evidenced.

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Revitalising our approach to buying goods and services

We are introducing a new, more collaborative, way of working with contractors and suppliers. As a consequence of this we now expect to realise procurement savings of more than £20m on our original five-year planned work budget estimates of £240m.

Following the appointment of a new Head of Procurement and Purchasing in June 2013 we have undertaken a holistic review of this area of our business. We have restructured the team and appointed specialist category managers accountable for delivering value in the purchasing of specific goods and services. This specialism ensures we challenge our contractors to provide us with their best deal. An example of this in practice is demonstrated by a recent rebate of £204,000 on a contract for the supply of food ingredients – a saving arising from negotiation based on comparing prices in the open market.

This move to greater specialism will build on the successes already achieved through our procurement activity which in the last year saw the following:

A standardisation and reduction in the range of food supplies leading to a £57,000 saving against budget

Water systems and pump procurement leading to a £22,000 saving against costs incurred in the previous year

Security (boarding, alarms and manning arrangements) – saving of £131,000 against prior year actual costs

A stationery contract which witnessed a price decrease of £71,000 on the range of products available

A rationalisation of our phone line requirements which delivered a saving of £72,000 against budget

A restructuring of IT contracts and hardware cancellations which delivered £126,000 saving against budget

The entering into new and renegotiated software licences which will deliver £260,000 savings over the next three years compared to previous costs.

The procurement team encourages regular feedback. As a result, procurement cards are being introduced from April 2014 to 1,000 location-based colleagues so they can buy low-value items more cost effectively but with appropriate controls.

Anchor people

Last year we reported that we had reviewed the majority of non-customer facing roles to reduce complexity and duplication and to speed up decision making. Combined with a reduction in the number (from 38 to 32) of our most senior managers these two steps have saved us £2.5m a year.

Better processes and an improved approach to performance management have helped:

Reduce sickness levels by 13 per cent in the last year (equivalent to 46,000 hours with a monetary value, based on an average care worker’s salary, of £356,000)

Reduce the number of colleagues leaving from 1,501 (2012/13) to 925 (2013/14). We estimate that this reduction has saved us £2.9m in additional recruitment costs, as well as management time.

We continue to work hard to engage with colleagues and increase their contribution to, and sense of fulfilment with, Anchor. It is therefore pleasing that our engagement score has increased.

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Below are our management costs benchmarked against the HCA’s Global Accounts:

Our benchmarked maintenance costs per unit are:

1 HCA global accounts 2013. The 2013 figures reported to the HCA and incorporated within the data for the Global Accounts of Housing Providers were £1,542 for management. This figure however incorporates the management costs of our care homes and for value for money benchmarking purposes has been split giving the above amended figures for care and housing.

Maintenance costs per unit2014 Actual

2013 Actual

Benchmark ref

Retirement housing to let £890 £731

Residential care homes £618 £864

weighted average £846 £784 £992 2

Management costs per unit2014 Actual

2013 Actual

Benchmark ref

Retirement housing to let £1,047 £1,065

Residential care homes £4,140 £3,759

weighted average £1,542 £1,500 £952 1

Asset maximisation

Underpinning all of Anchor’s investment in new housing and care home developments is a rigorous analysis of all proposed income and costs to ensure an internal rate of return of at least 10 per cent. Business cases are assessed by the Executive Management Board before referral to Board for approval, prior to starting any building development, and significant variations to the business case are re-assessed and re-approved before being approved by the Board.

The same internal rate of return is also applied when assessing the viability of existing assets. As part of the asset management strategy, we regularly review the performance of our locations, taking into account the future investment in planned works. Where the cost

of works is likely to result in a location under-performing financially further analysis is done, taking into account the local market, the cost of works and operational priorities, to determine its future.

In 2013/14 we exited from four housing locations (129 properties) and three nursing homes, securing £3.5m in sales value. We have announced plans to exit from three more locations in 2014/15.

We have surveyed our existing locations and identified opportunities to create an additional 200 homes. Of these, 71 could be in development in 2015/16, subject to Homes & Communities Agency and planning approval.

2 HCA global accounts 2013. The 2013 figures reported to the HCA and incorporated within the data for the Global Accounts of Housing Providers were £846 for maintenance. This figure however incorporates the maintenance costs of our care homes and for value for money benchmarking purposes has been split giving the above amended figures for care and housing.

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for our ‘Heroes of comedy’ sessions – we have “I have been downloading old comedy films

a customer who loves the Marx Brothers. One lady loves Dick Emery and her favourite saying is ‘Oh you are awful, but I like you!’ She really enjoyed watching the programme again.”

Joanne McKenzie Activities Co-ordinator, Holmpark, Birmingham

“Heathside’s Activities Co-ordinator Holly Manley used the iPad with a resident and his wife to look up maps from their home country, Ukraine. They also used a translation app so the gentleman was able to understand what they were doing.”

Katie Elder Activities Co-ordinator, Heathside, Woking

“We have a particular resident living with dementia who has just lost his wife and findsit extremely difficult to communicate. Throughlooking at his Personal Plan we discovered him and his wife were very fond of cats. We looked through Google for images of the cats and kittens and watched videos of cats trying to talk. Our resident let out a huge smile and began to stroke the screen and try to talk.”

Danielle WattsActivities Co-ordinator, Linwood, Thames Ditton

Introducing new technologyAs part of our on-going commitment to person-centred activities and meaningful engagement we've introduced iPads into our care homes. Here's just a few examples of how they're making a difference to our customers' lives.

Administrator Dawn Goodings and resident Edna Dennis

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to take a trip back in time and look at all the “During fitness is fun week we used the iPad

swimming baths our customers used to visit. One of our customers remembered going to Bramley baths and using the iPad we discovered a project had been set up to renovate the Victorian baths. We decided to visit and were treated to a guided tour and a talk about the history of the building. Our customer got so much out of this visit and enjoyed his swim too.”

Betty Rhodes

“We have a lady at Firth House that lived in London. Her son Skypes every Sunday at 2pm. She was very surprised to see what we can do

him. She now looks forward to Sundays.”

Sharon Ayre Activities Coordinator, Firth House, Selby

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Environmental savings and value

Since the mid-1990s we have reduced our number of offices from 12 to five. Offices are an expensive asset to maintain and we anticipate further efficiency savings of £170,000 a year when our two Bradford offices are combined into a single new office in 2014/15. Reducing the number of offices has increased the level of travel but this is monitored closely to limit costs. Since 2011/12 our travel and subsistence costs have risen from £4.4m to £4.6m. At 1.5 per cent per year, our cost increases compare very favourably with the escalating costs of food and above-inflation public transport fare rises. We are currently investing in new “voice and data” technology which should further reduce the need for our colleagues to travel. It is anticipated that this

will reduce our annual travel budget by £350,000 per year, make us more efficient (as time will not be lost travelling) and reduce our carbon footprint.

With almost 1,000 retirement housing and care locations, many of which have communal areas, we use significant amounts of energy. In 2013/14 we changed our energy suppliers and secured rates which were 27 per cent below the UK average domestic rate for gas and 20 per cent for electricity.

Our energy usage has remained fairly static over the last seven years. To achieve our target of reducing our energy usage by 10 per cent within 10 years, we will use 2014/15 to significantly improve how we collect and analyse energy usage data.

2014 Actual 2014 Target 2013 Actual

Gas safety checks 99.9% 100.0% 99.8%

lift safety checks 99.9% 100.0% 96.4%

Fixed electrical wiring inspections 100.0% 100.0% 99.6%

Health and safety compliance

Health and safety performance continues to be satisfactory with compliance in areas such as gas safety, electrical safety and lift maintenance being consistently good.

Senior management provide clear and strong direction in striving for high standards of health and safety compliance and there is a health and safety management system in place to achieve this. A health and safety plan is in place with clear targets to further improve health and safety performance.

Care Quality Commission Compliance

CQC target compliance is 100 per cent. Under this definition, no service can have any concerns, which is a stretching target. At the beginning of the year, we changed the way in which we measured compliance to adopt a more rigorous approach. This initially led to a drop in our compliance score but we are pleased to note that this is now improving month on month.

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Customer satisfaction and social value

We use annual and monthly satisfaction surveys to closely track customer opinion and have strengthened our approach to customer engagement. The creation of a permanent Scrutiny Panel allows customer representatives to take a detailed look at areas of our service delivery. As well as suggesting improvements they will also recommend how they think efficiencies can be delivered.

We monitor customer satisfaction very closely. This close monitoring has highlighted some declining satisfaction in the services we provide (overall satisfaction has fallen from 90 per cent (2010) to 86 per cent in the current financial year). As a consequence, the Executive Management Board is increasing its focus on customer service, in order to reverse this decline.

Delivering value for money services is not all about cost – we are keen to also deliver real social value. Our campaigning under the Grey

Pride banner is raising awareness of issues of importance to older people. Among a number of other campaigns currently running, our Anchor Community Band built awareness of the organisation among potential customers while raising £15,000 for the charity Contact the Elderly.

We also have opened our care homes up to the wider community through the volunteer programme. This has resulted in the recruitment of 500 volunteers. While not the driver for this work, it is pleasing that 12 volunteers went on to obtain permanent roles with us. The equivalent monetary value of the services volunteers provide, setting aside the social value, is considerable.

It is also pleasing to note that our expenditure on translation costs has fallen from £24,500 in 2010/11 to £10,000 (2012/13) partly as a result of using our own ethnically diverse staff population as translators where possible.

Care Manager Emma Hawtin with resident Brenda Wilson

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We have looked in detail at all indicators, particularly those which have seen a decline and have developed plans to address them in 2014/15.

Performance (key Performance indicators)

Our Key Performance Indicators (KPIs) are an important measure of our success. They are used in setting targets for colleagues and are cascaded throughout the business. In setting the KPIs it is important to identify the correct drivers to focus on,

use appropriate benchmarks to determine the right targets for the business, and report timely and accurate information to assess performance. All the KPIs are closely linked to our understanding of value for money.

2014 Actual

2014 Target

2013 Actual

Benchmark ref

Sickness absence 2.9% 3.5% 3.8%5.9% care homes

4.9% housing1

Staff turnover 14.0% 15.0% 16.0%18.6% care homes

11.5% housing2

Colleague engagement 77.0% 74.0% 72.0% 68.0% 3

Occupancy of care homes 92.2% 92.8% 92.2% 88.3% 4

Housing occupancy 98.1% 97.9% 97.7% 95.8% 5

2014 Actual

2014 Target

Benchmark ref

Customer satisfaction 86.0% 92.0% 84.7%6

Customer satisfaction – repairs 84.0% 92.0% 84.1%

1 CIPD survey 2012 (in connection with Simply Health) 2 National Minimum Data Set-Skills for Care report and housing sector by NMDS-SC dashboard

3 ORC International overall benchmark 2012 4 Colliers International spring 2013 care homes review 5 SDR statistical data 2013 6 Survey of ‘top 20’ providers annual reports 2013

a) Maximising income and resources:

b) Delivering value:

2014 Actual 2014 Target 2013 Actual

Complaints responded to within 14 days 95.8% 92.0% 97.1%

Repairs completed on time 97.2% 97.0% 97.3%

CQC compliance 71.4% 100.0% 87.3%

Reporting of injuries, Diseases, and Dangerous Occurrences Regulations (RiDDOR)

42 48 48

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key objectives for 2014/15

We expect efficiency savings of £250,000, through the application of a restructure of our property services.

The procurement team are committed to delivering £3m value savings in 2014/15 and have engaged with existing suppliers to achieve this. Part of this saving is anticipated to arise out of our drive to reduce energy expenditure. The employment of a specialist agent to monitor our gas, water and electricity bills will identify efficiencies, pick up on errors and, we anticipate, generate £200,000 in savings against current bills.

Delivering a changeA more detailed report, entitled ‘Value for money, delivering a change’ can be found on our website.

Resident Doreen Gascoigne with Care Assistant Charlotte Swales

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The nature of Anchor’s business is such that it faces risks and uncertainties on a daily basis. Anchor’s principal risks are categorised as either operational risks, financial risks or strategic risks. The most important risks are detailed in a centrally managed risk register and regularly reviewed and challenged by the Board, Audit & Risk Committee and the Executive Management Board.

Anchor’s principal risks and the mitigating activities in place to address them, are listed below. It is recognised that Anchor is exposed to a wider number of risks than those listed.

Safeguarding customers

As England’s largest not-for-profit provider of housing and care for older people, Anchor is responsible to varying degrees for the wellbeing and safeguarding of vulnerable adults.

Controls include:

Dedicated resources responsible for health and safety, customer care, dementia, safeguarding and food safety.

Comprehensive people plan to ensure the best people are recruited and trained to provide services to customers.

Continuous focus on quality.

Established monitoring and audit programme.

People risk

Anchor employs nearly 10,000 people. Failure to have the right people in place doing the right things will limit our ability to provide great services to older people.

Controls include:

Robust colleague engagement process for effective communication.

Strategic compensation and benefits policy.

Extensive learning and development programme.

Financial risk – deficits in Anchor’s pension scheme

Anchor remains responsible for any deficits in its final salary pension scheme.

Various actions have been taken to mitigate this including:

Closure of the scheme to new members and future accruals.

On-going review of liabilities.

In 2013 an agreement was reached with the trustees on the terms of a new recovery plan designed to eliminate the deficit in the defined benefit scheme over 10 years.

Public spending cuts

A significant proportion of Anchor’s revenue is derived from public sources. Cuts in public spending inhibit Anchor’s ability to continue to provide services to disadvantaged adults. In addition, the impact of the provisions in the Care Bill to cap individuals’ social care costs from April 2016 is yet to be fully understood. We have worked with leading think-tank the Strategic Society Centre to develop thinking in this area and inform the Department of Health’s consultation on its implementation.

Controls include:

Proactive engagement with commissioning bodies, trade bodies and government.

Welfare reform group to provide feedback to government on the impact of proposed changes.

Financial and social inclusion strategy to support customers.

The risks listed above do not comprise all of those identified by the Board and are not set out in any order of priority.

Anchor’s principal risks and uncertainties

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Underlying business performance is in line with the previous financial year, with a strong performance in retirement housing being partially offset by the performance in residential care homes. Retirement housing has benefited from the continuing programme to fill empty properties. Demand for retirement housing properties is strong, and the number of empty properties is at its lowest level for a number of years. Care homes performance has been impacted during the year by those locations earmarked for disposal; as part of the Anchor strategy to exit from the provision of nursing care, three such homes were disposed during the year at a financial loss.

Financial reviewA summary of Anchor’s financial results, from all activities, over the past five years is set out below:

Year to 31 March2014 Total £m

2013 Total £m

2012* Total £m

2011 Total £m

2010 Total £m

Turnover 265.8 264.9 267.5 280.8 286.5

Operating surplus before exceptional items

18.3 18.1 25.4 19.4 21.0

Surplus/(deficit) for the year 12.1 21.8 22.2 10.3 7.8

*In 2012, turnover and operating deficit relating to discontinued operations were £3.7m and £(0.1m) respectively and related to the home care service.

Financial results for the year

Tenants from St Clements Court, Wigan, planting seeds as part of Anchor's Bee Friendly campaign

Tenant Lai Tat Lillywhite (May) with family members Nicola Lillywhite, Jaya and Mei Mei Lillywhite (left to right)

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Turnover

In the year to 31 March 2014, turnover remained static at £265.8m (2013: £264.9m). The main area of focus for the business continues to be retirement housing lettings of £134.9m (2013: £128.6m) and residential care homes of £121.9m (2013: £119.2m), with turnover from other activities, including leasehold sales, being £9.0m (2013: £17.1m).

Operating surplus

Anchor’s surplus was £18.3m (2013: £18.1m).

Retirement housing surplus increased by £3.4m to £29.7m (2013: £26.3m), with the main contributors being lower void levels, higher weekly rents, and savings on utility costs as a result of the recent milder winter.

Residential care homes operating surplus, of £0.2m, decreased from last year (2013: £1.6m) due largely to the performance of homes earmarked for disposal.

Expenditure on major works to properties was £47.1m (2013: £42.4m). The Income and Expenditure Account incurred a higher charge than the previous year of £12.6m (2013: £11.8m) and also a higher value was capitalised: £34.5m (2013: £30.6m).

There were four retirement housing scheme transfers during the year (2013: 14) and three nursing home transfers (2013: nil).

Balance sheet performanceA summary of Anchor’s balance sheet over the past five years is set out below:

At 31 March2014 £m

2013 £m

2012 £m

2011 £m

2010 £m

Goodwill 0.1 0.1 0.2 0.2 0.4

Housing properties at cost less depreciation 915.3 887.7 891.2 888.0 897.0

Social Housing Grant (516.0) (520.2) (525.0) (543.8) (550.5)

Other capital grants (43.8) (44.6) (47.7) (53.0) (54.3)

Housing properties – net book value 355.5 322.9 318.5 291.2 292.2

Other tangible fixed assets 4.3 2.6 1.7 4.4 5.3

investments 3.1 3.4 2.9 2.7 1.9

net current assets 62.8 92.9 81.3 64.9 52.0

Total assets less current liabilities 425.8 421.9 404.6 363.4 351.8

Members of Anchor's Lesbian, Gay, Bisexual and Trans (LGBT) customer and colleague group

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At 31 March 2014, Anchor’s total assets less current liabilities increased to £425.8m (2013: £421.9m), of which £249.0m was represented by accumulated Income and Expenditure Reserve (2013: £238.2m). The Income and Expenditure Reserve increased by £12.1m from the surplus generated during the year and reduced by £1.3m from an actuarial loss following the annual valuation (performed in accordance with Financial Reporting Standard 17) of Anchor’s defined benefit pension scheme.

Continuing investment in our housing properties and construction of new care homes and other developments resulted in the net book value of housing properties increasing to £355.5m (2013: £322.9m).

Within net current assets, Anchor’s stock of housing for sale analysed in note 16 of the Financial Statements, increased to £13.1m (2013: £2.6m). This increase is attributable to new build properties.

Cash and short term deposits decreased to £71.3m (2013: £93.6m), mainly due to investment in new developments.

The disposal of housing schemes resulted in the attributable Social Housing Grant moving into the total Recycled Capital Grant Fund, increasing the fund’s balance to £13.2m (2013: £10.3m), shown in note 21 of the Financial Statements.

Cash flow

The net movement in operating cash flow for the year was an inflow of £46.4m (2013: £41.8m). The movement is fully analysed in note 29.1 of the Financial Statements.

As shown in note 29.1 of the Financial Statements, this cash flow was generated from an operating surplus of £18.3m (2013: £18.1m) and, after allowing for depreciation and other non-cash expenditure, was reduced by a £4.6m (2013: £4.6m) payment towards Anchor’s pension scheme deficit and increased working capital.

As shown in note 29.3 of the Financial Statements, £62.1m (2013: £42.7m) of cash was used to develop housing properties, an increase of £19.4m. Housing fixed assets disposal proceeds were £3.5m (2013: £18.4m).

Cash at bank was £46.8m (2013: £66.2m), a net decrease in cash of £19.4m (2013: increase of £35.7m).

investment in new developments

At 31 March 2014, development costs of £27.8m (2013: £11.1m) were added to fixed assets – properties under construction.

Programmes commenced at six locations: two retirement villages, three care homes and one assisted living development.

Anchor continues to seek suitable sites on which to build care homes, retirement villages and assisted living housing schemes which meet the needs of our customers now and in the future, and a number of such sites are progressing through various stages of property development and construction.

Gardener Joseph Jeyarajan and resident Robert Woolgar

27

anchor Trust annual report & Financial statements

Pensions

The Anchor Trust Final Salary Pension Scheme was closed on 1 April 2011 to further contributions and no new entrants have been admitted since 2003. The service costs after finance income were £0.1m (2013: £0.1m credit). The actuarial loss was £1.3m (2013: £7.5m). Anchor had previously agreed with the trustees of the scheme to make additional payments towards the pension deficit, which amounted to £4.6m (2013: £4.6m) after costs in this financial year, and will be £5.1m (before costs) increasing by 3.0 per cent per annum for each of the next nine years.

The actuarial loss and service costs partially offset by finance income and the additional payment, described above, resulted in the value of the pension scheme liability on a Financial Reporting Standard 17 (FRS17) basis decreasing by £3.6m (2013: increasing by £2.4m), being a £3.4m increase in the scheme’s assets and a £0.2m decrease in the scheme’s liabilities. At the year end, the scheme had an FRS17 deficit of £35.7m (2013: £39.2m).

Treasury

Anchor’s treasury activities are managed to ensure sufficient cash is in place to fund operations and to reduce the impact of adverse movements in interest rates and the financial markets.

Treasury activities are carried out in accordance with a Board-approved treasury management policy and supporting procedures. A treasury strategy is in place to support delivery of the Group’s objectives and its operational and long term plans are supported by financial budgets and forecasts. The treasury strategy is approved annually by the Board.

Cash flow requirements are monitored through a rolling forecasting process. Anchor’s policy is to minimise cash held by repaying debt as early as practicable, while ensuring sufficient access to funding to cover investment and development plans. This is achieved by the use of forecasts covering short, medium and long-term cash flows and the use of short-term investment and revolving facilities.

During 2014, surplus cash was held predominantly in a cash liquidity fund. A total of 50 per cent of drawn borrowings were at fixed rates of interest at the year end (2013: 50 per cent) for an average period of 12 years (2013: 13 years).

Anchor has access to undrawn committed borrowing facilities of £73.6m (2013: £73.6m). These facilities together with substantial unutilised security on the Balance Sheet ensure Anchor remains in a strong position to fund future growth plans and investment opportunities.

Net debt at 31 March 2014 was £51.9m (2013: £30.0m), as cash generated from operations was used to finance capital expenditure and working capital.

Anchor remains in compliance with its financial covenants, which are primarily based on interest cover and gearing. Covenants have been met with considerable headroom, due to low interest rates payable (as LIBOR has decreased) and a strong trading performance.

Tax and legal structure Anchor has a non-charitable trading subsidiary company, Anchor 2020 Limited, which is used to procure design and construction services for the Group and manage the professional fees on new development projects.

Anchor has a second non-charitable trading subsidiary company, Anchor Lifestyle Developments Limited, which is used to operate non-charitable services.

Surpluses from these subsidiaries are donated to Anchor Trust, or to the benefit of Anchor Trust’s charitable activities.

Statement of ComplianceIn preparing this Operating and Financial Review, the Board has followed the principles set out in the Statement of Recommended Practice: Accounting by registered social housing providers (SORP).

In approving the Operating and Financial Review, the directors are also approving the Strategic Report in their capacity as directors of the company.

The Operating and Financial Review and the Strategic Report were approved by the Board on 22 July 2014 and signed on its behalf by:

Stephen Jack OBE Director

Pamela Chesters CBE Chairman

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3Section 3Corporate Governance Report

29


Overview of Anchor’s corporate governance

Anchor is a private company limited by guarantee. Anchor has no shareholders and all of its surpluses are reinvested back into the business. Since 2010 all housing associations are required to be governed in accordance with an appropriate code of governance and Anchor has elected to be governed by the Financial Reporting Council (FRC) UK Corporate Governance Code 2012 (UK Code). A self-assessment review of compliance with the UK Code was undertaken and concluded that throughout the accounting period Anchor had complied with the key provisions of the UK Code, while acknowledging that provisions A4.3, B3.3 and D1.1 are not applicable, and B6.2, B7.1, B7.2 and D2.4 address the circumstances of listed companies and so are not appropriate to Anchor’s affairs. Additionally, Anchor does not produce half-yearly financial statements and therefore cannot fully comply with provision C1.3.

Anchor’s Board is entirely made up of Non-Executive Directors who normally serve for three year terms, subject to a maximum of three terms. In 2013/14, Anchor’s Chairman, Aman Dalvi, stood down having completed three terms of office as director.

The Board has the following committees: Audit & Risk Committee (A&RC), Executive Remuneration and Nomination. Throughout 2013/14 the Customer Services Committee also operated as a committee of the Board but by mutual consent it was agreed that after 31 March 2014, it would operate as a stand-alone committee as opposed to a committee of Anchor’s Board.

Anchor is also monitored and supervised by external regulators including the Homes & Communities Agency, the Care Quality Commission and the Charities Commission.

Corporate Governance ReportThe Board and its committees

All members of the Board are non-executive directors. As at 31 March 2014 the Board comprised six members led by Chair Pamela Chesters. Aman Dalvi, who was previously the Chairman, retired in September 2013 at the end of his term, and Lesley James, Chair of the Executive Remuneration Committee, retired on 31 March 2014. During the year Stephen Jack, who also chairs A&RC, was appointed as Vice Chair and Senior Independent Director.

The Board controls Anchor’s strategic direction and reviews its operating and financial position. In accordance with the UK Code, there is a formal schedule of matters reserved specifically to the Board, which ensures it takes all major strategy, governance, financial planning, investment and policy decisions. The appointment of the Chief Executive and the approval of standing orders and delegations of authority are all matters reserved to the Board.

The Board undertakes an annual review of its schedule of matters reserved and the terms of reference for its committees to ensure that these documents remain in line with good practice.

During the financial year, an internal evaluation of the effectiveness of the Board, and the Board’s committees, was undertaken which was facilitated by Anchor’s Company Secretary who has significant insight into both the day-to-day and strategic workings of the Board. The evaluation concluded that Anchor has an effective governance structure with a good range of skills and expertise.

The Board’s governance framework is designed to encourage all Board members to bring an independent judgement to bear on issues of strategy, performance, resources (including key appointments) and standards of conduct.

A4.3 Unresolved concerns documented in Board MinutesB3.3 No more than one non executive directorship in a FTSE 100 companyB6.2 Evaluation of the Board of FTSE 350 companiesB7.1 Annual election by shareholders of directors of FTSE 350 companies B7.2 Papers to shareholders accompanying a resolution to elect non executive directors

C1.3 Annual and half yearly financial statements D1.1 Performance related remuneration for executive directorsD2.4 Shareholder approval of long term incentive schemes

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Board meetings The Board meets regularly throughout the year. Historically, meetings have occurred quarterly with an additional strategy day. In December 2013 it was decided to increase the frequency of meeting so that meetings now take place monthly except for

the month of August. At the end of each meeting, sufficient time is given for the Chair to meet privately with the Senior Independent Director and with the other Board members.

Member attendance at Board and committee meetings was as follows:

In addition to attending Board meetings each member of the Board undertakes regular visits to Anchor locations during the year and shares their findings with the rest of the Board and the Chief Executive.

The performance of each Board Director is evaluated by the Chair. The Senior Independent Director led an evaluation of the Chair.

The Board reviews the independence of its directors as part of the annual Board effectiveness review. The directors bring a strong independent oversight to the Board and following this year’s review the Board considers that all of the directors continue to demonstrate their independence.

The Board has in place formal procedures for the management of its meetings which require the Board to be supplied with timely and relevant information to enable it to discharge its duties. As part of the Board’s evaluation of the effectiveness of its procedures the Board considered these and determined that they were satisfactory.

The Board composition is kept under review and when a new appointment is to be made, consideration is given to the experience which a potential new member could add to the existing mix. A transparent recruitment process is used with advice from external consultants if required. Appointments to the Board are approved by the full Board.

Board (7 meetings)

A&RC (4 meetings)

Executive Remuneration

Committee (3 meetings)

Nominations Committee (2 meetings)

Customer Services

Committee (3 meetings)

Aman Dalvi* 2 / 2 1/ 1 1/ 1 1/ 1

Pam Chesters 7/ 7 2/ 2 2 / 2 2 / 3

Paul Doona 5/ 7 4/ 4 1/ 3 1/ 2

Angela Horsman 6/ 7 3 / 3 2 / 2 3/ 3

Stephen Jack 7/ 7 4/ 4 3 / 3 2 / 2

lesley James 5/ 7 2 / 3 1/ 2

Rima Makarem 5/ 7 3/ 4 2 / 3 2 / 2

Chris wood 6/ 7 3/ 4 1/ 3 1/ 2

* Retired September 2013

continued on p34

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Alacia Elliott, 83, lives with her husband at Sandyford Court in Jesmond. Their daughter told them about the estate seven years ago and shortly after they moved into their bungalow. It was an ideal place to retire to – very close to their family and the shops.

After going along to Age Concern’s fitness classes Alacia was offered the opportunity to train to become a fitness instructor. At college she learnt about exercise, nutrition and diet, and got the certificates she needed to teach.

Alacia now teaches a fitness class at Sandyford Court which has proved so successful residents from local Anchor schemes also join in.

She said: “Exercise keeps you active and fit – it helps you walk better and helps with your balance. It also helps anyone with arthritis. Exercise is movement while relaxing your mind to music. It is very social – we have the class and then tea and coffee afterwards.”

Alacia Elliott Sandyford Court, Jesmond

New opportunities

32

“We like living here at sandyford court as it’s a nice community with people of the same age. We still have our independence and we don’t feel isolated. We are on the committee here and take part in activities.”

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Audit & Risk Committee (A&RC)The committee comprises at least three Directors, two of whom constitute a quorum. Appointments to A&RC are for an initial period of three years and are extendable for two further three year periods.

Stephen Jack was appointed as Chairman of A&RC in June 2012 and the other members are Paul Doona, Chris Wood and Rima Makarem. The committee structure requires at least one member of A&RC to have significant, recent and relevant financial experience. The Board is satisfied that Stephen Jack and Paul Doona fulfil this requirement.

The primary role of the A&RC is to provide assurance to the Board on:

The integrity of the financial reporting and the audit process.

The maintenance of a sound system of internal control and risk management.

Meetings and attendance

The committee met on four occasions timed to coincide with the internal and external financial reporting cycles of Anchor.

The Chief Executive, members of the Executive Management Board and senior representatives of the internal and external auditors attended meetings by invitation. At each meeting there was an opportunity for the internal and external auditors to discuss matters with the committee without any members of the executive management team being present.

Report on the committee’s activities for the financial year 2014

internal audit

Last year the committee’s activities involved a strategic reappraisal of the provision of internal audit services by Price Waterhouse Coopers LLP (PwC) The committee concluded that internal audit could be more effectively undertaken by a dedicated internal

audit team employed directly by the company. As a consequence, a small team headed up by a new Head of Internal Audit has been recruited and the agreement with PwC came to an end on 31 March.

in addition, during the year the committee reviewed:

The internal audit plan for the year and the achievement of that plan.

The adequacy of management’s response to the matters raised during the year in reports from the internal auditors, including the implementation of recommendations made.

Reports on the adequacy and effectiveness of Anchor’s internal control and risk management procedures.

The Excellence Tool which measures compliance with Anchor’s standards and policies within Operations.

The approach taken by a number of key compliance functions within the risk management framework.

External auditThe committee recommended the reappointment of KPMG LLP for 2013/14. The committee are confident of the independence and the objectivity it brings to the effectiveness of the external audit process. This is displayed through KPMG’s robust internal processes, its continuing challenge, its focused reporting and its discussions with both management and the committee.

During the year the auditors were engaged to provide a range of services to Anchor apart from audit activity, including advice on taxation and pensions. Each appointment was made taking into account the requirements of the Board’s policy on the use of auditors for non-audit work to ensure the auditor’s objectivity and independence was safeguarded. The Board policy defines the non-audit services that are permitted to be carried out by auditors. The committee receives annual reports from the Chief Financial Officer describing the non-audit work undertaken by auditors.

34


Tenants and colleagues at St Christopher's House, Morpeth enjoying their recently renovated garden, which was paid for with money from Anchor's Legacy Fund.

in accordance with its remit, the committee reviewed and approved:

The auditor’s plans for the audit of Anchor’s Financial Statements 2013/14.

The terms of engagement for the audit and proposed audit fee and associated expenses.

The content of the formal audit letter provided by the auditors and management’s response, including major issues that arose on the audit and their resolution.

Financial Reporting

The Directors consider that this Annual Report and Financial Statements taken as a whole is fair, balanced and understandable, and provides the information necessary for the members to assess the Group’s performance, business model and strategy.

During the year the committee reviewed a wide range of accounting and financial issues including the recoverable amount of housing properties and the annual financial statements prior to submission to the Board.

whistle-blowingAnchor’s whistle-blowing policy sets out the arrangements for colleagues to raise concerns or complaints regarding the risk issues, internal controls and related matters with relevant line management or senior company executives. These matters are advised to internal audit for consideration and reported to the committee as appropriate. Any matters considered sufficiently significant by the committee are brought to the attention of the Board, which decides how the matter will be handled, including whether or not it will be referred to an outside agency.

The A&RC regularly reviews the arrangements in place for handling whistle-blowing cases to ensure that they provide for the proportionate and independent investigation of issues raised and for appropriate follow-up action.

FraudThe committee receives regular reports of any fraudulent activity perpetrated or attempted against the company and its customers. Any matters considered sufficiently significant by the committee are brought to the attention of the Board.

The A&RC reviews the arrangements in place for dealing with fraudulent activity to ensure that they are proportionate and also that all appropriate external agencies are properly notified.

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Executive Remuneration Committee

The Executive Remuneration Committee consists of at least three Directors (all Non-Executive Directors of the Board), with a quorum of two. Membership is

reviewed annually by the Chairman of the committee. The committee met three times during the year.

Lesley James chaired the committee and stepped down with effect from 31 March 2014. Stephen Jack has taken over the Chair on an interim basis. Throughout the 2013/14 year its members have been Aman Dalvi (up to 30 September 2013), Paul Doona, Angela Horsman, Stephen Jack, Rima Makarem and Chris Wood, with Pamela Chesters joining the Board on 1 April 2013. No person other than the members of the committee is entitled to be present at meetings but others may be invited by the committee to attend. Neither the Company Secretary nor any members of the Executive Management Board are present when the committee considers matters relating to them.

The Executive Remuneration Committee is responsible for determining the pay and benefits and contractual arrangements for the Executive Management Board. The committee is aware that the subject of executive pay continues to be an area of focus for the media and the wider public and is aware of the sensitivities regarding executive pay at a time when public expenditure continues

Assurance

On behalf of the Board, the A&RC examines the effectiveness of Anchor’s:

System of internal control, covering all material controls, including financial, operational and compliance controls, primarily through reviewing the internal audit plan and reviewing its findings.

Management of risk by reviewing evidence of risk assessment activity.

Action taken or to be taken to manage critical risks or to remedy any control failings or weaknesses identified.

Tenants Jean Clark, Ian Raine and Jennifer Stephens

36


to be under pressure. The committee’s aims are to develop and recommend remuneration strategies that drive performance and reward it appropriately. Anchor’s long-term remuneration strategy is to attract and retain talented individuals and ensure that they are focused on delivering strategic priorities within a framework aligned to stakeholders’ interests.

The committee has written terms of reference which are reviewed annually and any proposed changes are referred to the Board for approval. The committee has an executive remuneration policy that sets out the objectives and the approach for the work of the committee. It states, “the objective of Anchor’s remuneration policy is to attract, retain and motivate high calibre senior executives through competitive pay arrangements which are also in the best interests of all stakeholders”. Total remuneration is benchmarked against a comparator group reflecting the market in which Anchor operates. Remuneration is targeted at a median position, moving to upper quartile for exceptional performance. It is assessed through personal objectives aligned to business key performance indicators, measured through the annual performance management process.

In 2013/14 year the remuneration committee approved a bonus plan for senior executives linked to the achievement of key business objectives. The key business objectives are measured through the delivery of Key Performance Indicators (KPIs), and have been developed using a balanced score card approach, focusing on People, Finance, Compliance & Service Delivery and Customer. The KPIs were weighted within the total bonus payment, and targets in each category benchmarked to ensure excellence at upper quartile. The plan also introduced a multiplier for the achievement of personal performance measures ranging from a multiplier of 0 to 2, to build personal accountability and performance delivery into the plan.

Executive Directors may hold positions in other companies as non-executive directors and retain the fees. Jane Ashcroft is a non-executive director of Dignity plc, and in accordance with Anchor policy she retained fees for the year of £44,000 (2013: £41,000).

The committee also ensures that executive remuneration is aligned with the remuneration philosophy for all Anchor colleagues. It is

underpinned by a stated set of common reward principles: performance delivery, alignment to strategy, competitive and motivating, equitable and fair, and value for money. The committee endorsed the Executive Management Board’s decision that from 1 April 2013 all Anchor colleagues should be paid above the National Minimum Wage, with a further commitment to progress and align Level 2 Care Assistants and Activity Co-ordinators to the Living Wage. This supports Anchor’s objective of being an employer of choice and cements Anchor’s commitment to ensure customers receive high quality care from a motivated workforce.

The committee has access to such information and advice both from within Anchor and externally at the expense of Anchor as it deems necessary. During the year the committee sought advice from New Bridge Street consultants. The committee also seeks internal support from the Chair, Company Secretary, Director of Human Resources and Head of Reward as required.

Resident Doreen Haigh and Care Assistant Samantha Hill

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Nominations Committee

The committee consists of at least three Directors with a quorum of two. Membership is reviewed annually by the committee Chair.

Lesley James chaired the committee until her retirement at the end of the year. Pamela Chesters will take over on an interim basis until a new appointment to replace Lesley James is made. The committee has written terms of reference which it reviews regularly and any proposed changes are referred to the Board for approval.

The committee noted that following the resignation of Lesley James, Anchor’s Board comprises six members, of whom three are women, and therefore complies with the ‘Women on Boards report for FTSE 100 companies’ issued by Lord Davies in February 2011.

In the forthcoming year the action plan is to:

Continue to ensure the non-executive directors on the Board have the appropriate skills and range of experience.

Continue to support the succession of members of the Executive Management Board.

Review the size of the Board to ensure

In carrying out its activities the committee has access to such information and advice both from within Anchor and externally at the expense of Anchor as it deems necessary. Recruitment services

in relation to the appointments of Tim Seal and Dominic Hayes as members of Anchor’s Executive

has no other connections with Anchor.

Customer Services CommitteeCustomer Involvement

Anchor is committed to supporting and developing a strong Customer Services Committee (CSC). Members of the CSC are the chairs and deputy

chairs of the eight regional customer forums. Members are appointed for a period of three years and appointments can be renewed thereafter for a maximum period of six years. The CSC maintains close links with the Board. Anchor’s chair together with at least one other non-executive director together with members of Anchor’s Executive Management Board endeavour to attend all meetings of the CSC.

The committee has clear written terms of reference, which include:

Shaping housing management service standards and service delivery.

Driving continuous improvements in the services provided to customers.

Scrutinising performance in the services provided to customers.

Agreeing the content of the annual performance report made available to all rental customers.

Last year Anchor encouraged the CSC to widen its remit and include representation from Anchor’s care home and leasehold customers. The CSC has embraced this challenge and is becoming an increasingly important conduit through which the views of care home and leasehold customers are expressed.

Following discussions with the CSC, the Board and the CSC have agreed that with effect from 31 March 2014 the CSC will no longer be a committee of Anchor’s Board, but members of the Board will continue to attend CSC meetings and the Board will also continue to receive a quarterly report from the CSC.

The Board would like to acknowledge and place on record their thanks to Mr Derek Stone, Chair of the East Midlands and Anglia customer forum, and Mr Thomas Tuff, Chair of Cumbria and North East customer forum, who passed away during the year.

continued on p40

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“The thought of going into accommodation aimed at older people did make us hesitate at first. But anchor offered us something different.”

Angie and Stephen are both in their 50s and still working. They were looking for their next home when they enquired about an Anchor property. “We were thinking about the long term and wanted to find a new home that we could see ourselves living in for the rest of our lives,” says Angie.

Angie and Stephen Thompson, with Scheme Manager Jamar Hesford Guardian Court, York

Something different

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Anchor’s approach to risk management

The Board has overall accountability for ensuring that risk is effectively managed across Anchor and, on behalf of the Board, the A&RC reviews the effectiveness of the risk management process. A review of the principal risks and uncertainties is included in the Operating and Financial Review including Strategic Report.

The Board

The Board recognises its responsibility for Anchor’s system of internal control and reviewing its effectiveness. During the year, the Board has continued to debate and develop its understanding of risk, risk appetite and tolerance. Protecting the business from operational and reputational risk is an essential part of the Board’s role. With the support of the A&RC, the Board has continued to drive a better understanding of the risks Anchor faces.

The Board is satisfied that the system of internal control has been operating effectively for the year and there are no incidents of weakness leading to material loss, contingency or uncertainty that require separate disclosure in the Financial Statements.

Audit & Risk Committee (A&RC)

The A&RC has reviewed its terms of reference during the year to ensure that it continues to provide assurance to the Board on Anchor’s financial reporting, internal control and risk management, internal audit arrangements and external audit arrangements.

The A&RC has monitored the integrity of the Financial Statements and reviewed the actions and judgements of management in their preparation before they were submitted to the Board for approval. The A&RC pays particular attention to strategic processes for risk management, internal control and governance, critical accounting policies and practices.

The A&RC has reviewed the effectiveness of the internal control systems and is satisfied that the policies in relation to financial control, delegated authority, treasury management, fraud detection and reporting, internal audit, project management, strategic planning, business planning, asset management and performance reporting contribute to an effective control environment.

The A&RC has also reviewed the effectiveness of Anchor’s risk management systems. In addition to reports from the internal auditors, the A&RC has also considered the company’s internal processes for identifying, evaluating and managing the significant risks it faces.

The A&RC discussed the external audit strategy with KPMG at the start of its audit planning process. KPMG identified its assessment of the key risks for the purposes of the audit and the scope of their work.

For 2014, these risks were valuation of pension liabilities and capital expenditure on development activity. More detail is set out in KPMG’s report on pages 48 to 50.

The A&RC regularly reviews incidents of whistle-blowing during the year and continues to have oversight of this.

In addition to the above, the A&RC has considered its own effectiveness through a self-assessment in which each member has participated. The committee concluded that during the year the arrangements, structures and processes in place had enabled it to undertake an appropriate review of Anchor’s financial reporting, internal control and risk management, internal audit arrangements and external audit arrangements.

Executive Management Board

The Executive Management Board is responsible for the operation of the internal control environment within Anchor.

Risk management procedures are applied throughout Anchor to support the achievement of the organisation’s objectives with key strategic risks and the action taken to mitigate them reported to A&RC and the Board.

The Executive Management Board has been diligent in taking action to mitigate risk where this has been needed. Where improvements in internal control have been needed, steps have been taken to ensure that systems and controls are improved and that material error or misstatement has not occurred.

40

4Section 4Board, Directors and Advisors

41


PatronHRH Princess Alexandra

Members of the BoardChairman

Pamela Chesters CBE

Members *

Paul Doona

Angela Horsman

Stephen Jack OBE

Dr Rima Makarem

Chris Wood

Executive Management Board**Chief Executive

Jane Ashcroft CBE

Chief Financial Officer

David Springthorpe (Resigned 31 May 2014)

Members

David Edwards

Dominic Hayes (Appointed 27 January 2014)

Sue Ingrouille

Howard Nankivell

Tim Seal (Appointed 16 December 2013)

Registered Office2nd Floor

25 Bedford Street

London

WC2E 9ES

External AuditorsKPMG LLP

BankersLloyds Banking Group PLC

investment ManagersSchroder Investment Management Limited

SolicitorsEversheds LLP

Treasury advisorsTraderisks Limited

Board, Directors and Advisors

* Members are classified as Directors for the purposes of the Companies Act 2006

** Members of the Executive Board are not classified as Directors for the purposes of the Companies Act 2006

42

5Section 5Directors’ report

43


Directors’ Report

legal status Anchor Trust is a company limited by guarantee (number 3147851). It is registered under the Housing Act 1996 (registration number LH4095) and is a charity (number 1052183).

Review of the business A review of the business is provided in the statement of the Chair and Chief Executive and the Operating and Financial Review including Strategic Report.

Directors The Directors at 31 March 2014 and the date of approval of the Financial Statements are those listed on page 42.

Employment – equality and diversity

Our people strategy aims to cultivate motivated and supported colleagues who understand how they contribute to the organisation. Anchor consults with employees, who are called colleagues, in a range of ways, both formally and informally.

Anchor strives to comply with employment legislation and seeks to ensure that we employ a diverse and appropriately skilled workforce.

Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the individuals concerned. In the event of colleagues becoming disabled, every effort is made to ensure their employment within Anchor is continued and any necessary adaptations to their working environment or routine are made.

Health and safety Anchor recognises the importance of managing health and safety risks in order to keep customers

and colleagues safe. Anchor’s health and safety performance continues to be satisfactory with health and safety measures being included in the key performance indicators.

Donations Neither Anchor nor any of its subsidiaries made any charitable donations or political donations, or incurred any political expenditure during the year.

Creditor payment policy

It is Anchor’s policy to settle the terms of payment with any suppliers when agreeing the terms of each transaction; to ensure those suppliers are made aware of the terms of payment; and to abide by them. Generally Anchor pays its creditors within 30 days. At the year end, there were 23 days (2013: 22 days) worth of purchases in trade creditors.

Post balance sheet events There were no post balance sheet events that require disclosure in the Financial Statements.

Going concern

After making enquiries and examining major areas which could give rise to significant financial exposure, the Directors are satisfied that no material or significant exposures exist other than as reflected in these Financial Statements and that Anchor has adequate resources to continue its operations for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing the Financial Statements.

AuditorKPMG LLP has expressed its willingness to continue in office as auditor to Anchor. A resolution proposing its reappointment will be made at the Annual General Meeting.

44


Disclosure of information to auditors 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 (as defined in Section 418(2) of the Companies Act 2006) of which the company’s auditors are 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 auditors are aware of that information.

Statement of Directors’ responsibilities in respect of the Directors’ Report and the Financial Statements The Directors are responsible for preparing the Directors’ 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 they have elected to prepare the Financial Statements in accordance with UK Accounting Standards and applicable law (UK Generally Accepted Accounting Practice).

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 surplus or deficit for that period. In preparing these Financial Statements, the Directors are required to:

Select suitable accounting policies and then apply them consistently;

Make judgements and estimates that are reasonable and prudent; and

State whether applicable UK Accounting Standards and Statements of Recommended Practice have been followed, subject to any material departures disclosed and explained in the Financial Statements.

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, the Housing and Regeneration Act 2008 and the Accounting Direction for Private Registered Providers of Social Housing 2012. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the company and to prevent and detect fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the company’s website. Legislation in the UK governing the preparation and dissemination of Financial Statements may differ from legislation in other jurisdictions.

Each director confirms that, so far as he/she is aware, there is no relevant audit information of which the Company’s auditors are unaware and that each director has taken all the steps that he/she ought to have taken as a director to make himself/herself aware of any relevant audit information and to establish that the Company’s auditors are aware of that information.

By order of the Board.

David Edwards Company Secretary and General Counsel 22 July 2014

45

Time to relax

Eileen, 91, was living in a bungalow in Leeds and wasn’t coping very well. Eileen had refused any help and struggled with shopping. After having respite care it was decided she’d benefit from more help. The decision was made to move Eileen into a care home near her son Martin who lived in West Byfleet. They chose Anchor’s West Hall and Eileen moved in November 2013.

Eileen said: “Moving to West Hall has made me relax: I don’t feel lost anymore. At my home in Leeds I felt alone with no one to talk to, but being here has changed my life. I have made friends and found a purpose to live a new life. I like meeting new people from all different walks of life, at home I wouldn’t speak to any of my neighbours or friends.”

“Before I had no interest in taking part in activities, but now my passion is the gardening club, I also join in with tai chi and music for health. West Hall recently had a visit from the Zoo Lab which provides animal handling experiences which I enjoyed thoroughly.”

Eileen’s son Martin has also noticed a change in his mother. He said: “My mother is more relaxed since living at West Hall, she seems more confident. I chose West Hall as it provided lots of space, and the staff were pleasant.”

Eileen Sampson West Hall, West Byfleet, Surrey

“Coming to West Hall has given me a chance of living another life; I can’t thank the staff enough for what they have done to change my life.”

46

6Section 6Independent Auditor’s Report

47


Independent auditor’s report to the members of Anchor Trust only

Opinions and conclusions arising from our audit1 Our opinion on the financial statements

is unmodified

We have audited the financial statements of Anchor Trust for the year ended 31 March 2014 set out on pages 51 to 76. In our opinion the financial statements:

give a true and fair view of the state of the Group’s and of the Company’s affairs as at 31 March 2014 and of the Group’s surplus for the year then ended;

have been properly prepared in accordance with UK Accounting Standards; and

have been prepared in accordance with the requirements of the Companies Act 2006, the Housing and Regeneration Act 2008 and the Accounting Direction for Private Registered Providers of Social Housing 2012.

2 Our assessment of risks of material misstatement

In arriving at our audit opinion above on the financial statements the risk of material misstatement that had the greatest effect on our audit was as follows:

Recoverable amount of housing properties (Housing properties under construction £47m, Properties for resale £13m)

Refer to page 29 (Audit & Risk Committee section of the Corporate Governance Report), page 56 (accounting policy) and pages 52 to 76 (financial disclosures)

The risk – Housing Properties represent 76 per cent of the Group’s total assets and are split between Housing Properties held for rental and Properties held for resale. We do not consider

there to be a significant risk regarding the carrying value of the Group’s housing properties including those properties classified as Housing Properties under Construction and Properties for resale. However, due to their materiality in the context of the financial statements as a whole the recoverability of the Housing Properties under Construction and Properties for resale is considered to be the area which had the greatest effect on our overall audit strategy and allocation of resources in planning and completing our audit.

For Properties for resale there is a risk that net realisable value falls short of the carrying value. Although market conditions have started to improve, there are still some areas where downward pressure on property values remains; and for Housing Properties under Construction there is a risk that any costs overruns could lead to potential impairment.

Our response – Our audit procedures included, among others:

– Inspecting the Group’s assessment of property valuations and impairment calculations.

– For Housing properties under Construction we compared actual spend, plus forecast costs to complete, to the original Board approved scheme appraisal (the forecast income and expenditure of a new build site) to consider whether the total expected costs indicated potential impairment. We obtained and corroborated the assumptions used to derive the expected recoverable amount to third party data sources.

– For Properties for resale at year end we compared actual spend plus forecast costs to completion for work in progress to expected sales proceeds.

48


3 Our application of materiality and an overview of the scope of our audit

The materiality for the Group financial statements as a whole was set at £5.3m. This has been determined with reference to a benchmark of Group total turnover (of which it represents two per cent), which we consider to be one of the principal considerations for members of the Company in assessing the financial performance of the Group.

We agreed with the Audit & Risk Committee to report to it all corrected and uncorrected misstatements we identified through our audit with a value in excess of £260,000, in addition to other audit misstatements below that threshold that we believe warranted reporting on qualitative grounds.

4 Our opinion on other matter prescribed by the Companies Act 2006 is unmodified

In our opinion the information given in the Chairman’s and Chief Executive’s Statement, Operating and Financial Review, including the Strategic Report, Corporate Governance Report, and Director’s Report for the financial year for which the financial statements are prepared is consistent with the financial statements.

5 we have nothing to report in respect of the matters on which we are required to report by exception

Under ISAs (UK and Ireland) we are required to report to you if, based on the knowledge we acquired during our audit, we have identified other information in the annual report that contains a material inconsistency with either that knowledge or the financial statements, a material misstatement of fact, or that is otherwise misleading.

In particular we are required to report to you if:

we have identified material inconsistencies between the knowledge we acquired during our audit and the Directors’ statement that they consider that the annual report and financial statements taken as a whole is fair, balanced and understandable and provides the information necessary for the members to assess the Group’s performance, business model and strategy; or

the Audit & Risk Committee section of the Corporate Governance Report does not appropriately address matters communicated by us to the Audit & Risk Committee.

Under the Companies Act 2006 we are required to report to you if, in our opinion:

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

the parent company 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 need for our audit.

We have nothing to report in respect of the above responsibilities.

49


Respective responsibilities of the directors and auditor

As explained more fully in the Statement of Directors’ Responsibilities set out on page 45, 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 UK Ethical Standards for Auditors.

Scope of an audit of financial statements performed in accordance with iSAs (Uk and ireland)

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. This report is made subject to important explanations regarding our responsibilities, as published on our website at www.kpmg.com/uk/auditscopeother2013, which are incorporated into this report as if set out in full and should be read to provide an understanding of the purpose of this report, the work we have undertaken and the basis of our opinions.

The purpose of this report and restrictions on its use by persons other than the Company’s members as a body

This report is made solely to the Company’s members, as a body, in accordance with section 128 of the Housing and Regeneration Act 2008 and 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.

Chris wilson Senior Statutory Auditor for and on behalf of kPMG llP, Statutory Auditor

Chartered Accountants Arlington Business Park Theale Reading RG7 4SD 22 July 2014

50

7Section 7 Financial Statements

51


Consolidated Income and Expenditure Account

Note2014 £’000

2013 £’000

Turnover 4 265,822 264,851

Operating costs 4 (247,521) (246,742)

Operating surplus before exceptional items 4 18,301 18,109

Exceptional items 5 - 34

Operating surplus 18,301 18,143

(Deficit) / surplus on disposal of fixed assets 14 (1,560) 8,192

Interest receivable and other income 10 2,727 3,350

Interest payable and similar charges 11 (7,414) (7,860)

Surplus for the year 12,054 21,825

for the year ended 31 March 2014

Note2014 £’000

2013 £’000


Actuarial loss on pension fund 26 (1,292) (7,461)

Total recognised surplus for the year 10,762 14,364

Note 2014 £’000

2013 £’000

Reported surplus for the year 12,054 21,825

Realised investment gains 15 (239) (545)

Historical cost surplus for the year 11,815 21,280

The accompanying accounting policies and notes on pages 56 to 76 form an integral part of these financial statements.

Statement of total recognised surpluses and deficits

note of historical cost surpluses and deficits

52


Consolidated Balance Sheet

Note £’000 2014 £’000 £’000

2013 £’000

Intangible Fixed Assets

Goodwill 13 50 102

Tangible Fixed Assets

Housing properties – gross cost less depreciation 14 915,350 887,745

Less: Social housing grant 14 (515,972) (520,211)

Other capital grants and receipts 14 (43,804) (44,643)

355,574 322,891

Other tangible fixed assets 14 4,248 2,622

Investments 15 3,129 3,423

363,001 329,038

Current Assets

Stocks 16 13,258 2,732

Debtors: amounts due within one year 17 18,772 25,585

Debtors: amounts due after more than one year 18 20,763 21,304

Short term deposits and investments 19 24,521 27,428

Cash at bank 46,771 66,208

124,085 143,257

Creditors: amounts falling due within one year 20 (61,285) (50,337)

Net current assets 62,800 92,920

Total assets less current liabilities 425,801 421,958

Creditors: amounts falling due after more than one year 21 139,827 142,929

Provisions and Pension Liability

Provisions for liabilities and charges 22 967 1,216

Pension liability 26 35,657 39,224

Capital and Reserves

Restricted reserves 28 354 355

Income and Expenditure reserve 28 248,996 238,234

425,801 421,958

as at 31 March 2014

The financial statements on pages 52 to 76 were approved by the Board on 22 July 2014 and signed on its behalf by:

Stephen Jack OBE DirectorPamela Chesters CBE Chairman

53


Company Balance Sheet

Note £’000 2014 £’000 £’000

2013 £’000

Intangible Fixed Assets

Goodwill 13 - 53

Tangible Fixed Assets

Housing properties – gross cost less depreciation 14 915,416 888,171

Less: Social housing grant 14 (515,972) (520,211)

Other capital grants and receipts 14 (43,804) (44,643)

355,640 323,317

Other tangible fixed assets 14 4,248 2,622

Investments 15 3,129 3,423

Investments in subsidiary undertakings 15 2,301 2,301

365,318 331,716

Current Assets

Stocks 16 3,761 2,732

Debtors: amounts due within one year 17 18,601 25,478

Debtors: amounts due after more than one year 18 37,269 28,740

Short term deposits and investments 19 24,521 27,428

Cash at bank 42,575 63,782

126,727 148,160

Creditors: amounts falling due within one year 20 (57,721) (49,266)

Net current assets 69,006 98,894

Total assets less current liabilities 434,324 430,610

Creditors: amounts falling due after more than one year 21 139,827 142,929

Provisions and Pension Liability

Provisions for liabilities and charges 22 967 1,216

Pension liability 26 35,657 39,224

Capital and Reserves

Restricted reserves 28 354 355

Income and Expenditure reserve 28 257,519 246,886

434,324 430,610

as at 31 March 2014

The financial statements on pages 52 to 76 were approved by the Board on 22 July 2014 and signed on its behalf by:

Stephen Jack OBE DirectorPamela Chesters CBE Chairman

54


Consolidated Cash Flow Statement

Note2014 £’000

2013 £’000

Net cash inflow from operating activities 29.1 46,352 41,831

Returns on investments and servicing of finance

Net cash outflow from returns on investments and servicing of finance 29.3 (7,234) (5,457)

Capital expenditure and finance investment

Net cash outflow from capital expenditure and financial investment 29.3 (61,236) (25,259)

Net cash (outflow) / inflow before use of liquid resources and financing (22,118) 11,115

Management of liquid resources

Net cash inflow from management of liquid resources 29.3 2,907 24,781

Net cash (outflow) / inflow before financing (19,211) 35,896

Financing

Net cash outflow from financing 29.3 (226) (184)

(Decrease) / increase in cash (19,437) 35,712


2014 £’000

2013 £’000

Reconciliation of net cash flow to movement in net debt

(Decrease) / increase in cash in the period (19,437) 35,712

Cash inflow from net increase in debt 226 184

Change in debt resulting from movement in finance lease obligations 171 84

Cash flow from decrease in liquid resources (2,907) (24,781)

Movement in net funds in the year (21,947) 11,199

Net debt at 1 April (29,981) (41,180)

Net debt at 31 March (51,928) (29,981)

The accompanying accounting policies and notes on pages 56 to 76 form an integral part of these financial statements.

55


Notes to the Financial Statements

1 Basis of accountingThe financial statements have been prepared on a going concern basis under the historical cost convention as modified by the revaluation of fixed asset investments and in accordance with accounting standards applicable in the United Kingdom. Accounting policies have been applied consistently with the prior year.

They have been prepared in accordance with the Accounting Direction for Private Registered Providers of Social Housing 2012.

2 Basis of consolidation

The Group financial statements comprise those of Anchor Trust and its subsidiary undertakings.

3 Principal accounting policiesi Turnover

Turnover is net of voids and value Added Tax and includes:

Rents and service charges from social housing lettings and leasehold management

Residential care home charges Home care charges Revenue grants Sales of leasehold properties Supporting People contract income

Turnover has been analysed in accordance with the requirements of the Accounting Direction for Private Registered Providers of Social Housing 2012 (see note 4).

Charges for services provided and Supporting People income are recognised as income when Anchor has provided the service concerned. Grants made as contributions to revenue expenditure are credited to income in the period in which the related expenditure is incurred.

Income from the sale of leasehold properties is recognised as turnover at the completion date of the sale of the property.

Voids represent rent losses arising from vacant accommodation and the amount is shown in Note 4.3, as required by the Accounting Direction for Private Registered Providers of Social Housing 2012.

ii interest payableInterest is capitalised on borrowings to finance developments to the extent that it accrues in respect of the period of development if it represents either:

a) interest on borrowings specifically financing the development programme after deduction of interest on social housing grant received in advance; or

b) interest on borrowings of Anchor Trust as a whole after deduction of interest on social housing grant received in advance to the extent that they can be deemed to be financing the development programme.

Other interest payable is charged to the income and expenditure account in the year.

iii Pensions

Defined contribution pension costs are charged to the income and expenditure account in the year they are incurred.

In respect of defined benefit pensions, the pension costs charged against income are based on an actuarial method and actuarial assumptions. Before the current financial year, these were designed to provide the anticipated pension cost over the average service lives of the employees in the scheme in a way that sought to ensure that the regular pension cost represented a broadly level percentage of the current and expected future pensionable payroll in the light of current actuarial


56


assumptions. Variations from the current costs were spread over the average service lives of the employees in the scheme in a way that seeks to ensure that the regular pension cost represents a broadly level percentage of the current and expected future pensionable payroll in the light of current acturial assumptions. Variations from the current cost were spread over the remaining service lives of current employees in the pension scheme.

As the scheme was closed to further accrual as at 31 March 2011, the anticipated pension costs are primarily the scheme expenses and there is no remaining service life of employees assumed for the scheme.

iv TaxationIncome and capital gains of Anchor Trust are exempt from tax where arising from charitable purposes.

v leases

As lessee

Assets financed by leasing agreements which give rights approximating to ownership (finance leases) have been capitalised at their fair value and depreciation is provided on the basis of the Group depreciation policy. The capital elements of future obligations under finance leases are included as liabilities in the balance sheet and the current year’s interest element, having been allocated to accounting periods to give a constant periodic rate of charge on the outstanding liability, is charged to the Income and Expenditure Account. The annual payments under all other lease arrangements, known as operating leases, are charged to the Income and Expenditure Account on a straight-line basis.

As lessor

Upon completion of properties the development costs incurred under a Private Finance Initiative (PFI) contract are converted to a finance lease debtor. This debtor represents the total amount outstanding under the lease agreements less unearned income. Finance lease income, having been allocated to accounting periods to give a constant periodic rate of return on the net investment, is included in turnover.

vi Housing properties

Retirement housing and residential care home properties are stated at cost less social housing grant, other capital grants and depreciation. Shared Ownership for the Elderly (SOE) schemes

are held at the outstanding interest in the properties less social housing grant retained and depreciation. The outstanding interest in SOE schemes is stated at cost, plus cost of equity subsequently repurchased by Anchor Trust. Proceeds from first tranche disposals are accounted for in the income and expenditure account in the year in which the disposal occurs.

Cost for housing properties includes the cost of acquiring land and buildings, construction costs including internal equipment and fittings, cost of capital employed during the development period and expenditure incurred in respect of improvements and extension of existing properties to the extent that it enhances the economic benefit derived from the assets.

The costs of housing properties are split between the structure and those major components which require periodic replacement. Replacement or restoration of such major components is capitalised and depreciated over the average estimated useful life which has been set taking into account professional advice, the Group’s asset management strategy and the requirements of the Decent Homes Standard. The lives attributable to assets capitalised in this way range from four to 50 years.

Housing properties in the course of construction are held at cost and are not depreciated. They are transferred to completed properties when ready for letting.

The asset lives used are as follows: Housing properties and residential care homes:

between 25 and 50 years except where the economic life of the property is dependent on a revenue support agreement in which case the life used is the initial term of that agreement.

For individual components the assets lives used are as follows: Bathrooms and kitchens: 10 years Windows: 15 years SOE schemes: 99 years.

For all properties impairment reviews are carried out on an annual basis in accordance with Financial Reporting Standard 11.

The depreciation policy relating to Housing Properties follows the SORP Updated 2010 on Accounting by registered social landlords. Depreciation is calculated on cost net of any grant received.

57


vii Social housing grantSocial housing grant is receivable from central government agencies and local authorities and is offset against the cost of housing properties on the face of the balance sheet. The purpose of social housing grant is to subsidise the capital cost of affordable housing.

Social housing grant due from such agencies or received in advance is included as a current asset or liability.

Where, following the sale of the property, social housing grant becomes repayable, to the extent that it is not subject to abatement, it is included as a liability until it is repaid or utilised.

Any social housing grant received in respect of revenue expenditure is credited to the income and expenditure account in the same year as the expenditure to which it relates.

viii Other grantsThe capital costs of housing properties are stated net of capital grants, other than social housing grant, receivable from public bodies.

Grants in respect of revenue expenditure are credited to the income and expenditure account in the same year as the expenditure to which they relate.

ix Other tangible fixed assetsAll other tangible fixed assets are included at cost less depreciation.

Depreciation is provided on a straight line basis on the cost of the asset less the estimated residual value on all tangible fixed assets except land.

The asset lives used are as follows: Motor vehicles: four years Computer equipment: two to four years Office equipment and fittings: four years

x investmentsAll investments are stated at market value at the balance sheet date. Investments that are intended to be held to generate returns for use on a continuing basis in the activities of Anchor Trust are classified as fixed assets.

Investments held as part of short term treasury management for a planned expenditure purpose are classified as current assets.

xi Restricted reservesRestricted reserves are funds received, the use of which is restricted by general law or by the terms on which the funds were given.

These include funds where the donor has made a donation to be spent for a particular purpose or in a particular geographical area.

xii impairmentWhen a review of individual fixed assets or income generating units indicates an impairment, this is recognised in the income and expenditure account and included within cumulative depreciation.

xiii StockStock comprises properties available for resale and goods for consumption, which are shown at cost. This is considered to be a reasonable approximation to the lower of cost and net realisable value.

xiv Positive goodwillWhere the fair value consideration for an acquired business exceeds the fair value of its separable net assets, the difference is treated as purchased goodwill and is capitalised and amortised through the income and expenditure account over its estimated economic life. The estimated useful economic life of goodwill is four to 10 years.

xv Financing costsThe initial cost of raising finance is charged to the income and expenditure account when incurred.

xvi Provision for liabilitiesA provision is made when Anchor Trust has a legal or constructive obligation as a result of a past event and it is probable that an outflow of economic benefits will be required to settle the obligations. Anchor Trust closes retirement housing and care homes that are not financially viable in the ordinary course of business and provision is made accordingly.

xvii Related partiesAnchor Trust has taken advantage of the exemption contained in Financial Reporting Standard 8 and has therefore not disclosed transactions between group companies that are eliminated on consolidation. All transactions between group companies are on commercial terms.

58


4 Particulars of turnover, operating costs and operating surplus

4.1 Analysis of turnoverSocial

housing lettings£’000

Home care£’000

Non-social housing activities

£’000

Central overheads and income

£’0002014 Total

£’0002013 Total

£’000

Turnover 256,847 2,889 5,128 958 265,822 264,851

Operating costs (226,916) (3,313) (6,841) (10,451) (247,521) (246,742)

Operating surplus / (deficit) before exceptional items

29,931 (424) (1,713) (9,493) 18,301 18,109

2014£’000

2013£’000

Leasehold management 3,468 3,196

Sales of leasehold properties 849 5,958

Other activities 811 1,330

Total 5,128 10,484

Social housing lettings comprise income from retirement housing and from residential care homes (see note 4.3).

Home care income comprises income from care services delivered into customers’ homes.

Anchor’s costs relating to administration, offices and other support functions are allocated to Anchor Trust’s businesses, being social housing lettings, home care and non-social housing activities. The amounts allocated were £35,557,000 (2013: £35,424,000), £645,000 (2013: £992,000) and £3,775,000 (2013: £3,465,000) respectively. Anchor Trust, which operates the regulated retirement housing to let and residential care home businesses, also transacts with other group companies, which are not regulated, and these transactions are described in note 32.

4.2 Particulars of turnover from non-social housing activities

All turnover has been derived from activities within the United Kingdom.

59


6 impairment of land and buildings

An impairment review of assets has been undertaken as required by Financial Reporting Standard 11. The review concluded that no impairment charge was required for the year (2013: £nil)

Retirement housing

to let£’000

Residential care homes

£’0002014 Total

£’0002013 Total

£’000

Income

Rent receivable net of identifiable service charges 84,038 120,816 204,854 198,508

Charges for support services 2,657 - 2,657 2,435

Service charge income 46,014 - 46,014 43,898

Net rental income 132,709 120,816 253,525 244,841

Other revenue grants 15 464 479 658

Other income from social housing lettings 2,202 641 2,843 2,220

Income from social housing lettings 134,926 121,921 256,847 247,719

Expenditure

Management 23,424 17,618 41,042 40,260

Service charge costs 41,379 92,668 134,047 128,540

Routine maintenance 8,802 1,136 9,938 9,186

Planned maintenance 11,098 1,493 12,591 11,848

Bad debts 611 208 819 1,064

Lease charges 100 560 660 611

Depreciation of housing properties 19,699 7,704 27,403 27,861

Other costs 88 328 416 382

Operating costs on social housing lettings 105,201 121,715 226,916 219,752

Operating surplus on social housing lettings 29,725 206 29,931 27,967

4.4 Property numbersRetirement

housing leasehold units

Retirement housing units

to let


units

Unit numbers available as at 1 April 2013 6,803 22,494 4,339

Additions 3 - -

Disposals/De-registered (36) (129) (126)

Unit numbers available as at 31 March 2014 6,770 22,365 4,213

The value of void losses was £2,364,000 (2013: £2,704,000)

2014£’000

2013£’000

Business disposal credit - (34)

Total exceptional items included in operating surplus - (34)

The exceptional items arising are as follows:

5 Exceptional items

Exceptional income of £nil (2013: £34,000 income) related to discontinued operations. In 2013 the exceptional credit arose from the release of unutilised provisions relating to the separation costs for Anchor Staying Put.

4.3 Particulars of turnover and operating costs from social housing lettings

60


7 Operating surplus before exceptional items

Operating surplus is stated after charging:2014£’000

2013£’000

Depreciation of tangible owned fixed assets – housing properties 27,506 27,985

Depreciation of tangible owned fixed assets – other 1,498 2,018

Amortisation of positive goodwill 52 51

Operating lease rentals – land and buildings 2,119 2,338

Auditor’s remuneration excluding VAT

In their capacity as auditor 107 104

In respect of other services:

Service charge audit fees 70 68

Tax advice 88 43

Pensions consultancy 81 50

Quality assurance reviews - 46

8 Directors’ emoluments

The Directors are defined as the members of the Board and members of the Executive Management Board. Members of the Board are defined as Directors for the purposes of the Companies Act 2006. Members of the Executive Management Board are not classified as Directors under the Companies Act 2006. One additional post was created to join the Executive Management Board in the financial year.

2014£’000

2013£’000

Payments to Board members during the year 192 147

Total aggregate remuneration payable in respect of the Executive Management Board:

Emoluments (excluding benefits in kind) 1,222 1,189

Benefits in kind 35 41

Pension contributions 169 140

Compensation paid in respect of loss of office 39 70

1,465 1,440

Payments to the highest paid Director

Total emoluments, excluding pension contributions 362 330

Defined benefit pension scheme

Accrued pension of the highest paid Director 45 44

The highest paid Director was the Chief Executive who received a base salary of £293,000 (2013: £286,000) and a bonus for the year of 7.5% of base salary (2013: 10%). The Chief Executive is entitled to a car allowance. The value of the car allocated, as a benefit in kind, was £13,599 (2013: £12,964) and the balancing amount was paid as an allowance of £3,742 (2013: £3,742), in accordance with Anchor’s policy. The Chief Executive was an ordinary member of the Anchor Trust defined benefit scheme before it was closed to further contributions on 1 April 2011 and is an ordinary member of the Anchor Trust defined contribution scheme. Employer’s contribution in respect of the Chief Executive’s pension in the year was £87,945 (2013: £57,200) of which £29,315 was taken as cash. No contribution was made to any other individual pension schemes.

61


2014£’000

2013£’000

Wages and salaries 114,593 113,429

Social security costs 8,251 8,102

Pension costs 2,368 1,102

125,212 122,633

9 Employee costs and numbers

9.1 Employee costs:

2014Number

2013Number

Office staff 720 743

Operational staff 7,725 7,942

8,445 8,685

9.2 The average number of employees, including part time staff, during the year was:

2014Number

2013Number

Office staff 677 696

Operational staff 5,652 5,677

6,329 6,373

9.3 The full time equivalent number of employees during the year was:

2014Number

2013Number

2014Number

2013Number

£60,001 to £70,000 27 16 £160,001 to £170,000 2 2

£70,001 to £80,000 2 8 £170,001 to £180,000 1 1

£80,001 to £90,000 8 5 £180,001 to £190,000 1 -

£90,001 to £100,000 9 12 £210,001 to £220,000 - 1

£100,001 to £110,000 3 1 £270,001 to £280,000 - 1

£110,001 to £120,000 3 3 £280,001 to £290,000 1 -

£120,001 to £130,000 2 6 £380,001 to £390,000 - 1

£130,001 to £140,000 - 1 £420,001 to £430,000 1 -

£140,001 to £150,000 1 2

The full time equivalent number of employees whose total aggregrate remuneration (including pension contributions and compensation payable in respect of loss of office) fell within the following bands was:

Full time equivalents are calculated based on a standard working week of 37.5 hours.

62


2014£’000

2013£’000

Interest receivable 2,221 2,373

Exchange rate gain 239 545

Other income 267 432

2,727 3,350

10 interest receivable and other income

2014£’000

2013£’000

On bank loans, overdrafts and other loans repayable wholly or partly in more than five years 6,173 6,182

Less: Interest capitalised (55) (50)

Finance lease interest 1,296 1,728

7,414 7,860

2014£’000

2013£’000


Tax on surplus at standard rate of 23% (2013: 24%) (2,772) (5,238)

Factors affecting charge for the year

Charitable surplus exempt from taxation 2,772 5,238

- -

2014£’000

2013£’000

United Kingdom corporation tax at 23% (2013: 24%) - -

- -

11 interest payable and similar charges

12 Taxation charge

Group£’000

Company£’000

Goodwill

At 1 April 2013 102 53

Amortisation for the year (52) (53)

As at 31 March 2014 50 -

13 intangible fixed assets

The taxation charge comprises:

Interest was capitalised on assets under construction at a rate of LIBOR + 0.225%, being the weighted average rate payable on the bank loans used to finance development costs.

The tax assessed for the period is lower than that resulting from applying the standard rate of 23% (2013: 24%) corporation tax in the UK. The differences are explained below:

Anchor Trust is exempt from UK corporation tax on activities which fall under its charitable objects.

63


Retirement housing£’000


£’000

Properties under

construction£’000

Shared ownership schemes

£’000

Total housing properties

£’000

Cost

At 1 April 2013 845,439 228,575 19,414 4,751 1,098,179

Additions 28,755 5,797 27,830 - 62,382

Transfers (7) 277 (270) - -

Disposals (8,549) (4,448) - - (12,997)

As at 31 March 2014 865,638 230,201 46,974 4,751 1,147,564

Depreciation

At 1 April 2013 128,863 81,571 - - 210,434

Provided in the year 19,813 7,693 - - 27,506

Transfers - - - - -

Disposals (3,534) (2,192) - - (5,726)

As at 31 March 2014 145,142 87,072 - - 232,214

Net book value at 31 March 2014 720,496 143,129 46,974 4,751 915,350


Social housing grant (SHG)

At 1 April 2013 474,904 38,638 - 6,669 520,211

Transfer to Recycled Capital Grant Fund (2,830) - - - (2,830)

Disposals (1,409) - - - (1,409)

As at 31 March 2014 470,665 38,638 - 6,669 515,972

Other capital grants

At 1 April 2013 25,533 19,110 - - 44,643

Transfers - - - - -

Disposals (39) (800) - - (839)

As at 31 March 2014 25,494 18,310 - - 43,804

Total SHG and other capital grants as at 31 March 2014

496,159 56,948 - 6,669 559,776


500,437 57,748 - 6,669 564,854

Overall net book value as at 31 March 2014

224,337 86,181 46,974 (1,918) 355,574


216,139 89,256 19,414 (1,918) 322,891

14 Tangible fixed assets

14.1 Housing properties – Group

64


Retirement housing£’000


£’000

Properties under

construction£’000

Shared ownership schemes

£’000

Total housing properties

£’000

Cost

At 1 April 2013 844,725 241,358 7,771 4,751 1,098,605

Additions 28,755 5,797 27,470 - 62,022

Transfers (7) 277 (270) - -

Disposals (8,549) (4,448) - - (12,997)

As at 31 March 2014 864,924 242,984 34,971 4,751 1,147,630

Depreciation

At 1 April 2013 128,863 81,571 - - 210,434

Provided in the year 19,813 7,693 - - 27,506

Transfers - - - - -

Disposals (3,534) (2,192) - - (5,726)

As at 31 March 2014 145,142 87,072 - - 232,214



Social housing grant (SHG)

At 1 April 2013 474,904 38,638 - 6,669 520,211

Transfer to Recycled Capital Grant Fund (2,830) - - - (2,830)

Disposals (1,409) - - - (1,409)

As at 31 March 2014 470,665 38,638 - 6,669 515,972

Other capital grants

At 1 April 2013 25,533 19,110 - - 44,643

Transfers - - - - -

Disposals (39) (800) - - (839)

As at 31 March 2014 25,494 18,310 - - 43,804


496,159 56,948 - 6,669 559,776


500,437 57,748 - 6,669 564,854


223,623 98,964 34,971 (1,918) 355,640


215,425 102,039 7,771 (1,918) 323,317

14.2 Housing properties – Company

65


Office equipment and fittings

£’000

Motor vehicles £’000

Total other tangible

fixed assets£’000

Cost

At 1 April 2013 16,149 97 16,246

Additions 3,126 - 3,126

Transfers - - -

Disposals (10) (97) (107)

As at 31 March 2014 19,265 - 19,265

Depreciation

At 1 April 2013 13,527 97 13,624

Provided in the year 1,498 - 1,498

Transfers - - -

Disposals (8) (97) (105)

As at 31 March 2014 15,017 - 15,017

net book value at 31 March 2014 4,248 - 4,248

net book value at 31 March 2013 2,622 - 2,622

14.3 Housing properties held under finance leases – Group and Company

The balances for residential care homes include four residential care homes held under finance leases at gross cost £11,878,000 (2013: £11,878,000) with accumulated depreciation of £8,188,000 (2013: £7,847,000). The depreciation charge during the year was £341,000 (2013: £509,000).

14.4 Other tangible fixed assets – Group and Company

Note2014£’000

2013£’000

Total expenditure works to housing properties 47,143 42,414

of which:

Amounts capitalised 34,552 30,566

Amounts charged to income and expenditure (Planned maintenance) 4.3 12,591 11,848

14.6 Expenditure works to housing properties

14.5 Housing properties

Additions to housing properties in the course of construction during the period included capitalised interest of £55,000 (2013: £50,000).

Group Company

2014£’000

2013£’000

2014£’000

2013£’000

Freehold land and buildings 325,530 291,114 325,596 291,540

Long leasehold land and buildings 30,044 31,777 30,044 31,777

355,574 322,891 355,640 323,317

The net book value of housing properties at the balance sheet date comprises:

The total amount of social housing grant received or receivable as at the balance sheet date was £515,972,000 (2013: £520,211,000).

66


Anchor Trust is regarded as the parent company for these companies on the grounds that it either owns 100% of the issued share capital or it has the sole right to nominate Directors.

2014£’000

2013£’000

Receipts from disposal of housing properties 5,169 17,203

Net book value of property disposals (2,201) (6,538)

Transfer to Recycled Capital Grant Fund (2,830) (3,250)

Other disposal costs (1,698) 777

(Deficit) / surplus on disposal of housing properties (1,560) 8,192

Company Nature of business Share capital

Anchor Lifestyle Developments Limited Residential care homes and housing development £1

Anchor 2020 Limited Design and construction services £1

Anchor Retirement Living Limited Dormant £1

Anchor Trust Trading Limited Dormant £1,000

AMSA Retirement Homes Limited Dormant £100

Rain Healthcare Services Limited Dormant £1,000

Company £’000

Cost at 1 April 2013 and 31 March 2014 2,301

14.7 (Deficit) / surplus on disposal of housing properties

The following subsidiary undertakings are controlled by Anchor Trust and are registered in England and wales:

Stocks of raw materials and consumables relate to catering supplies within residential care homes. Properties held for resale includes £3,620,000 (2013: £2,697,000) properties ready for resale and £9,497,000 (2013:£nil) work in progress.

Group Company

2014£’000

2013£’000

2014£’000

2013£’000

Properties for resale 13,117 2,597 3,620 2,597

Raw materials and consumables 141 135 141 135

13,258 2,732 3,761 2,732

16 Stock – Group and Company

15 Fixed asset investments

£’000

Market value at 1 April 2013 3,423

Realised investment gains 239

Disposals at market value (533)

Market value at 31 March 2014 3,129

Historic cost at 31 March 2014 (2013: £2,730,000) 2,332

15.1 Fixed asset investments – Group and Company

15.2 Fixed asset investments – Subsidiary undertakings

67


Group Company

2014£’000

2013£’000

2014£’000

2013£’000

Rental debtors 5,562 10,260 5,562 10,260

Less: Provision for bad and doubtful debts (1,206) (1,282) (1,206) (1,282)

4,356 8,978 4,356 8,978

Trade debtors 371 6,782 371 6,782

Prepayments 7,630 4,389 8,743 4,389

Other debtors and accrued income 6,415 5,436 5,131 5,329

18,772 25,585 18,601 25,478

17 Debtors: amounts falling due within one year

Group Company

2014£’000

2013£’000

2014£’000

2013£’000

Finance debtor 19,187 19,617 19,187 19,617

Amounts due from subsidiary undertakings - - 16,506 7,436

Amounts due from related companies 1,036 1,147 1,036 1,147

Other debtors 540 540 540 540

20,763 21,304 37,269 28,740

2014£’000

2013£’000

Short term bank deposits - 3,000

Money market fund investments 24,521 24,428

24,521 27,428

18 Debtors: amounts falling due after more than one year

19 Short term deposits and investments – Group and Company

Upon completion of properties the development costs incurred under a PFI contact have been converted to a finance debtor in line with Anchor’s accounting policy.

Amounts due from related companies comprise amounts due from Burnbank House Limited, a company registered in England and Wales, of which Anchor Trust owns 25% of the company’s share capital.

Transactions with Burnbank House Limited are as follows. Interest receivable for 2014: £111,000 (2013: £111,000) and rent payable for 2014: £113,000 (2013: £113,000).

68


Group Company

Note2014£’000

2013£’000

2014£’000

2013£’000

Trade creditors 4,471 3,980 4,526 4,035

Rents received in advance 3,139 2,866 3,139 2,866

Surpluses carried forward on variable service charge schemes 3,626 3,162 3,626 3,162

Recycled capital grant fund 21 7,083 2,767 7,083 2,767

Housing loans: current instalments due on loans 23 644 701 644 701

Obligations under finance leases 25 207 169 207 169

Social security and other taxes 2,360 2,867 2,360 2,867

Other creditors 8,871 7,938 8,826 7,938

Accruals and deferred income 30,884 25,887 27,310 24,761

61,285 50,337 57,721 49,266

Note2014£’000

2013£’000

Recycled capital grant fund 6,107 7,537

Housing loans 23 109,275 109,456

Obligations under finance leases 25 12,759 12,968

Loan stock 335 323

Major repairs sinking funds for leasehold schemes 9,671 10,169

Other creditors 1,680 2,476

139,827 142,929

2014£’000

2013£’000

Fund at 1 April 10,304 7,013

Transferred to fund during the year 2,830 3,250

Utilised during the year - -

Interest credited to fund 56 41

Fund at 31 March 13,190 10,304

Falling due within one year 7,083 2,767

Falling due after more than one year 6,107 7,537

13,190 10,304

20 Creditors: amounts falling due within one year

21 Creditors: amounts falling due after more than one year – Group and Company

Major repairs sinking funds for leasehold schemes

Major repairs sinking funds are maintained for most leasehold retirement estates to provide for repairs of a long term nature. Contributions are normally received from leasehold customers on the resale of properties by reference to the length of occupation and original purchase price of the property. Some leasehold customers contribute through the service charge.

Recycled capital grant fund

The total recycled capital grant fund balance would be repayable to the Homes & Communities Agency in the event that it is not utilised.

69


Note

Onerous Leases£’000

Business Disposal

£’000

Tax Liabilities

£’0002014£’000

2013£’000

Balance as at 1 April 1,158 50 8 1,216 1,726

Balances utilised in the year (198) (50) (1) (249) (787)

Balances released in the year 5 - - - - (34)

Provisions raised during the year - - - - 311

Balance as at 31 March 960 - 7 967 1,216

22 Provisions for liabilities and charges – Group and Company

23 Housing loans – Group and CompanyAll housing loans from Orchardbrook Limited, HACO, local authorities and banks are secured by charges on certain of Anchor Trust’s housing properties and are repayable at varying rates of interest as follows:

2014£’000

2013£’000

Fixed rates

Orchardbrook Limited Interest payable at 11.615% 28,912 29,104

HACO 10.625% debenture stock 2017 15,000 15,000

Banks Between 5.895% and 6.345% 10,000 10,000

Local authorities Between 11.600% and 16.500% 108 112

Other Between 0.000% and 3.000% 590 590

54,610 54,806

Variable rates

Banks 0.200% – 0.450% above LIBOR 55,000 55,000

Orchardbrook Limited Interest payable 1.550% 309 351

55,309 55,351

Total housing loans 109,919 110,157

2014£’000

2013£’000

In one year or less 644 701

Greater than one year, but less than two 1,196 177

Greater than two years, but less than five 25,466 18,649

In five years or more 82,613 90,630

109,919 110,157

The total net book value of housing properties used to secure liabilities to third parties is £123,988,000 (2013: £119,200,000)

Repayment instalments fall due as follows:

70


26 Pension obligations – Group and CompanyAnchor Trust operates two pension schemes for its employees:

Defined contribution scheme:

A defined contribution scheme was opened on 1 January 2003. The pension cost for this scheme, which represents contributions payable by the Group, was £2,368,000 (2013: £1,102,000).

Defined benefit scheme:

Members of staff employed prior to 1 January 2003 were eligible to join a group life assurance and pension scheme which provides benefits based on final pensionable salary. The assets of the scheme are held separately by an independent fund manager, The Pensions Trust. After consultation with members, the defined benefit scheme was closed to future contributions from existing members as at 1 April 2011. Anchor will contribute an initial £5,052,000 per year into the scheme increasing 3% per annum for the next nine years.

The total group charge for the year was £340,000 (2013: £348,000). The contributions were determined on the basis of actuarial advice using the projected unit method and relate entirely to current service costs. Before the scheme closed, Anchor Trust paid contributions at 12.5% of pensionable salaries.

The last full valuation was carried out at 30 September 2012. The next valuation is due to be carried out on data as at 30 September 2015.

Properties£’000

Motor vehicles £’000

2014£’000

2013£’000

Operating leases which expire:

Within one year 214 83 297 33

In the second to fifth years 806 825 1,631 1,439

Over five years 260 - 260 1,190

Total 1,280 908 2,188 2,662

Gross obligations

£’000

Future finance charges £’000

2014 Net obligations

£’000

2013 Net obligations

£’000

In one year or less 1,497 1,290 207 169

Between two and five years 6,785 4,963 1,822 1,408

In five years or more 17,663 6,726 10,937 11,560

Total 25,945 12,979 12,966 13,137

24 Operating lease obligations – Group and CompanyAnchor Trust leases a number of properties and motor vehicles under operating leases. The annual commitments under non-cancellable operating leases are set out below:

25 Finance lease obligations – Group and CompanyObligations under finance leases are payable as follows:

71


Financial Reporting Standard 17 “Retirement Benefits” (FRS17) disclosures

Anchor applies the provisions of FRS17 in preparing these accounts. A valuation for the purposes of FRS17 was prepared as at 31 March 2014 by a qualified independent actuary. The assumptions used by the actuary are:

At 31 March 2014 % per annum



Inflation rate 3.30 3.30 3.10

Rate of increase in salaries 4.30 4.30 4.60

Rate of increase for pensions in payment 2.00 2.00 1.80

Rate of increase for deferred benefits during deferment 3.30 3.30 3.10

Discount rate 4.40 4.40 4.60

The assets in the scheme and the expected rates of return were:

Expected rate of return

%

Market value at 31 March 2014

£’000


%

Market value at 31 March

2013 £’000


%

Market value at 31 March

2012 £’000

Equities 7.00 87,050 7.30 84,295 8.00 75,930

Bonds 3.40 37,321 4.20 36,645 5.10 31,178

Property 6.00 9,559 6.30 8,684 7.00 8,368

Cash 0.50 715 0.50 1,628 0.50 1,027

Total market value of assets 134,645 131,252 116,503

Present value of scheme liabilities (170,302) (170,476) (153,282)

Net pension liability (35,657) (39,224) (36,779)

2014 £’000

2013 £’000

2012 £’000

2011 £’000

2010 £’000

Liability at the start of the year (39,224) (36,779) (29,569) (40,459) (26,146)

Movement during the year

Contributions paid 4,932 4,932 4,980 1,799 2,154

Current service cost (340) (348) (16) (2,011) (1,615)

Other finance income / (charge) 267 432 293 (125) (1,439)

Recognised actuarial (loss) / gain (1,292) (7,461) (12,467) 11,227 (13,413)

Liability at the end of the year (35,657) (39,224) (36,779) (29,569) (40,459)

2014 £’000

2013 £’000

Current service cost 340 348

2014 £’000

2013 £’000

Expected return on assets 7,644 7,360

Interest cost (7,377) (6,928)

Net charge to other interest payable 267 432

Movement in liability during the year:

Analysis of the amount charged to operating surplus:

Analysis of the amount charged to other finance income:

72


2014 2013 2012 2011 2010

Difference between actual and expected returns on assets

Amount (£’000) (3,145) 8,193 (2,880) (392) 20,907

% of scheme assets -2.3 6.2 -2.5 -0.3 19.5

Experience gain / (loss) on scheme liabilities

Amount (£’000) 430 (5,865) 1,255 1,363 2,872

% of scheme liabilities 0.3 -3.4 0.8 1.0 1.9

Total actuarial gain / (loss) recognised in statement of total recognised surpluses and deficits

Amount (£’000) (1,292) (7,461) (12,467) 11,227 (13,413)

% of scheme liabilities -0.8 -4.4 -8.1 7.9 -9.1

Restricted reserves £’000

At 1 April 2013 355

Utilisation of reserve (3)

Realised investment surpluses 2

At 31 March 2014 354

2014 £’000

2013 £’000

Actual return less expected return (3,145) 8,193

Experience gain / (loss) on scheme liabilities 430 (5,865)

Gain / (loss) on change of assumptions 1,423 (9,789)

Recognised actuarial loss (1,292) (7,461)

2014 £’000

2013 £’000

Net assets

Net assets excluding pension liability 285,007 277,813

Pension liability (35,657) (39,224)

Net assets including pension liability 249,350 238,589

Reserves

Revenue reserve excluding pension liability 284,653 277,458

Pension liability (35,657) (39,224)

Revenue reserve including pension liability 248,996 238,234

History of experience gains and losses:

Analysis of amount recognised in statement of total recognised surpluses and deficits:

Reconciliation to the balance sheet:

27 Share capital Anchor Trust is a company limited by guarantee and as such has no share capital.

28 Movement on reserves

28.1 Movement on other reserves – Group and Company

Restricted reserves represent unspent funds received for specific purposes from external organisations. Restricted reserves are only expendable in respect of the projects for which they are received.

73


Group £’000

Company £’000

At 1 April 2013 238,234 246,886


Actuarial loss on pension fund assets (1,292) (1,292)

At 31 March 2014 248,996 257,519

2014 £’000

2013 £’000

Total operating surplus 18,301 18,143

Depreciation 29,004 30,003

Movement in restricted reserves (1) (2)

Amortisation of positive goodwill 52 51

Difference between pension charge and cash contributions (4,592) (4,584)

(Increase)/decrease in stock (10,526) 3,070

Decrease / (increase) in debtors 7,354 (6,136)

Increase in creditors 6,760 1,286

Net cash inflow from operating activities 46,352 41,831

28.2 Movement on income & Expenditure reserve

29 notes to the consolidated cash flow statement 29.1 Reconciliation of operating surplus to net cash flow from operating activities

At 1 April 2013 £’000

Cash flows £’000

Non cash movement

£’000

At 31 March 2014 £’000

Cash at bank and in hand including overnight deposits 66,208 (19,437) - 46,771

Other short term deposits and investments 27,428 (2,907) - 24,521

Debt due within one year (701) 701 (644) (644)

Debt due after one year (109,456) (463) 644 (109,275)

Finance lease obligations (13,137) 171 - (12,966)

Loan stock (323) (12) - (335)

(29,981) (21,947) - (51,928)

29.2 Analysis of changes in net debt

74


2014 £’000

2013 £’000

Returns on investments and servicing of finance

Interest received 2,221 2,373

Interest paid (9,455) (7,830)

Net cash outflow from returns on investment and servicing of finance (7,234) (5,457)

Capital expenditure

Payments to acquire and develop housing properties (62,108) (42,728)

Payments to acquire non-housing fixed assets (3,126) (914)

Receipts from disposal of housing fixed assets 3,465 18,383

(61,769) (25,259)

Financial investment

Receipts from sale of investments 533 -

533 -

Net cash outflow from capital expenditure and financial investment (61,236) (25,259)

Financing

Loans advanced - -

Loan repayments (226) (184)

Net cash outflow from financing (226) (184)

Management of liquid resources

Withdrawals from short term deposits 2,907 24,781

Net cash inflow from management of liquid resources 2,907 24,781

2014 £’000

2013 £’000

Capital expenditure that has been contracted for but has not been provided for in the financial statements

9,695 7,758

Capital expenditure that has been authorised by the Board but has not yet been contracted for

75,753 51,758

85,448 59,516

29.3 Analysis of cash flows for headings netted in the cash flow statement

30 Capital commitments – Group & Company

In addition expenditure on developing housing stock of £7,426,000 (2013: £14,708,000) has been contracted for but not provided for in the financial statements and a further £46,337,000 (2013: £16,028,000) has been authorised by the Board but not yet contracted for.

All of this anticipated expenditure is covered by existing cash and banking facilities.

31 Contingent liabilities – Group & Company

There were no contingent liabilities as at 31 March 2014 nor at 31 March 2013.

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32 Transactions with related parties

During the year Anchor Lifestyle Developments Limited made inter-group charges of £511,000 (2013: £3,215,000) in respect of interest on loans to Anchor Trust. Anchor 2020 Limited made inter-group charges of £325,000 (2013: £668,000) in respect of interest on loans, management charges and donations to Anchor Trust. In addition, Anchor Lifestyle Developments sales to Anchor Trust were £nil (2013: £10,905,000) and Anchor 2020 Limited sales to Anchor Trust were £16,655,000 (2013: £8,818,000). All transactions between group companies are on normal commercial terms.

As at 31 March 2014, Anchor Trust was owed £12,598,000 and £3,393,000 (2013: £12,788,000 and £2,164,000) from Anchor Lifestyle Developments Limited and Anchor 2020 Limited respectively. Both these companies are 100% owned by Anchor Trust.

Transactions with Burnbank House Limited are described in Note 18.

During the year one member of the Executive Management Board had relationships with organisations with which Anchor Trust has immaterial transactions. Jane Ashcroft is a Non Executive Director at English Community Care Association, Your Care Rating Limited and ARCO Limited, which had transactions with Anchor totalling £33,459, £25,008 and £8,695 respectively.

There are no other related party transactions in the year to 31 March 2014 (2013: £nil).

34 Post Balance Sheet Events – Group & Company

There were no post balance sheet events that require disclosure or adjustment to these financial statements.

33 legislative provisions

Registration number

Companies Act 2006 3147851

Charities Act 1993 1052183

Housing Act 1996 LH4095

Anchor Trust is registered under the following Acts:

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Section 8The Board

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The BoardPamela Chesters CBE Chair

Pamela is Chairman of Central London Community Healthcare NHS Trust, and has also chaired the boards of the leading charity Action for Children and Royal Free Hampstead NHS Trust, one of the largest NHS trusts in the UK. She was Chairman of English Churches Housing Group from 2003 to 2009.

Pamela was a councillor for the London Borough of Camden from 1990 to 2000, including two years as leader of the opposition. In her executive roles, she was London Mayor Boris Johnson’s Advisor for Health & Families between 2009 and 2012. Prior to that, she spent nearly 20 years at British Petroleum Company, most recently as CEO of Duckhams Oils.

Stephen Jack OBE vice Chair

Stephen is a chartered accountant and has held a number of senior finance positions in international financial services organisations including Dresdner Kleinwort Benson, ING Barings, Collins Stewart Tullett plc (where he was Group Finance Director) and Compagnie Financière Tradition SA (where he was Group CFO).

Since 2007 he has been the Chairman of the Independent Living Fund, a non-departmental public body sponsored by the Department for Work and Pensions, which provides support to nearly 18,000 disabled people across the UK. Stephen joined the Board of the Cambridge Building Society as a non-executive director in April 2014.

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Paul Doona Trustee Director

Paul, a chartered accountant, was Finance Director and Company Secretary of St Modwen Properties plc from 1985 to 1999, managing the flotation and restructure of the company. After two years as Finance Director and then Chief Executive of Claims Direct plc, Paul undertook a number of chief executive and finance director roles in the gaming sector. Paul’s non-executive roles have encompassed various sectors including leisure, property, financial services, asset management and natural resources businesses. Paul is a non-executive director of the Dudley Building Society.

Dr Rima Makarem Trustee Director

Rima has extensive long-standing experience in healthcare and the pharmaceutical industry. She currently runs her own interim management and consultancy business and holds a portfolio of non-executive positions. These include: Non-Executive Director and Audit Chair at University College London Hospitals; Trustee of UCLH Charity; Associate Board Member and Chair of the Risk Assurance Committee at Health Education South London; and, until April 2014, member of the Medical Research Council Audit Committee. She was until recently a Non-Executive Director and the Audit Chair at NHS London and at NHS Haringey before that. Previously she was Director of Competitive Excellence at GlaxoSmithKline and, prior to that, a management consultant.

Lesley James CBE Trustee Director

Lesley progressed through human resources roles with a number of retailers before joining Tesco in 1985. She became a main Board Director in 1994 with responsibility for all HR functions.

Since leaving Tesco in 1999 she has undertaken a range of non-executive roles in retail and customer service organisations, as well as with the Department for Trade and Industry and in charities. She is currently on the board of St Modwen Properties plc.

Chris Wood Trustee Director

Chris has spent over 20 years of his career working in local government. He was Director

of Housing in two London Boroughs and then held the posts of Deputy and Chief Executive at the London Borough of Newham. Chris left local government in 2008 and for the last six years has worked as a partner with a housing and regeneration management consultancy company working with public and private sector clients. He is a Non-Executive Director of Sahara Homes (a private sector care provider for adults with learning disabilities), Fair Finance (a personal finance social enterprise) and Meridian Homestart (a housing company wholly owned by the Royal Borough of Greenwich).

Angela Horsman Trustee Director

Angela has more than 30 years’ experience in leisure marketing and communications. She worked for Saga,

the market leader in services for the over 50s, where she was Marketing Director for Saga Holidays and then Communications Director

for the Saga Group. Angela was previously Marketing Director of London Zoo

and Whipsnade Wild Animal Park and was Chief Executive of a tourism

development action programme in Kent. Angela is a Trustee Director of the Royal National Lifeboat Institution and a member of its fundraising and communications committee. She is also a Trustee Director of The Brooke, an international animal welfare organisation dedicated to improving the lives of

working horses, donkeys and mules in some of the

world’s poorest communities.

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Joan, 83, first found out about Denham Garden Village in Uxbridge when her daughter Lynda moved in. Lynda, 60, decided to opt for something different when moving back from the north of England.

Mother and daughter now both live in the retirement village with their own apartments and busy lives. Joan has been at Denham for six happy years and shares an apartment with 92 year old Fred. Joan and Fred are old friends

who reconnected at Anchor’s Denham Garden Village and the couple are now engaged with wedding plans afoot.

Denham offered exactly what both women were looking for – proximity to family, a modern apartment, and plenty going on. Future care needs weren’t part of their original decision but since moving in, both mother and daughter feel assured that onsite support is on hand if it’s needed.

A family affair

“I love my apartment and the security of not being on my own. There is always someone to talk to and so much to do. It’s a comfort to know that there is the facility of care on site if I need it.” Joan Emms Denham Garden Village, Uxbridge, Buckinghamshire

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Section 9Executive Management Board

8181

The Executive Management Board

Jane Ashcroft CBE Chief Executive

Jane joined Anchor in 1999 from BUPA, which had acquired Care First plc where she was Personnel Director. She was previously HR Manager and Company Secretary with Bromford Housing Group, and before that Assistant Secretary with Midlands Electricity plc. Jane chairs Care England, the largest representative body for providers of adult social care, and is a Trustee of The Silver Line, a helpline for older people, and a Board member of ARCO, representing retirement community operators. She was appointed Chief Executive of Anchor on 9 March 2010. Jane is a Fellow of the Institute of Chartered Secretaries, a Member of the Chartered Institute of Personnel and Development and a Non-Executive Director of Dignity plc.

David Edwards General Counsel and

Company SecretaryDavid, a barrister, joined Anchor in July 2011 from Peverel Limited, where he was Head of Legal Services and Company Secretary. Prior to that, David was Company Secretary and Director of Legal Services for De Vere Group plc until the company was taken over in 2006. As well as a number of other appointments in commerce and industry David has also been a Director of the Cheshire Courts Board.

Dominic Hayes Director of Property,

Development and ProcurementDominic joined Anchor in January 2014 as Director of Property, Development and Procurement. Previously Dominic held senior corporate property roles in private healthcare (BUPA, BMI, Nuffield) and transportation (National Express Group).These roles involved responsibility for all property matters across diverse portfolios, both in the UK and internationally. Dominic also worked as Managing Director of Simons Developments, a family owned business specialising in retail development and mixed-use schemes throughout the UK. Dominic is a chartered surveyor who has operated at a senior level in the property sector for over 20 years.

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Sue Ingrouille Director of Human Resources

Sue joined Anchor as Director of HR in February 2012. Her early career was with Marks & Spencer, undertaking a wide range of HR roles. She joined Orange where she was part of the start-up executive team for the B2B part of

the organisation and more recently, HR Director. After eight years with Orange, Sue moved into executive search for a number of years before joining the not-for-profit sector with Anchor.

Howard Nankivell Director of Sales & Marketing

Howard joined Anchor in October 2009 and brings with him 20 years of sales and marketing experience from a number of different market sectors. Most of his experience is from the travel and hospitality industry where he held UK and EMEA marketing director roles at both Marriott International and the Hilton Group. Howard was also the Head of Business Development at Direct Wines where he was

responsible for creating and developing a wide portfolio of wine club brands including Laithwaites and the

Sunday Times Wine Club.

Tim Seal Director of Operations

Tim joined Anchor in December 2013, following more than eight years as a Regional Director at BUPA, managing, developing and growing a region of 105 care homes across the Midlands, South West and Wales. His earlier career saw him broadening his experience in a variety of senior sales, account management, and operational roles with Compass Group, Group 4 and Braun (UK). Tim also worked as a futures and options broker for a merchant bank in The City in the mid-90s.

David Springthorpe Chief Financial Officer

David, a chartered accountant, joined Anchor in December 2008 from BAA Heathrow Airport. Until his move into the not-for-profit sector with Anchor, David spent his career in a variety of finance, strategy and property roles with B&Q (where he was also Company Secretary), Kingfisher, and Virgin Atlantic Airways, before joining BAA Heathrow Airport where he was Chief Financial Officer. David is also a member of the Institute of Directors and has held a number of trustee roles for local charities.

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AccessibilityThis document can be made available in large print, Braille, audio or electronic formats, or other languages on request.

Contact our Customer Participation Officer on 01274 381 654

Thanks

Many thanks to all the Anchor customers and colleagues featured in this document.

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anchor, 2nd Floor, 25 Bedford street, london Wc2e 9esTel: 020 7759 9100 www.anchor.org.ukCompany number: 3147851Registered Charity number: 1052183 (england and Wales)Housing Association number: lH4095

Anchor Annual Report 2014

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Transcript of Anchor Annual Report 2014