Basis of preparation
The financial statements are prepared under the historical cost convention and in accordance with applicable accounting standards. THFC is incorporated in Great Britain with limited liability under the Industrial and Provident Societies Acts 1965 to 2002. Although THFC's constitution is not governed by the Companies Act 1985, these financial statements have been prepared so as to comply with the requirements of that Act as well as those of the Industrial and Provident Societies Acts 1965 to 2002.

Basis of consolidation
The Group accounts consolidate the results of THFC and all its subsidiaries drawn up to 31 March each year. UK Rents (Holdings) Limited ("UKRH"), UK Rents(No.1) PLC ("UKR1") and UK Rents Trustee Limited ("UKRT") have financial years ending 6 April , and therefore transactions for the period 1-6 April in each year have been reversed as part of the consolidation.

T.H.F.C. (Indexed) Limited ("THFCIL"), T.H.F.C. (Indexed 2) Limited ("THFCIL2"), T.H.F.C. (First Variable) Limited ("THFCFV") and T.H.F.C.(Social Housing Finance) Limited ("SHF") are incorporated in Great Britain with limited liability under the Industrial and Provident Societies Acts 1965 to 2002.

All the shareholders of THFCIL,THFCIL2 ,THFCFV and SHF have executed deeds of trust in favour of THFC and thus THFCIL, THFCIL2 ,THFCFV and SHF are treated as wholly owned subsidiaries of THFC.

T.H.F.C. (Services) Limited ("THFCS"), UKRH and UKRT are private limited companies; UKR1 and T.H.F.C. (Capital) PLC ("THFCC") are public limited companies, all being incorporated under the Companies Act 1985. The majority of the shares of THFCS are owned by THFC with the remaining shareholders having executed deeds of trust in favour of THFC. THFCS owns all of the shares of THFCC and UKRH and UKRH owns all of the shares of both UKRT and UKR1 so THFCS, THFCC, UKRH, UKRT and UKR1 are treated as wholly owned subsidiaries of THFC.

Haven Indexed PLC ("HAVIND"), and Haven Indexed Holdings Limited ("HAVH") were incorporated in March 2001.HAVIND and HAVH have not commenced trading.

Loans to registered social landlords and debenture stocks
The terms of the loans to registered social landlords ("RSLs") are matched to those on which the funds have been raised through the issue of debenture stocks, and hence both are accounted for on a similar basis as set out below.

• Discounted debenture stocks
  Loans to RSLs are stated at cost plus accrued discount which is credited to the profit and loss account on a basis that, together with the interest receivable, gives a constant rate of return on the investment.

  Debenture stocks are stated at issue price plus accrued discount which is debited to the profit and loss account on a basis that, together with interest payable, gives a constant rate of return on the amount outstanding at any one time.

• Stepped coupon debenture stocks
  Loans to RSLs are stated at cost plus deferred interest which is credited to the profit and loss account on a basis that, together with the interest receivable, gives a constant rate of return on the investment. Debenture stocks are stated at their nominal value plus deferred interest.

  Deferred interest is the difference between interest calculated on the basis of the yield to redemption and the actual interest paid.

• Index linked debenture stocks
  The loans to RSLs and the debenture stocks are stated at the indexed value of the outstanding loan and stock respectively. The indexation is calculated by reference to the Retail Price Index applying to the period and a base Retail Price Index.

  Prior to indexation, the total of each semi-annual repayment of principal and payment of interest is a constant amount over the term of the stock or loan. The total amount of payment due in any interest period is calculated by reference to the Retail Price Index as above.

Interest
Interest receivable on loans to RSLs and interest payable on debenture stocks and bank loans is accounted for on an accruals basis.

Premiums on redemption
Premiums receivable and payable on prepayment of debenture stocks are taken to the profit and loss account in the period in which the prepayment takes place.

Securitised assets and related income
Securitised assets are recorded in the accounts at cost. Income arising from the assets isaccounted for on an accruals basis.

Fees receivable
Front-end fees and annual administration fees are taken to income as they fall due.

Fixed assets and depreciation
Tangible fixed assets are stated at cost less depreciation calculated on a straight line basis to write off the assets evenly over their estimated useful lives. Fixtures, fittings and equipment: 25% per annum.

Deferred taxation
Deferred taxation is provided using the liability method on all timing differences to the extent that it is probable that an actual liability will crystallise in the foreseeable future.

Pension fund
THFCS participates in the Social Housing Pension Scheme (SHPS). SHPS is a multi-employer, defined benefit scheme. Due to the nature of the Scheme, the profit and loss account charge for the period under both SSAP24 and FRS17 represents the employer contribution payable.