PENROSE HOUSING ASSOCIATION LIMITED

LEGAL AND ADMINISTRATION

BOARD OF DIRECTORS

The directors of the association are its committee-men and co-optees and throughout this report are referred to as the trustees.

J Ogbonna - Chair

M Morgan – Vice Chair

D Woodward - Treasurer

S Haleema

J Atkinson

P Navare

D Morris

E Acquaah

J Aries-Tyler

M Jones (co-optee)

CHIEF EXECUTIVE J Horsman

SECRETARY G Morgan

REGISTERED NUMBER 26973R

PRINCIPAL ADDRESS 356 Holloway Road

London

N7 6PA

AUDITORS Horwath Clark Whitehill LLP

Registered Auditors

St Bride’s House

10 Salisbury Square

London

EC4Y 8EH

BANKERS Lloyds TSB plc

25 Gresham Street

London

EC2V 7HN

SOLICITORS Capsticks

77/83 Upper Richmond Road

London

SW15 2TT

PENROSE HOUSING ASSOCIATION LIMITED

DIRECTORS’ REPORT

FOR THE YEAR ENDED 31 MARCH 2006

The directors present their report and accounts for the year ended 31 March 2006 under the Industrial and Provident Societies Acts 1965 to 2002 and the Friendly and Industrial and Provident Societies Act 1968.

Structure, Governance and Management

The Board of Penrose Housing Association consists of up to fifteen members and there is provision for the co-option onto the Board of additional individuals with specialist knowledge deemed by the Board to provide added value to their deliberations. The Board is responsible for the strategic direction of the organisation and delegates the responsibility for day to day operations and professional management to the Chief Executive and the Executive Management Team. The Board has six regular meetings a year (including the Annual General Meeting) and two half day Board Away Days to discuss matters of strategic relevance in more depth.

There is one standing Board Committee, the Finance Committee, which meets a minimum of four times a year and whose remit is to oversee:

The financial component of the Business Plan
Business planning including risk appraisal
The framework for financial regulation, control and reporting
Financial management and performance

Other working parties of Board members are formed for specific purposes as and when required.

Vacancies on the Board are filled by utilising a combination of outside agencies (such as the National Housing Federation ‘Get on Board’ initiative), open advertising in newspapers and personal recommendations. The majority of Board members are appointed by short listing and interview. The Board follows an equal opportunities policy when considering potential candidates for appointment.

The Board carries out a review of its performance annually and regularly monitors the skills of its membership. All new Board members are inducted and made familiar of their legal duties and responsibilities, the content of the Association Rules, the Board and its decision making processes, the corporate plan and recent financial performance. The Board establish links with Penrose projects and are encouraged to engage with these projects and through other events.

The Association is governed by the Association Rules amended on 27 February 2002. The Association is regulated by the Financial Services Authority as a registered Industrial & Provident Society

The Board has a risk management strategy which comprises an annual review of the major risks to which the Association may be exposed and the establishment of systems and procedures to mitigate those risks identified as well as the implementation of procedures designed to minimise any potential impact on the organisation should those risks materialise.

PENROSE HOUSING ASSOCIATION LIMITED

DIRECTORS’ REPORT

YEAR ENDED 31 MARCH 2006 (CONTINUED)

Objectives and activities

The objects of the association are:

To carry on for the benefit of the community the business of:

o Relieving sickness and poverty including providing medical, social, welfare, rehabilitative, resettlement and care services to those in need;

o To advance education, training, employment, mentoring and other similar services to those in need;

o To provide housing and any associated amenities for persons in need upon terms appropriate to their means

The Association aims to reduce crime and rebuild lives, contributing to safer and more inclusive communities. The strategy continues to be to do this through the provision of housing, care, resettlement and community services. A key element of this strategy is to develop effective partnerships with statutory and voluntary funders as well as other community agencies.

Specifically in the year to 31 March 2006 the aim has been to continue to provide quality and innovative resettlement services with good quality housing and specialist support and care whilst fostering strategic partnerships to facilitate the provision of holistic services. One of the strategies in achieving these objectives has been to maintain the organisation’s financial strength and to continue to vary its income streams to ensure both security and flexibility and aid the development of new services.

Penrose delivers two streams of services: its core resettlement work and services for mentally disordered offenders. Both streams of work are delivered on a pan-London basis with the aim of expanding to new locations and diversifying the services to meet the needs of its service user group.

Achievements and performance

2005-06 has been a successful year for Penrose both financially and operationally. Alongside a surplus for the year of £361,044 we have seen some tremendous outcomes from our projects and across the organisation in terms of implementing a new finance system which will improve our management reporting across project cost centres.

Our annual Black History month celebrations took place in October 2005. The event was planned and co-hosted by service users, and featured poetry, singing, rapping and artwork delivered by service users. The day was also used to launch the service User Involvement Strategy which has been designed and developed with service user representatives on various forums across the organisation.

In order to contribute to the national well-being agenda, a monthly sports group has also been set up, open to all service users and to date there has been a football competition, bowling, ice skating and snooker. All have been well attended and we are now in the process of doing a review of these days to look at the outcomes and work with service users on planning future events.

An exercise promotion project – funded by the Matthew Wrightson trust - has been set up at one of our MDO schemes. Exercise, as above has been proved to improve physical and psychological well being and can control addiction to alcohol and drugs. It can also help to promote reintegration through building social networks. A walking group has been set up, with services users taking part in morning walks and a bicycle recycling scheme is being developed in conjunction with the local police to promote training in bike maintenance and use of the recycled bicycles.

Service users are also now running their own music workshop. This was previously run by the local authority, however many of the service users did not feel that it was pitched appropriately to their skills. Staff are now supporting a current service user, from our resettlement services to run this workshop for other users. The service user will also be undertaking a certificate in teaching adults and will also be supported by studio technicians and Morley music college staff.

Penrose had 88% occupancy during 2005-06 with 3% of unoccupied days due to refurbishment and planned maintenance. Mental Health Service information was included for the first time which has tended to bring occupancy levels down due to a new project and restricted referral rights into that project. In addition, occupancy has suffered as a result of the decommissioning of our Medway service which did not allow re-lettings once a service user was moved on.

During the year we continued to improve our positive move-on rate for service users – up to 70% from 56%. One of the most successful indicators during the year has been that less than 3% of Penrose service users moving-on are due to a return to custody. As an indirect comparison, 58% of those leaving prison are reconvicted within 2 years.

Our services have also experienced successful commissioner reviews and a number of our services have been accredited by commissioners. This is an important step in demonstrating the value of our services and also in providing greater assurance over funding.

Staff turnover has reduced over the year by 18% and we also completed another successful staff survey which showed positive results in most areas.

Financial Review

Penrose recorded a surplus for the year to 31 March 2006 of £361,044 increasing retained funds to £1,461,537 which is line with the Directors’ assessment of reserves requirements. Alongside the continued operational achievements this represents a successful year in consolidating the financial position of the organisation. The excellent financial result has been based on strong financial management as well as conservative budgeting assumptions.

The principal funding sources remain local authority administered Supporting People block grants largely for our resettlement projects alongside funding from primary healthcare trusts towards our mentally disordered offender work. The Board continues to be extremely grateful to its commissioners for their continued funding of these vital work streams.

During 2005-06 and continuing into 2006-07 Penrose has implemented a programme of investment in its core systems to ensure that they adequately support the increasing complexity of its operations and to enhance reporting and aid “value-added” working methodology as well as value for money within its administrative procedures. One of the key investments has been in a new accounting system which allows for more effective cost allocation and cost centre budget management. The Association’s policy is to budget each year for a position whereby total costs in the year are exceeded by that year’s income, so as to build up reserves and, as a consequence cash balances on hand.

PENROSE HOUSING ASSOCIATION LIMITED

DIRECTORS’ REPORT

YEAR ENDED 31 MARCH 2006 (CONTINUED)

The Association has no borrowing facilities and must therefore maintain sufficient cash balances to enable all liabilities to be settled as they fall due and to provide a cushion against unforeseen financial strain. The Board has agreed that the Association’s reserves should be built up over time to a level representing approximately three months running costs.

Cash balances which are not required for immediate day-to-day needs are held either in interest bearing deposit accounts with immediate access, or in fixed term money market deposits from which funds can be drawn only on maturity.

The budget for 2006-07 recognises the increasing challenge of achieving value for money in our existing work whilst also trying to adopt the principle of full cost recovery. Having largely achieved our reserves target and as the result of further investment in core systems and project development the budget is a break even one. The Directors acknowledge the contingent liability in respect of the Social Housing Pension Scheme and are satisfied with the approach of the scheme trustees in aiming to eliminate the scheme deficit over the next 17 years. Consideration of this liability will be factored into future reserves projections and our reserves policy will reflect this and other risks faced by the organisation and we will continue an active policy of increasing our reserves base.

During the year £28,354 of restricted funds were credited, with £3,325 being utilised from this and previous years.

Plans for future periods

We continue to build on our successes and are always looking at new models of working providing pathways for current and potential service users into education, training and employment. We will also continue to move forward in the field of mental health, with the aim of opening up services to increasing numbers of mentally disordered offenders and extending our services into new geographic areas building on the experience gained from some of our existing pilot projects.

A core element of our strategy is to be outward-focussed and we will continue to evaluate opportunities for working in partnership with commissioners and also other agencies to provide integrated pathways and provide an even more holistic approach to working with our client group.

We also aim to build on our solid financial position whilst developing new work. Our approach is one of advocating the full cost recovery budgeting approach promoted by the Association of Chief Executives of Voluntary Organisations and endorsed by HM Treasury in our ongoing work whilst recognising the need to be adaptable when exploring new ways of working. For 2006-07 we are operating a break-even budget reflecting both investment in service development and infrastructure and core systems.

PENROSE HOUSING ASSOCIATION LIMITED

DIRECTORS’ REPORT

YEAR ENDED 31 MARCH 2006 (CONTINUED)

Directors who served during the year:

J Ogbonna Chair

M Morgan Vice Chair

D Woodward Treasurer

M Martynski Resigned on 28 September 2005

S Haleema

A Assan Resigned on 10 November 2005

J Atkinson

P Navare

N Smith Resigned on 25 January 2006

D Morris

E Acquaah

J Aries-Tyler

M Jones Co-opted on 28 September 2005 (not a member of the Association)

None of the directors has any beneficial interest in the Association. Each director is a member of the Association and has contributed £1 to purchase a share. A further two members do not act as directors.

Finance Committee

D Woodward Treasurer / Chair of the Committee

J Ogbonna Chair of the Board

P Navare

E Acquaah

M Jones Appointed on 21 November 2005

Chief Executive

J Horsman

PENROSE HOUSING ASSOCIATION LIMITED

DIRECTORS’ REPORT

YEAR ENDED 31 MARCH 2006 (CONTINUED)

Statement of Directors’ Responsibilities and Corporate Governance

The Directors are responsible for their annual report, and for the preparation of financial statements for each financial year which give a true and fair view of the incoming resources and the application of resources of the Association during the year, and of the state of affairs as at the end of the financial year. In preparing these financial statements, the Directors are required to:

· ensure that the most suitable accounting policies are established and applied consistently;

· make judgements and estimates which are reasonable and prudent;

· state whether the applicable accounting standards and statement of recommended accounting practice have been followed, subject to any material departures disclosed and explained in the financial statements; and

· prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Association will continue in operation.

The Directors have overall responsibility for ensuring that the Association has appropriate systems and controls, financial and otherwise. They are also responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Association and enable them to ensure that the financial statements comply with the Industrial and Provident Societies Acts 1965 to 2002 and the Friendly and Industrial and Provident Societies Act 1968. They are also responsible for safeguarding the assets of the Association and for their proper application, and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities and to provide reasonable assurance that:

· the Association is operating efficiently and effectively;

· all assets are safeguarded against unauthorised use or disposition and are properly applied;

· proper records are maintained and financial information used within the Association, or for publication, is reliable;

· the Association complies with relevant laws and regulations.

On behalf of the board of directors on

Secretary

19 July 2006

INDEPENDENT AUDITORS’ REPORT

TO THE MEMBERS OF PENROSE HOUSING ASSOCIATION LIMITED

We have audited the financial statements of Penrose Housing Association Limited for the year ended 31 March 2006 which comprise the Statement of Financial Activities, the Balance Sheet and the related notes. These financial statements have been prepared in accordance with the accounting policies set out therein.

This report is made solely to the Association, as a body, in accordance with Section 9 of the Friendly and Industrial and Provident Societies Act 1968. Our audit work has been undertaken so that we might state to the Association’s members those matters we are required to state to them in an auditors’ 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 Association and the Association’s members, as a body, for our audit work, for this report, or for the opinion we have formed.

Respective responsibilities of directors and auditors

As described in the Statement of Directors’ Responsibilities the directors are responsible for preparing their report and the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland).

We report to you our opinion as to whether the financial statements give a true and fair view, the financial statements are properly prepared in accordance with the Industrial and Provident Societies Acts 1965 to 2002 and the directors’ report is consistent with the financial statements.

Basis of opinion

We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgments made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the Association’s circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance as to whether the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we have also evaluated the overall adequacy of the presentation of information in the financial statements.

Opinion

In our opinion:

· The financial statements give a true and fair view, in accordance with United Kingdom Generally Accepted Accounting Practice, of the state of affairs of the Association as at 31 March 2006 and of its surplus for the year then ended;

· The financial statements have been properly prepared in accordance with the Charities Act 1993; and

· The information provided in the Director’ report is consistent with the financial statements.

Date	Horwath Clark Whitehill LLP Registered Auditor St Bride’s House 10 Salisbury Square London EC4Y 8EH

	Notes	General	Restricted	Total	Total
		Funds	Funds	2006	2005
					(Restated)
		£	£	£	£
INCOME AND EXPENDITURE

INCOMING RESOURCES

Voluntary income
Donations		21,834	28,345	50,179	40,258
Activities of generating funds
Bank interest		103,124	-	103,124	69,825
Incoming resources from Charitable activities
Supporting People		2,120,775	-	2,120,775	2,111,515