Financial Statements 7
The asset lives used are as follows: Housing properties and residential care homes: between 30 and 99 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 asset lives used are as follows: Roadways and footpaths: 30 years Bathrooms: 25 years Kitchens: 25 years Windows: 30 years Alarms: 20 years Boilers: 30 years Call systems: 15 years External doors: 30 years Door entry systems: 15 years Electrical wiring: 30 years Emergency lighting: 15 years Aerials: 20 years Fire safety systems: 15 years Central heating: 10 years Laundry rooms: 10 years Lifts: 25 years Plumbing: 25 years Security systems: 20 years Air conditioning: 20 years Cleaning equipment: five years Gym equipment: five years Communal kitchen equipment: 20 years Other scheme equipment: four to 10 years Fencing and railing: five years Flooring: eight to 10 years SOE schemes: 99 years. Freehold land and housing properties under construction are not depreciated. Properties held on finance lease arrangements are depreciated over the life of the lease or their estimated useful economic lives in the business, if shorter. xiii Government grants Government grants include grants receivable from Homes England (HE), the Greater London Authority (GLA), local authorities, and other government organisations. Government grants received for housing properties are recognised in income over the useful life of the housing property structure and, where applicable, its individual components (excluding land) under the accruals model. Grants relating to revenue are recognised in income and expenditure over the same period as the expenditure to which they relate once reasonable assurance has been gained that the entity will comply with the conditions and that the funds will be received. Social housing grants ('SHG') due from such agencies or received in advance are included as a current asset or liability.
xi Housing properties Housing properties are properties held for the provision of social retirement housing, residential care or to otherwise provide social benefit. Retirement housing and residential care home properties are stated at cost less accumulated depreciation and impairment losses. 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 Hanover Group. Proceeds from first tranche disposals are accounted for in the income and expenditure account in the year in which the disposal occurs. Where housing properties are acquired from third parties the cost is their purchase price together with any costs of acquisition, improvement and interest payable. Where the housing properties are developed by the Group or the Association cost includes the cost of land, direct development costs of bringing the properties to the present condition up to the date of practical completion of the scheme. As of 1 April 2023 the Group no longer capitalises incidental interest costs of development reflecting the fact it has been considered immaterial for a number of years. 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 economic 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 useful lives attributable to assets capitalised in this way range from four to 50 years Works to existing properties which replace a component that has been identified separately for depreciation purposes, along with those works that result in enhancing the economic benefits of the properties, are capitalised as improvements. Where a component is replaced the cost and related depreciation are eliminated from tangible fixed assets. Economic benefits are enhanced if work performed results in an increase in rental income, a reduction in future maintenance costs or a significant extension to the useful economic life of a property. Direct development costs involved with administering development activities are capitalised to the extent that they are directly attributable to the development process and in bringing the properties into their intended use. Directly attributable costs comprise the labour costs of employees that relate directly to the construction or acquisition of property and the incremental costs that would have been avoided only if the individual properties had not been constructed. Housing properties in the course of construction are held at cost less impairment losses and are not depreciated. xii Depreciation of housing properties The Group separately identifies the major components which comprise its housing properties, and charges depreciation so as to write down the cost of each component to its estimated residual value, on a straight- line basis, over its useful economic life.
75
Made with FlippingBook - PDF hosting