Financial Statements 7
Rental income from social housing and other rental properties owned by the Group is recognised, net of void losses, on a straight-line basis over the applicable lease term. Voids represent rent losses arising from vacant accommodation and the amount is shown in note 4, as required by the Accounting direction for private registered providers of social housing 2022. Void losses are only recognised where the properties are available for letting Service charge income is recognised on an accruals basis as it falls due. The Group operates both fixed and variable service charges on a scheme-by-scheme basis in full consultation with residents. The service charges on all schemes are set on the basis of budgeted spend. Where variable service charges are used the budget will include an allowance for the surplus or deficit from prior years, with a surplus being returned to residents in the form of a reduced charge in future years and a deficit being recovered via a higher service charge in future years. v Interest payable Interest payable is charged to income and expenditure in the year. vi Employee benefits Short-term employee benefits and contributions to defined contribution plans are recognised as an expense in the period in which they are incurred. vii Pensions Anchor Trust final salary scheme The pension costs charged against income are based on an actuarial method and actuarial assumptions. 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. Other defined benefit pension plans The Association’s net obligation in respect of other defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. The fair value of any plan assets is deducted. The Association determines the net interest expense / (income) on the net defined benefit liability / (asset) for the period by applying the discount rate as determined at the beginning of the annual period to the net defined benefit liability / (asset), taking account of changes arising as a result of contributions and benefit payments. The discount rate is the yield at the statement of financial position date on AA credit rated bonds denominated in the currency of, and having maturity dates approximating to the terms of, the Association’s obligations. A valuation is performed annually by a qualified actuary using the projected unit credit method. The Association recognises net defined benefit plan assets to the extent that it is able to recover the surplus either through reduced contributions in the future or through refunds from the plan. Changes in the net defined benefit liability arising from employee service rendered during the period, net interest on net defined benefit liability, and the cost of plan introductions, benefit changes, curtailments and settlements during the period are
swap cashflows, a strong correlation between changes in market value of swap and hypothetical swap implies that the hedge is expected to be highly effective. Defined benefit obligation (DBO) Management's estimate of the DBO is based on a number of critical underlying assumptions such as standard rates of inflation, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses (as analysed in note 25). The liability as at 31 March 2024 was £nil (2023: £nil). Provisions for liabilities and charges Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event; it is probable that the Group will be required to settle the obligation; and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Anchor Hanover Group closes retirement housing and care homes that are not financially viable in the ordinary course of business and provision is made accordingly for the expected costs of closure. iii Investment in subsidiaries and associated undertakings Investments in subsidiaries are accounted for at cost less impairment in the Association financial statements. An associate is an entity, being neither a subsidiary nor a joint venture, in which the Group holds a long-term interest and where the Group has significant influence. The Group considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate. The results of associates are accounted for using the cost method of accounting. iv Turnover and revenue recognition Turnover is net of voids and Value Added Tax (VAT) and includes: • Rents and service charges from social housing lettings • Rents and service charges from social housing lettings • Residential care home charges • Home care charges • Revenue grants • Sales of leasehold properties • First tranche shared ownership sales • Income for leasehold properties for older people • Leaseholder management fees • Supporting People contract income Turnover has been analysed in accordance with the requirements of the Accounting direction for private registered providers of social housing 2022 (see note 4). Charges for services provided and Supporting People income are recognised as income when Anchor Hanover Group 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 point of legal completion of the sale.
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