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The Housing Finance Corporation Limited (THFC) was incorporated in Great Britain in 1987, with limited liability under the Industrial and Provident Societies Act 1965. Its principal objective is to lend money to registered social landlords. It has established a number of wholly owned subsidiaries to cater for the varying interests of stockholders and bank lenders in different forms of financial instrument and the reports and accounts for all companies within the THFC group (the Group) are available separately on request from T.H.F.C. (Services) Limited, 21 Ironmonger Lane, London EC2V 8EY.
During the year ended 31 March 2002 the following transactions were completed: THFC 25 year fixed rate loan - facility amount £9,350,000 5 year revolving loan facility - facility amount £5,000,000 25 year amortising term loan - facility amount £17,000,000 8.625% debenture stock 2023 (5th tranche) - gross proceeds £27,265,951. T.H.F.C. (Capital) Plc The proceeds of a £239,500,000 bond issued by Sunderland (SHG) Finance PLC were made available to the Sunderland Housing Group. The result of the above transactions has been to increase the nominal amount raised by the Group and still outstanding to a total of £1.5 billion at the year-end. This represents loans to 134 registered social landlords.
The consolidated operating surplus before taxation was £573,000 (2001 - £745,000). Under its rules, THFC cannot 'trade for profit'. It is, however, the intention of the Directors that it will continue to make operating surpluses each year. Any such surpluses may not be distributed either directly or indirectly to shareholders and are accumulated as reserves to act as an additional protection for investors. The reserves, plus the £1.7 million deferred tax provision, are held as cash deposits. Investment strategy remains unchanged from prior accounting periods. THFC makes no political donations.
Details of Directors, their service periods for the year and Shareholders of THFC are set out in the table below. Messrs Dennis and Wood retired on 31 March 2002. Ms Pam Alexander and Mr Sadru Visram joined the Board on 1 April 2002. The shares held by Messrs Dennis and Wood have been transferred since the year end to Ms Alexander and Mr Visram. The share held at the beginning of the year by Mr Binder has been bought in and cancelled. The biographies of the current Directors can be found here. Mrs Blomfield-Smith served as a Director only during her term of office
as THFC's Chief Executive.
Mrs. Barbara Ainger resigned and Ms. Deanne Cooke-Yarborough was appointed to succeed her as Chief Executive and Company Secretary on 17 April 2001. Ms Cooke-Yarborough resigned and Barbara Ainger was re-appointed acting Chief Executive in her place on 30 June 2001. Mrs Rosamund Blomfield-Smith served as Chief Executive from 29 October 2001 to 7 January 2002, following which David Creed took on the duties of the Chief Executive as Executive Deputy Chairman on 9 January 2002. Miss Virginia Pearson succeeded Ms Cooke-Yarborough as Company Secretary
on 1 July 2001. The Company Secretary is responsible for ensuring Board
procedures are followed.
The Directors' remuneration is established by the Annual General Meeting in the light of periodic advice from financial advisers. None of the current Directors receives pension benefits, bonuses or benefits in kind with the exception of the Executive Chairman (David Creed) who is paid a salary on a per diem basis for his time spent on executive matters in addition to his fees as a Director and as Chairman since the end of the year. He received a salary of £15,000 for his services as an executive in the year in addition to his director's fees of £13,468. Other than Mrs Blomfield-Smith and David Creed, the Chairman (George Dennis) was the highest paid Director in 2001/2002 receiving £21,548. Other Directors each received £13,468 except Mr Binder who was paid £1,122. Mr Coulter's remuneration was remitted to his employer. Mrs Blomfield-Smith received £54,208 during the year in salary, director's fees, pension benefits and compensation for loss of office.
The Directors as set out above (all of whom are non-executive with the exception of the Executive Chairman) comprise the Board of THFC and its subsidiaries, with the exception of T.H.F.C. (Capital) PLC which has an additional Director, John Shinton of the Royal Bank of Canada. Peter Cooke is nominated by The Housing Corporation and James Coulter represents the National Housing Federation. The Board is responsible for the overall direction and strategy of THFC and its subsidiaries, establishing an adequate control framework within which the executive can operate effectively, monitoring performance, ensuring adequate resources are available and taking all borrowing and lending decisions. The Board meets a minimum of five times per year to conduct its regular business with further meetings as required to approve and execute all new loan transactions. The Board has established two sub-committees: Nominations and personnel committee Considers potential nominees to the Board and personnel matters including recommendations to the Board on executive remuneration and appointments. Comprises David Creed (chairman), Peter Cooke and Jim Coulter. Audit committee Reviews internal controls, financial reporting, annual financial statements, the performance and recommendations of external auditors and compliance with laws and regulations. It does not consider financial or operational risks since these matters are covered by the full Board at its scheduled meetings. The committee was constituted by the Board at its January 2002 meeting. Before that date all audit committee matters were considered by the full Board. Members comprise Michael Boohan (chairman), Peter Cooke and Jim Coulter. David Creed and senior members of staff attend when required. There are no other permanent committees of the Board and all matters reviewed in committee are reserved for decisions to be considered by the full Board. Matters of Board governance are considered by the full Board. Directors are entitled to take independent financial advice.
The management and administrative functions of the Group are carried out by T.H.F.C. (Services) Limited (THFCS) which is itself a wholly owned subsidiary of THFC with the same Board membership. THFCS employs the executive and administrative staff for this purpose and carries out its functions under management agreements with each of the other organisations. THFCS also offers administrative and consultancy services to third parties.
THFC complies with the Combined Code issued by the London Stock Exchange except in relation to the requirements regarding institutional shareholders which are not applicable to THFC as an Industrial and Provident Society.
The Board acknowledges that it is responsible for THFC's system of internal control and for reviewing its effectiveness. It should be recognised that such a system can provide only reasonable and not absolute assurance against material misstatement or loss. The Board has decided that the establishment of a separate internal audit function would not be appropriate for an organisation with a total staff complement of eight but the key accounting and financial records are scrutinised by the chairman of the Audit Committee on a quarterly basis and by meetings of the Audit Committee at least twice a year. Controls are otherwise exercised through written standing orders, clear lines of responsibility and restrictions on delegated executive powers. The Directors have assessed the adequacy of internal controls during the period up to 24 June 2002. No weaknesses of internal control have resulted in material loss or require disclosure.
Key business and operating risks have been assessed during the year by the Board and mitigating action implemented. All loans to borrowers are matched in terms of their maturity, interest and repayment profile to the equivalent bond issue or bank loans. Therefore, primary operating risks relate to the credit monitoring of borrowers, the completion of appropriate loan security, timely collection of all payments due and the achievement of a secure return on investment income. Quarterly reports on these areas are made to the Board in addition to detailed reviews of performance against budget.
After making enquiries, the Directors have formed a judgement at the time of approving the financial statements that there is a reasonable expectation that THFC has adequate resources to continue in operational existence for the foreseeable future. For this reason, the Directors continue to adopt the going concern basis in preparing the financial statements.
The Group's financial statements are published on THFC's website (www.thfcorp.com)
and the Directors are responsible for the maintenance and integrity of
that website. However there is currently uncertainty regarding the legal
requirements in publishing information on websites, compounded because
information published on the internet is accessible in many countries
with different legal requirements relating to the preparation and dissemination
of financial statements.
PricewaterhouseCoopers have been engaged by the Board as auditors of all Group companies, and a resolution for their reappointment will be proposed at the Annual General Meeting. By order of the Board Virginia Pearson The Housing Finance Corporation Limited |
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