New Charter Homes Limited
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NEW CHARTER HOMES LIMITED
REPORT
AND
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH 2014
Company Number: 3807022
Charity Number: 1146435
HCA registration Number: LH4266
New Charter Homes Limited
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CONTENTS Page
Members, Senior Staff, Advisors, Bankers and Lead Funders 2
Strategic Report 4
Directors Report 16
Independent Auditor’s Report 17
Income and Expenditure 19
Balance Sheet 21
Cash Flow Statement 22
Notes to the Financial Statements 23
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MEMBERS, SENIOR STAFF, ADVISORS, BANKERS AND LEAD FUNDERS
Board of Directors
Chair Geoff Loughlin
Vice-Chair Jim Middleton Resigned 30/09/13
Other Directors Jacqui Fendall Resigned 30/09/13
Joan Ryan Resigned 02/10/13
Tom Daly Resigned 30/09/13
Mark Dunford Appointed 19/11/13
Lez Barstow
Helen Garnett-Wren
Geoff Loughlin
Tracey Jones
David Boyle
Tammy Williams Appointed 01/10/13
Tony Powell (co-opted)
Andrew Leah (co-opted) Appointed 02/10/13
Group Chief Executive Ian Munro
Executive Officers
Executive Director of Corporate
And Deputy Chief Executive Martin Frost
Group Company Secretary Martin Frost
Lead Executive Tony Powell
Registered Office Cavendish 249
Cavendish Street
Ashton-under-Lyne
OL6 7AT
Regulated by Homes and Communities Agency
(LH4266)
Charity Registration Number 1146435
Company Registration Number 3807022
External Auditor Baker Tilly UK Audit LLP
3 Hardman Street
Manchester
M3 3HF
Internal Auditor KPMG
St James Square
Manchester
M2 6DS
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MEMBERS, SENIOR STAFF, ADVISORS, BANKERS AND LEAD FUNDERS (continued)
Funding Facilities Nationwide Building Society
Kings Park Road
Moulton Park
Northampton
NN3 6NW
Principal Bankers Cooperative Bank Plc
PO Box 101
Balloon Street
Manchester
M60 4EP
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STRATEGIC REPORT FOR THE YEAR ENDED 31ST MARCH 2014
The Directors present the financial statements of the Company for the year ended 31st March 2014.
GOVERNANCE
The Company is a Registered Provider (RP) of social housing and is regulated by the Homes and Communities Agency
(HCA). It has adopted and is fully compliant with the main principles and provisions of both the National Housing
Federation’s ‘Excellence in Governance: Code for Members’ and the ‘Code of Conduct 2012’. A statement of compliance is
contained within the Group’s Governance Plan.
THE BOARD
The Board of New Charter Homes is responsible for exercising all the powers of the organisation, controlling strategic
direction and setting its policy framework. Details of members can be found on page 2.
Accordingly, the Board reserves a number of matters for its own consideration where those matters impact on strategic
direction and effective oversight, including corporate governance, property development and finance and approval of the
budget and business plan.
The members of the Board have a range of skills and experience enabling them to make effective decisions and monitor
organisational performance with the prevailing regulatory environment. To facilitate this the Board has met 6 times during
the period, all meetings have attained the necessary quorum and decision making has remained in line with New Charter
Homes’ Rules.
To ensure the board maintain and enhance their individual and collective skills to best meet the evolving needs of the
organisation, Board Members have taken part in an annual appraisal exercise, accompanied by a skills assessment and an
overall Board effectiveness review as part of the wider independent Governance Review undertaken by Campbell Tickell
during the period. This process has informed the Group Governance Plan and has resulted in a targeted training and
development programme for individuals and for the Board as a whole.
FUTURE DEVELOPMENTS
The Board is looking forward to ensure investment in existing homes is sustained and the wider responsibilities we feel we
have for the wellbeing of our tenants and the wider community is enhanced. We also seek to maximise opportunities
across Greater Manchester to provide high quality new accommodation.
In the coming year the main issues we are addressing will include:
Welfare Reforms – as the impact of Universal Credit increases and Welfare Reforms tighten on individual families,
the Board will be monitoring the results and reviewing financial inclusion strategies and the supply/demand of
properties
Health & Social Care Integration – this is an area of service which the Board will be reviewing and looking to
develop new business opportunities. In addition, a review of the Sheltered Care Services & Independent Living for
Older People will be completed, and during the next 12 months a change in the service and longer strategic
direction will be considered by the Board
Traded Services – as Public Sector Reforms continues there will be opportunities to deliver new services,
particularly associated with transforming rehabilitation
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RISKS AND UNCERTAINITIES
As a member of the New Charter Housing Trust Group we adopt the Group Risk Management Strategy. Risks that may
prevent the Company achieving its strategic objectives are reviewed monthly by the senior management team and the
Strategic Risk Register is considered by the Group Risk and Assurance Committee at its quarterly meetings. Management
of risk is the ultimate responsibility of the Board of the Company and as well as reviewing the Risk Register on a regular
basis at Board meetings, during the course of 2013/14 Board Members engaged in risk management workshops as part of a
wider set of improvements to Group risk management practices. Risks are recorded and assessed in terms of their impact
and probability. Major risks are outlined below:
KEY RISK
ACTION BEING TAKEN
Impact of welfare reform on rental income
stream.
The application of the spare room subsidy (bedroom
tax) has had a measurable effect on the demand for
transfers and tenancy turnover, which has impacted
rent collection and we anticipate will be exacerbated
with the advent of universal credit, direct payment
and benefit cap.
Low demand for housing properties
Failure to meet void targets in relation to turnaround
times and number of empty homes which would lead
to increased rent loss and higher tenancy turnover.
Increased affordable rent levels on new builds and re-
let making property inaccessible or unaffordable,
leading to failure to deliver the commitment to the
affordable rents programmes, would also impact on
the predicted income generated from re-let
conversions which will result in failure to comply with
HCA contract and funding.
Failure to meet void targets in relation to turnaround
times and number of empty homes which would lead
to increased rent loss and higher tenancy turnover.
Welfare reform steering group in place.
Specialist Welfare Advice Team delivering
measurable impacts
Money Care team providing debt advice
Enhanced arrears procedures and monitoring in
place working closely with tenants to recover
arrears on a timely basis.
Neighbourhood plans developed to ensure all
partners are working towards joint
interventions across neighbourhoods to reduce
costs and improve sustainability
Regular review of the business plan to ensure
adequate resources to deliver core activities
and development
Regular monthly voids monitoring
Regular review of impact of affordable rents
policy
Pre tenancy risk assessments, support plans and
interviews
Revised allocation policy to encourage
community contribution and update eligibility
criteria to ensure relet achieved
Effective marketing strategy to attract new
customers and using Right Move to generate
demand
HCA quarterly development updates
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Delivery of development programme
The successful delivery of the programme support
from HCA, as well as the ability and willingness of
development contractors to continue to build our
schemes in a challenging economic environment.
Availability of finance
Availability of loan finance is essential to a thriving
housing market. Potential impact on the Company’s
ability to deliver its development programme.
Regular monthly voids monitoring
Regular review of impact of affordable rents
policy
Pre tenancy risk assessments and support plans
HCA quarterly development updates
Internal Audit during 2013/14 gave High
assurance, the top possible rating.
Regular communication with lenders to
maintain strong relationship.
Close monitoring of lenders’ covenants,
reported to the board on a quarterly basis
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Company uses various financial instruments, including loans and cash, and other items such as rental arrears and trade
creditors that arise directly from its operations. The main purpose of these financial instruments is to raise finance for the
Company’s operations.
The existence of these financial instruments exposes the Company to a number of financial risks. The main risks arising
from these financial instruments are interest rate risk, liquidity risk and credit risk.
Interest rate risk
The Group finances its operations through bank borrowings. The Company’s exposure to interest fluctuations on its
borrowings is managed by the use of both fixed and variable rate facilities.
Liquidity risk
The Company seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs and invest
cash assets safely and profitability.
Credit risk
The Company’s principal credit risk relates to tenant arrears. This risk is managed by providing support for tenants and
closely monitoring the arrears and bad debts. The Welfare Reform and resulting changes to the benefits system has been
identified as a key risk, and the SWOT team continued to carry out extensive work throughout the year to minimise the
potential impact.
VALUE FOR MONEY SELF ASSESSMENT
For this second Value for Money Self-Assessment, we have made a shift change in terms of content and communication.
The full group statement encompassing all the Registered Providers in the New Charter Group, including New Charter
Homes, will be available on our website at www.newcharter.co.uk/value-for-money , where it will also be possible to access
more background on the topics covered in our full self-assessment and see details of specific achievements and activities
that demonstrate our philosophy in practice.
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Highlights
A more detailed summary of our value for money achievements are available in the Group Financial Statements.
As a group we delivered bankable savings and efficiencies of £1.565m in 2013/14 and to date in 2014/15 we have already
secured £614,000 of further savings. In addition, our business plan for 2015/16 and 2016/17 targets incremental efficiencies
of £750,000 and £1,350,000 respectively, this will be ongoing through the life of our Business Plans.
In summary our achievements and plans for financial savings and efficiencies are:-
2013/14 achieved £1.565m
2014/15 to date £0.614m
2015/16 plan (incremental) £0.750m
2016/17 plan (incremental) £1.350m
The measurable social impact of projects we undertook in 2013/14 at a cost to the group of £2.2m are delivering a return
over a three year horizon of £22.7m (£8.9m for clients & communities, £11.1m for partners and £2.7m to the group).
Benchmarking of our 2012/13 performance highlighted some excellent areas of performance and areas for improvement.
In drawing together a picture of current performance and cost we have taken account of comparative performance and
quartile positions using the following sources:
2012/13 HouseMark returns
Operational KPIs quartile positioning
Customer feedback/formal scrutiny arrangements and priorities stated at our Value for Money Customer
conference in June 2014
2013 STAR (Survey of Tenants and Residents) findings.
This has enabled us to develop a picture of our performance for the RAG tables below.
New Charter Homes Cost Performance Quality – customer
satisfaction
Customer Priority
Responsive repairs and voids
Major works and cyclical maintenance
Resident involvement
Estate services
Tenancy management
Rent arrears and collection
Anti-social behaviour
Lettings
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We expect our 2013/14 benchmarking results will be available by October and we will update our website with the key
highlights as soon as we have them.
REVIEW OF THE YEAR
The New Charter Homes Board has continued to carry out its Governance role effectively and robustly. An annual
business cycle for reports has ensured key elements of strategic and operational business have been reported and
monitored. During the year, the Board has been refreshed with three new Directors joining the Board. Individual Board
Members have obtained externally accredited qualifications through the Airport Group ILM Course. All Board Members
have received Performance Reviews with the Chair of Homes Board and have contributed to the Board Effectiveness
Review.
Homes Board has overseen a number of new initiatives and overall performance has been excellent. Some of the highlights
are as follows:
Neighbourhood Plans
The launch of the Neighbourhood Plans just over 12 months ago was well received, and the review undertaken in March
2014 has shown that Star Ratings have risen significantly with 62% of neighbourhoods now at 5 Stars. As part of the
Neighbourhood Plans, but also the wider ASB initiatives, we have developed an innovative restorative practice scheme,
which is proving to be very successful in responding and managing low level anti-social behaviour complaints.
Community Regeneration
The Great Opportunities programme has continued. During the year, through our 13 Work Clubs, we have provided 522
people with training and have supported 104 people to gain paid employment.
We are continuing to work in partnership with Manchester United, the Royal Exchange Theatre and Bridgewater Hall/Halle
Orchestra. Our Youth Team reached over 700 people, held over 450 outreach and structured sessions, covering such
topics as health, employment, training, music and the environment. The ‘Great Sports’ community programme was attended
by over 15,000 young people and adult volunteers. We have been successful in obtaining match-funding for a number of our
schemes including £20,000 for a Music Project.
Relets
Relets and Building Company have reduced turnaround times on routine voids to 23.6 days beating the target of 26 days.
The average number of weekly voids has increased during 2013/14. However, year-end performance in terms of the
number of empty homes is still below 1%, bearing in mind the average weekly increase, this is a great achievement.
This year has also seen the launch of our new Allocations Policy, providing customers with more realistic advice regarding
the chances of them being offered a home with us. We no longer accept applications from people who do not meet our
eligibility criteria, but recognise and reward those customers who contribute to our communities.
Repairs and Investment
We delivered a high level of service and over achieved targets while under-spending allocated budgets in both responsive,
cyclical, investment and environmental improvement areas. A few of our highlights are outlined below:
100% gas servicing completed for 44 consecutive months
99.82% of repairs completed right first time
99.86% of repairs completed within target times
Overall satisfaction with repairs at 95.45%
Satisfaction with investment works 97%
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Development and New Build
Great progress has been made with regards to delivering new units and maximising the availability of grant. All sites named
in the original HCA bid now either delivered or currently on site.
During the period 2013/2014 we handed over the keys to 102 brand new homes.
56 units have been purchased; this is made up of Mortgage Rescue and former right to buy properties. In total, £19million
has been invested over the period, which equates to £75,500 every working day
Delivering a fantastic customer experience
The table below illustrates our commitment to providing a fantastic customer experience;
Performance Indicator Target Outturn performance
Average time taken to complete any
repair
6 days 5.65 days – top quartile
Number of repairs right first time 99% 99.82% - top quartile
Repairs appointments kept 100% 100% - top quartile
Emergency repairs – responded to in
4 hour target
99.50% 100% - top quartile
All repairs in target 99% 99.86%- top quartile
Gas servicing certificates in target 100% 100% - top quartile
Customer satisfaction with repairs
service
95% 95.45%
Satisfaction with newly let properties 96% 96.77%
Satisfaction with investment works 96% 97%
Number of empty homes 1.4% of stock 0.87% of stock
Overall customer satisfaction - 94%
The results from the STAR (Survey of tenants and residents) survey were particularly pleasing:
Overall satisfaction with services was 90%
Satisfaction with how we respond to ASB remained at 90%
EMPLOYMENT PRACTICES
As a member of New Charter Housing Trust Group we adhere to Group wide employment practices. The Group Diversity
and Inclusion Policy has ensured that every reasonable effort is made to ensure we are compliant with the Equality Act
2010 and that there is no harassment, victimisation or discrimination in respect of the protected characteristics contained
within the Act including Age, Disability, Gender Re-assignment, Race, Religion or Belief, Sex, Sexual Orientation, Marriage
and Civil Partnership and Pregnancy and Maternity, in the way we treat our employees, contractors, job applicants and
visitors.
We remain committed to creating a working environment that offers equality of treatment and opportunity for all
employees and to provide them with the opportunity to develop their skills and abilities. This applies to all aspects of the
Group’s working practices and includes the recruitment and selection of employees, terms and conditions of employment,
training, salary, work allocation, promotion and disciplinary procedures.
All employees are required to adhere to the Diversity and Inclusion policy and it is a mandatory requirement that they
undergo training and development activities to ensure that they carry out their duties and responsibilities in terms of
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promoting, developing, implementing and reviewing the policy in the course of their work. As evidence of commitment to
diversity and inclusion, the Group has been awarded the Diversity in Business Accreditation at an “excellent” level.
To encourage all sections of the community to seek employment, facilities necessary to offer a welcoming environment and
flexible working patterns have been offered, provided that they do not conflict with service delivery. All vacancies are
advertised widely and appropriately.
Employment practices are reviewed as appropriate to ensure compliance with current legislation. The Group regularly
informs employees of issues relevant to their employment through meetings with Trade Union representatives, the
Employee Consultation Forum and through direct means of communication. During the year's trading, the Group has
continued to apply its policy on Trade Union recognition and has provided time off for staff to attend Trade Union facilities.
FINANCIAL REVIEW
The financial position and results for the year are set out on pages 19 to 41 of these statements.
Results for the year
The surplus for New Charter Homes for the year, before movements to reserves, was £3.450m which was within the
approved plan. This compares with a surplus of £3.228m in the previous year.
The main variance compared to the previous year was an increase in turnover of £4.421m. An increase of operating costs
of £2.98m and a increase in RTB sales yielding a surplus of £0.366m (2013 Surplus: £0.380m) more than compensated
for an increase in interest costs of £1.213m.
Surplus/reserves
Total reserves as at 31st March 2014 were £150.888m (2013 - £180.157m). These reserves represent accounting
surpluses/deficits from current and previous years and movements on the valuation of our housing properties. As at the 31st
March 2014 the properties have been valued at £435.534m (2013: £458.676m), this reduction is value has been offset
against the revaluation reserve and the Statement of Recognised Gains and Losses.
Summary Balance Sheet
New Charter Homes’ Balance Sheet as at 31st March 2014 is summarised on page 21 of these financial statements.
The key factor affecting the Balance Sheet is the inclusion of our housing stock at valuation (rather than at cost less
depreciation).
In our view, the valuation approach provides a more relevant and meaningful representation of our financial position. The
valuation was carried out by Savills, an independent and professionally qualified surveying firm as at 31st March 2014.
The financial statements demonstrate a net current asset position of £10.571m as at 31st March 2014 (2013– £8.171m).
Cash flows
New Charter Homes cash flows are summarised on page 22.
The principal sources of cash inflows in the year were:
rental and other income of £66.914m (2013 - £62.385m),
the sale of housing properties under RTB and land sales of £1.233m (2013 - £599k) and
total balance drawdown in the year of £12m (2013 - £13m).
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The principal cash outflows were:
operating costs of £45.895m (2013 - £43.610m),
investment in assets, particularly housing stock, of £28.644m (2013 - £23.615m) and
servicing of debt of £17.282m (2013 - £16.069m).
Capital structure and treasury policy
The Company’s financial strategy is underpinned by a business plan and has been used to secure long term funding, over a
thirty year period, from two lenders, with the Nationwide Building Society being lead lender and facility agent.
The funding profile, amounting in total to a facility for the Company of £350m, reflects the fact that in the initial years of
the Company, accrued deficits were recorded until the ten year investment strategy was fulfilled in March 2010. An
updated stock condition survey has been completed and the results fed into future projections.
Surpluses are projected which enable the repayment of all outstanding loans. Long-term borrowings at the year-end totalled
£313.550m (2013 - £301.550m).
Close monitoring of the business is exercised by Funders, by the application of a series of loan covenant requirements on a
quarterly basis. These relate to the basic drivers of the business and include tests on income, expenditure, interest, the
security valuation of the Company’s assets, and in summary reflect the fact that cashflow is the predominant issue. The
Directors are pleased to report that during the period all tests applied by the Funders on a Group wide basis were fully
met.
New Charter continues to maintain a risk-averse approach towards the management of its loan portfolio and at the year-
end had 92.65% of its debt on a fixed rate basis, leaving it relatively well protected against potential adverse movements in
interest rates. The Finance Committee agreed a set of treasury policies at the time of stock transfer. These policies have
been reviewed by the Committee during the course of the financial year.
Going Concern
The Company’s business activities, its current financial position and factors likely to affect its future development are set
out within the Report of the Board. The Company has in plane a long-term debt facility, which provides adequate resources
to finance the investment and development programmes, along with the Company’s day to day operations. The Company
also has a long-term business plan which shows that it is able to service these debt facilities whilst continuing to comply
with lenders covenants.
On this basis the board has a reasonable expectation that the Company has adequate resources to continue in operational
existence for the foreseeable future, being a period of twelve months after the date on which the financial statements are
signed off. As a result it continues to adopt the going concern basis in the financial statements.
STATEMENT OF COMPLIANCE
In preparing this Board report, the board has followed the principles set out in the Statement of Recommended Practice:
Accounting by registered social housing providers (SORP) update 2010.
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Statement of directors’ responsibilities in respect of the Directors’ Report and the financial statements
The directors are responsible for preparing the Strategic Report & the Directors’ Report and the financial statements in
accordance with applicable law and regulations.
Company law, Charitable law and Social Housing regulation requires the directors to prepare financial statements for each
financial year. Under that law they have elected to prepare the financial statements in accordance with United Kingdom
Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law).
Under company law, the directors must not approve the financial statements unless they are satisfied that they give a true
and fair view of the state of affairs of the company and the surplus or deficit of the company for that period.
In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgments and estimates that are reasonable and prudent;
state whether applicable UK Accounting Standards and the Statement of Recommended Practice Accounting
for Registered Social Landlords 2010 have been followed, subject to any material departures disclosed and
explained in the financial statements; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
association will continue in business.
The directors are responsible for keeping proper accounting records that are sufficient to show and explain the company’s
transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to
ensure that its financial statements comply with the Companies Act 2006, the Housing & Regeneration Act 2008 and the
Accounting Direction for Registered Providers of Social Housing 2012. They have general responsibility for taking such
steps as are reasonably open to them to safeguard the assets of the company and to prevent and detect fraud and other
irregularities.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the
association’s website. Legislation in the UK governing the preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
Public Benefit
The Board confirm that they have referred to the guidance contained in the Charity Commission’s general guidance on
public benefit when reviewing the charity’s aims and in planning future activities.
Disclosure of information to auditor
The directors who held office at the date of approval of this Directors’ Report confirm that, so far as they are each aware,
there is no relevant audit information of which the Company’s auditors are unaware; and each director has taken all the
steps that he/she ought to have taken as a director to make himself/herself aware of any relevant audit information and to
establish that the Company’s auditors are aware of that information.
Internal Controls
The Homes and Communities Agency, has clear expectations with regard to internal controls and seeks to ensure that the
New Charter Housing Trust Board’s overall responsibilities with regard to matters relating to internal control are properly
discharged. To assist in this duty, the Trust Board has appointed a Risk & Assurance Committee to provide a Group wide
view of risk and assurance management. The Committee on behalf of all the Companies within the Group carries out
amongst other things the following:
An understanding of internal control
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Management of fraud
Effectiveness of internal control processes and systems
Understanding of risk and minimization of exposure without compromising broader objectives
A regular review of risks facing the Group
A summary of main policies designed to manage risk
A summary of the key sources of evidence
Confirmation that fraud register has been reviewed
Confirmation action taken in respect of any significant matters identified and any supervisory action
required by the regulatory bodies.
GROUP CHIEF EXECUTIVE’S STATEMENT OF INTERNAL CONTROL 2013-14
Under the Governance & Viability Standard of the Homes and Communities Agency (HCA) Regulatory Framework,
associations are required to have in place ‘an effective risk management and internal controls assurance framework’.
Whilst there is no requirement to include an Internal Controls Assurance Statement in the Directors’ Report and Financial
Statements it is considered good practise to do so and helps to demonstrate the Group’s compliance with the Regulatory
Framework.
Each of the Group’s Boards accept their responsibilities for establishing and maintaining effective systems of internal control
but acknowledge that no system of internal control can possibly seek to eliminate all risks. The framework adopted by the
Group is designed to manage risk as much as possible, taking into consideration evolving internal and external risks. This is
accomplished by ensuring a thorough understanding of the business objectives of the Group as set out in the Corporate
and Business Plans.
The internal control framework ensures compliance with the Regulatory Framework set down by the HCA and the
Group’s adopted Codes of Governance (the National Housing Federation’s Excellence in Governance: Code for Members
and Code of Conduct 2012).
Each of the Boards and the Group Management Team (GMT) has been actively engaged in identifying, assessing and
prioritising risk during 2013/14 and has overhauled the Group’s approach to Risk Management. The Group’s Risk and
Assurance Committee has overall responsibility for ensuring effective control mechanisms to manage those risks are
implemented and evaluated.
There has been no evidence of substantial fraudulent or corrupt activity during the year.
INTERNAL CONTROL FRAMEWORK
Business Planning/Objectives
There is a robust business planning process in place which allows for input from Board Members, executives, employees
and customers to set clear business aims and objectives against which progress can be demonstrated and risks can be
assessed.
Risk Management Framework
The Group has in place a comprehensive Risk Management framework. which details the key risks, the controls in place to
mitigate the risks and the risk ratings with and without controls. This is monitored in detail by the Risk & Assurance
Committee and reported to each Board.
Risk Management controls are monitored by the GMT, internal audit where a specific audit is programmed, and the Risk &
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Assurance Committee.
The use of Aspireview software is also under development to help manage and monitor risk and its links to the Corporate
Plan and Key Performance Indicators (KPIs)
All board reports contain a specific section on risk.
Internal Audit
The Group contracts out its internal audit service. KPMG were appointed as the Group’s Internal Auditors for the period
1st October 2012 to 30th September 2017, subject to formal review in 2014.
Risk and Assurance Committee
The Group has a Risk & Assurance Committee, membership of which is drawn from across the Group. The Committee
meets on a quarterly basis; it has clear Terms of Reference and meets annually with internal and external auditors without
officers being present.
The Committee agrees an annual internal audit programme which is determined against known and anticipated risks for the
year. All findings from the audits are presented to the Committee for scrutiny, the Committee is then responsible for
ensuring recommendations are implemented and followed up as appropriate.
Committee Members undertake regular training and development in relation to their risk management responsibilities.
Sessions were held in September 2013 and February 2014.
Finance Committee
The Group has a Finance Committee, membership of which is drawn from across the Group, The Committee meets on a
quarterly basis; it has clear Terms of Reference and is primarily responsible for monitoring and scrutinising the Group’s
financial planning and controls.
It has been decided that the Finance Committee and the Risk & Assurance Committee will come together as one
committee from 2014-15.
Policies & Procedures
The Group has in place a comprehensive suite of policies and procedures covering all areas of the business this includes
probity policies such as fraud & whistleblowing, anti-bribery, gifts & hospitality and conflicts of interest.
The Financial Regulations (including the scheme of delegations) are reviewed annually.
Performance Management
Financial Management Information and KPIs are in place and are scrutinised in detail by GMT on a monthly basis and the
Boards on a bi-monthly/quarterly basis.
The Group has in place an effective employee performance review system which helps to embed risk awareness and a
culture of continuous improvement.
Board Members also participate in an annual appraisal process consisting of individual appraisals and a full Board
Effectiveness Review.
SOURCES OF ASSURANCE
The Group draws upon various sources of assurance to evaluate the effectiveness of its internal controls.
HCA
The HCA concluded that ‘The Group meets the requirements on viability set out in the Governance and Financial
Viability standard and has the capacity to mitigate its exposures effectively’.
The Group is currently rated V1 and G1 by the HCA.
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Funders
The Business Plans for 2013/14 received approval from the Group’s funders.
A robust financial planning and control process ensured that all covenants set by the Group’s funders in relation to the loan
facilities were achieved during 2013/14.
Internal Audit
KPMG undertook 11 audits during 2013/14 and raised a total of 66 recommendations. To date 44 (66.7%) of these
recommendations have been implemented (20 signed off by the auditors). An overall opinion of satisfactory assurance was
achieved for the year.
External Audit
The Group’s External Auditors (Baker Tilly) presented their Audit Plan for the financial Year ending 31st March 2014; this
set out the areas of risks on which they would focus their audit.
Fraud Register
Any entries in the Fraud register are reported to the Risk & Assurance Committee. There were 5 entries during 2013/14.
Insurance
The Group has appropriate insurance in place to mitigate risks within the acceptable tolerance agreed by the Boards.
Awards & Accreditations
Detailed below are some of the external accreditations the Group has received during the year:
Customer Service Excellence Standard
Best Companies 3 Star Organisation
Sunday Times Best Not for Profit Companies to Work for (No 7)
Investors in People Gold Award
Investors in People Health & Wellbeing Award
ROSPA Gold Award
Housing Quality Network Estate Management Accreditation
Diversity in Business Accreditation
Investors in Excellence Standard
TPAS Quality Accredited
It is my conclusion that the Group’s internal control framework provides adequate assurance that risk is understood,
effectively managed and embedded within the culture of the organisation and that during 2013/14 there were no areas of
exceptional or undue concern.
I H Munro September 2014
Group Chief Executive
New Charter Housing Trust Group
By order of the board
Mr M Frost
Company Secretary
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DIRECTORS REPORT FOR THE YEAR ENDED 31ST MARCH 2014
The Directors present the financial statements of the New Charter Homes Limited for the year ended 31st March 2014.
PRINCIPAL ACTIVITY
The principal activity of the Company is providing rented housing and associated services within the district of Tameside.
New Charter Homes Limited is a charitable company limited by guarantee having obtained charitable status with the
Charity Commission on 14th March 2012.
RESULTS AND PERFORMANCE
Review of the results for the year has been included within the Strategic Report.
DIRECTORS
Chair Geoff Loughlin
Vice-Chair Jim Middleton Resigned 30/09/13
Other Directors Jacqui Fendall Resigned 30/09/13
Joan Ryan Resigned 02/10/13
Tom Daly Resigned 30/09/13
Mark Dunford Appointed 19/11/13
Lez Barstow
Helen Garnett-Wren
Geoff Loughlin
Tracey Jones
David Boyle
Tammy Williams Appointed 01/10/13
Tony Powell (co-opted)
Andrew Leah (co-opted) Appointed 02/10/13
STRATEGIC REPORT
Review of the business, Key performance indicators, Future Developments and Risk Management are all included in the
Strategic Report.
STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITOR
The directors who held office at the date of approval of this Directors’ Report confirm that, so far as they are each aware,
there is no relevant audit information of which the company’s auditors are unaware; and each director has taken all the
steps that he/she ought to have taken as a director to make himself/herself aware of any relevant audit information and to
establish that the company’s auditors are aware of that information.
AUDITOR
Baker Tilly UK Audit LLP indicated its willingness to continue in office. Following a review of the Auditors of the New
Charter Housing Trust Group, BDO LLP have been appointed auditors for the financial statements ending on or after 31
March 2015.
By the order of the board
M Frost September 2014
Company Secretary
New Charter Housing Trust Group
New Charter Homes Limited
Page | 17
INDEPENDENT AUDITOR’S REPORT TO THE MEMBER OF NEW CHARTER HOMES LIMITED
We have audited the financial statements of New Charter Homes Ltd for the year ended 31 March 2014 (the “financial
statements”) on pages 19 to 41. The financial reporting framework that has been applied in their preparation is applicable
law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).
This report is made solely to the company’s members as a body, in accordance with Chapter 3 of Part 16 of the Companies
Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are
required to state to them in an auditor’s 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 company and the company’s members as a body, for our audit
work, for this report, or for the opinions we have formed.
Respective responsibilities of Trustees and auditor
As explained more fully in the Trustee’s Responsibilities Statement set out on page 12, the Trustees (who are also the
directors of the company for the purposes of company law) are responsible for the preparation of the financial statements
and for being satisfied that they give a true and fair view.
We have been appointed auditors under the Companies Act 2006 and section 151 of the Charities Act 2011 and report in
accordance with those Acts.
Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and
International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices
Board’s (APB’s) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the Financial Reporting Council’s website at
http://www.frc.org.uk/auditscopeukprivate
Opinion on financial statements
In our opinion the financial statements:
give a true and fair view of the state of the company’s affairs as at 31 March 2014 and of its income and
expenditure for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been properly prepared in accordance with the requirements of the Companies Act 2006, the Housing and
Regeneration Act 2008 and the Accounting Direction for Private Registered Providers of Social Housing 2012.
Opinion on other requirement of the Companies Act 2006
In our opinion the information in the Strategic Report & the Directors’ Annual Report for the financial year for which the
financial statements are prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you
if, in our opinion:
the company has not kept adequate accounting records, or the returns adequate for our audit have not been
received from branches not visited by us; or
the company’s financial statements are not in agreement with the accounting records and returns; or
certain disclosures of the trustees’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit
New Charter Homes Limited
Page | 18
INDEPENDENT AUDITOR’S REPORT TO THE MEMBER OF NEW CHARTER HOMES LIMITED
(continued)
KEITH WARD (Senior Statutory Auditor)
For and on behalf of BAKER TILLY UK AUDIT LLP, Statutory Auditor
Chartered Accountants
3 Hardman Street
Manchester
M3 3HF
[date]
New Charter Homes Limited
Page | 19
Income and Expenditure Account
For the year ending 31 March 2014
2014 2013
£’000 £’000
Turnover 2 66,795 62,374
Operating costs 2 (46,580) (43,600)
Operating Surplus 2 20,215 18,774
Sales of fixed assets 4 366 382
Interest receivable and other income 5 151 141
Interest payable and similar charges 6 (17,282) (16,069)
Surplus on ordinary activities before taxation
3,450
3,228
Taxation on ordinary activities 10 - -
Surplus for the financial year 3,450 3,228
All of the above results derive from continuing operations.
The notes on pages 23 to 41 form an integral part of the financial statements.
New Charter Homes Limited
Page | 20
Statement of Total Recognised Surpluses and Deficits for Year Ended 31 March 2014
2014 2013
£’000 £’000
Surplus for the financial year 3,450 3,228
Unrealised Surplus on the revaluation of housing properties (32,719) 23,961
Total Recognised Surpluses and deficits relating to the year (29,269) 27,189
Statement of Historical Cost Surpluses and Deficits for the Year Ended 31 March 2014
2014 2013
£’000 £’000
Surplus on ordinary activities before taxation 3,450 3,228
Difference between the historical cost depreciation charges
and the actual depreciation charge for the year calculated
on the revalued amount
- 345
Total Recognised Surpluses and deficits relating to the year 3,450 3,573
Reconciliation of Movements in Funds for the Year Ended 31 March 2014
2014 2013
£’000 £’000
Opening total funds as at 1st April 180,157 152,968
Total recognised surpluses and deficits for the year (29,269) 27,189
Closing total funds at 31st March 150,888 180,157
New Charter Homes Limited
Page | 21
Balance Sheet
(Co. No. 03807022)
As at 31 March 2014
2014 2013
£’000 £’000 £’000 £’000
Fixed Assets
Tangible fixed assets – housing
properties
11
441,606
461,124
Other tangible assets 12 10,288 10,449
451,894 471,573
Current Assets
Debtors 13 16,752 13,330
Cash at Bank - -
16,752 13,330
Creditors
Amounts falling due within one year
14
(6,181)
(5,159)
Net Current Assets 10,571 8,171
Total Assets Less Current
Liabilities
462,465
479,744
Creditors
Amounts falling due after more than
one year
15
311,577
299,587
Capital and Reserves
Housing Properties Revaluation
Reserve
18
153,526
186,245
Revenue Reserve 18 (2,638) (6,088)
150,888 180,157
462,465 479,744
The notes on pages 19 to 41 form an integral part of the financial statements.
The financial statements were approved and authorised for issue by the board on the 18th September 2014 and signed on
its behalf by:
Geoff Loughlin (Chair)
M Frost (Company Secretary)
New Charter Homes Limited
Page | 22
Cashflow Statement
For the year ending 31 March 2014
2014 2013
£’000 £’000 £’000 £’000
Net cashflow from operating
activities
19a
28,549 24,969
Returns on investments and
servicing of finance
Interest received 151 141
Interest paid (17,282) (16,069)
(17,131) (15,928)
Capital expenditure
Acquisition and construction of housing
properties
(28,644) (23,615)
Social Housing grant – received 3,993 975
Proceeds from sales of fixed assets 1,233 599
(23,418) (22,041)
Net cash outflow before use of
liquid resources and financing
(12,000) (13,000)
Financing
Loans advances received 12,000 13,000
Loan principal repayments - -
12,000 13,000
Increase/(decrease) cash in the
period
- -
Management of liquid resources
Cash balances are held in the parent company who manages the funds on behalf of New Charter Homes Limited.
The notes on pages 19 to 41 form an integral part of the financial statements.
New Charter Homes Limited
Page | 23
Notes to the financial statements
For the Year Ended 31 March 2014
1 Accounting Policies
The financial statements have been prepared in accordance with applicable Accounting Standards in the United Kingdom
and the Statement of Recommended Practice (SORP) “Accounting by Registered Social Landlords” updated in 2010. A
summary of the more important accounting policies which have been applied consistently is set out below.
Basis of Accounting
The financial statements have been prepared under the historical cost convention as amended for the valuation of
housing properties and comply with the Accounting Direction for Registered Providers of Social Housing 2012 and
applicable Accounting Standards.
Going Concern
The Company’s activities together with the factors likely to affect it's future development and position are set out in the
report of the Board of Directors. On the basis of their assessment of the Company’s financial position, the Company’s
Directors have a reasonable expectation that the Company will be able to continue in operational existence for the
foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial
statements. The company has prepared a 30 year business plan in accordance with these expectations.
Finance Costs
Finance costs are expensed through the Income and Expenditure Account in the year incurred. All identified finance
costs currently go through the I&E.
Turnover
The majority of turnover is generated from Rental and Service Charge income which is exempt from VAT and charged
evenly to the Income and Expenditure Account over a 50 week period. Income is also generated from a Supporting
People Contract with Tameside MBC, where income is received monthly and a home contents insurance scheme,
where tenants are charged weekly.
Capitalisation
The policy is to revalue housing properties on an annual basis. All properties are valued on the basis of an Existing Use
Value Social Housing) with the assumption that target rent is the maximum rent. Properties under construction are
held at cost.
Major repairs to properties of a capital nature, which will result in an increase in the net rental income over the life of
the property, are capitalised under the component accounting principles described below.
Depreciation of Housing Properties
Housing Properties are depreciated over their expected useful economic lives on a straight line basis. The depreciation
is calculated by deducting the land value from the revalued sum. As detailed above in the Accounting Policies section,
the Trust has adopted the principle of Component Accounting. This accounts separately for each major component of a
property asset with substantially different useful economic lives, and depreciates them over their useful economic life.
Depreciation rates applied to major components
Structure of housing properties 100 Years (1.00% per annum)
Roofs 60 Years (1.67% per annum)
Bathrooms/Rewires/Lifts 30 Years (3.33% per annum)
Windows/Doors/Central Heating Systems 25 Years (4.00% per annum)
Kitchens 20 Years (5.00% per annum)
Boilers 13 Years (7.69% per annum)
New Charter Homes Limited
Page | 24
Notes to the financial statements
For the Year Ended 31 March 2014
Impairment
In accordance with Financial Reporting Standard 11 (FRS11) Impairment of Fixed Assets and Goodwill, for assets with a
remaining economic life greater than 50 years, an impairment review is undertaken. For those assets with a lower
economic life, an impairment review is undertaken where there is an indication that the assets may be impaired. If
assets are found to be impaired, the amount of impairment is disclosed in the note 3 analysis to the Income and
Expenditure Account.
Social Housing Grant and other capital grants
Where developments have been financed wholly or partly by Social Housing Grant (SHG) or any other form of capital
grant subsidy, the cost of those developments is reduced by the grants received (before revaluations). For component
accounting purposes the grant is deducted from the apportioned cost of 'structure' or where this is smaller than the
grant, the next largest identified component. When SHG in respect of housing properties in the course of construction
exceeds the total cost to date of those housing properties, the excess is shown as a current liability. Where SHG is
retained following the disposal of a property it is shown under the disposal proceeds fund and recycled in Creditors:
amounts falling due after more than one year. These funds will be used for the provision of new social housing for rent
and sale.
Other Fixed Assets
Tangible fixed assets are stated at cost less accumulated depreciation. Depreciation is charged on a straight line basis
over the expected useful economic lives of the assets at the following rates:
Freehold premises See note below
Motor vehicles 3 Years (33.3% per annum)
Furniture, Fixture & Fittings 5 years (20.0% per annum)
Computers and Office Equipment 5 years (20.0% per annum)
The principle of Component Accounting has also been applied to freehold premises in this category. The identified
major components have been re-lifed and are being depreciated at the rates in the ‘Depreciation of Housing Properties’
note above.
Where an asset has been identified to be disposed of, it will be treated as a current asset until the point of sale. Any
profit or loss on disposal will be recognised in the income and expenditure account. Any loss which may arise on the
replacement of components as part of the initial stock transfer, or loss on demolition of properties due to
redevelopment, will be written off to the Income and Expenditure Account as soon as the commitment is made.
Pension Costs
The Company participates in a pension scheme providing benefits based on final pensionable pay. The assets of the
scheme are held separately from those of the Company. Pension scheme assets are measured using market values.
Pension scheme liabilities are measured using a projected unit method and discounted at the current rate of return on a
high quality corporate bond of equivalent term and currency to the liability. Details of the scheme are set out in note
21. Contributions from the Group and participating employees are paid into an independently administered fund. These
payments are made in accordance with triennial calculations by professionally qualified independent actuaries. In the
intervening years, the actuary reviews the continuing appropriateness of the rates of the contributions.
The pension scheme managers are unable to identify the underlying assets and liabilities belonging to the employees of
individual group companies. Accordingly the full defined benefit or liability of the Group is recognised in the accounts of
New Charter Housing Trust Limited. New Charter Homes Limited is recharged its proportion of the employer
contribution payable to the scheme for the accounting period.
The pension scheme surplus (to the extent that it is recoverable) or deficit is recognised in full. The movement in the
scheme surplus / deficit in the Group accounts is split between operating charges, finance items and, in the statement of
total recognised gains and losses, actuarial gains and losses.
New Charter Homes Limited
Page | 25
Notes to the financial statements
For the Year Ended 31 March 2014
Revaluation Reserve
The revaluation reserve represents the changes in valuation of housing properties.
VAT
New Charter Housing Trust Group is registered as a Group for VAT purposes. The Trust’s main income stream, being
rent, is exempt from VAT. The majority of expenditure is subject to VAT, which the Trust is unable to reclaim. This
expenditure is therefore shown inclusive of VAT. VAT can be reclaimed under the partial exemption method for
certain other activities and is credited to the Income and Expenditure Account.
Bad and Doubtful debts
The Company provides against rent arrears of current and former tenants and other miscellaneous debts to the extent
that they are considered to be irrecoverable.
Leased assets
Assets held under finance leases are included in the balance sheet and depreciated in accordance with the Association’s
accounting policies. The present value of future rentals is shown as a liability.
The interest element of rental obligations is charged to the Income and Expenditure account for the period of the lease
in proportion to the balance of capital repayments outstanding.
Rentals payable under operating leases are charged to the Income and Expenditure account on a straight line basis over
the lease term.
Loan Arrangement Fees
Arrangement fees are held on the Balance Sheet and amortised over their useful economic life of 30 years. These are
reported as part of the long term loan creditor balances.
Disposal of Housing Properties
The Trust sells properties under the statutory regulations of preserved right to buy. Surpluses and deficits on such sales
are recognised after operating surpluses and deficits. The sale is recognised when the transaction is completed.
True and fair override
Under the requirements of the SORP, capital grants are shown as a deduction from the cost of housing properties and
other tangible fixed assets on the balance sheet (see note 11). This is a departure from the rules under the Companies
Act 2006 but in the opinion of the Board is a relevant accounting policy, comparable to that adopted by other registered
providers in order to present a true and fair view.
New Charter Homes Limited
Page | 26
Notes to the financial statements
For the Year Ended 31 March 2014
2 Particulars of Turnover, Cost of Sales, Operating Costs and Operating Deficit
2014 2013
Turnover
Operating
Costs
Operating
Surplus Turnover
Operating
Costs
Operating
Surplus
£’000 £’000 £’000 £’000 £’000 £’000
Income and expenditure from
social housing lettings
Social housing lettings 63,425 46,398 17,027 59,812 43,440 16,372
63,425 46,398 17,027 59,812 43,440 16,372
See Note 3 for further details
Income and expenditure from
other social housing lettings
Other rental 1,061 109 952 925 85 840
Supporting People Contract Income 318 - 318 297 - 297
Home Contents Insurance Scheme 81 73 8 78 75 3
Other Activities 1,910 - 1,910 1,262 - 1,262
3,370 182 3,188 2,562 160 2,402
66,795 46,580 20,215 62,374 43,600 18,774
New Charter Homes Limited
Page | 27
Notes to the financial statements
For the Year Ended 31 March 2014
3 Particulars of Turnover, Cost of Sales, Operating Costs and Operating Deficit – From Social Housing Lettings
2014
2013
General Needs
Supported
housing and
housing for older
people Total
Total
£’000 £’000 £’000 £’000
Income
Rent receivable (net of voids) 56,865 2,450 59,315 55,860
Charges for Support Services - 351 351 301
Service charges 3,068 691 3,759 3,651
Net Rental Income 59,933 3,492 63,425 59,812
Other Income - - - -
Total income from social lettings 59,933 3,492 63,425 59,812
Expenditure
Management 20,384 1,112 21,496 21,255
Routine Maintenance 9,454 516 9,970 9.829
Planned Maintenance 1,259 68 1,327 1,395
Major Repairs Expenditure 1,981 - 1,981 1,428
Bad Debts 833 46 879 903
Depreciation of housing properties 10,011 546 10,557 9,551
Depreciation of other assets 188 - 188 (921)
Total operating costs on social lettings 44,110 2,288 46,398 43,440
15,823 1,204 17,027 16,372
Void losses (784) (47) (831) (767)
New Charter Homes Limited
Page | 28
Notes to the financial statements
For the Year Ended 31 March 2014
4 Sale of Fixed Assets
2014 2013
£’000 £’000
Proceeds of sale 1,233 599
Less: Costs of sale (867) (217)
366 382
5 Interest Receivable and Other Income
2014 2013
£’000 £’000
Inter-company loan interest 136 133
Income receivable from money market investments 15 8
151 141
6 Interest Payable and Similar Charges
2014 2013
£’000 £’000
On bank loans, overdrafts and other loans 17,282 16,069
17,282 16,069
7 Surplus on Ordinary Activities Before Taxation
2014 2013
£’000 £’000
Is stated after charging:
Depreciation 10,745 8.630
Auditors remuneration (inc VAT)
- In their capacity as auditors 23 23
8 Directors and Board Members Emoluments
The remuneration of directors is disclosed in the consolidated accounts of New Charter Housing Trust Ltd. Due to the
streamlining of services; all costs are held within the Parent Company and are charged back as a fee via a recharge
mechanism. These costs are included within Management Costs.
New Charter Homes Limited
Page | 29
Notes to the financial statements
For the Year Ended 31 March 2014
8 Directors and Board Members Emoluments (continued) The Board Members of New Charter Homes received the following payments in the year:
2014 2013
£’000 £’000
Jacqui Fendall 2 4
Joan Ryan - 16
Alan Alcock - 2
Tracey Jones 4 4
David Boyle 4 4
Geoff Loughlin 13 13
Andrew Leah 3 -
Tammy Williams 2 -
Mark Dunford 2 -
Jim Middleton 6 10
Helen Garnett-Wren 4 2
Gordon Tow (co-opted) - 1
Jacqui McCann (co-opted) - 2
9 Employee Information
2014 2013
The average number of persons employed during the
year
Housing Management 50 23
50 23
Staff costs for the above persons were: £’000 £’000
Wages and salaries 1,019 384
Social Security 81 29
Other Pension Costs 55 2
1,155 415
Full details of New Charter Homes Limited staff costs can be found in the accounts of New Charter Housing Trust Limited.
New Charter Homes Limited
Page | 30
Notes to the financial statements
For the Year Ended 31 March 2014
10 Taxation on Surplus on Ordinary Activities
No tax is payable on its charitable activities due to the charitable status of the Association.
11 Tangible Fixed Assets – Freehold Housing Properties
Total social housing
properties held for
letting
Housing
properties
under
construction
Total
£’000 £’000 £’000
Cost or Valuation
As at 1st April 2013 (net of grant) 458,676 2,783 461,459
Properties acquired 5,440 - 5,440
Additions 11,054 12,137 23,191
Works to existing properties - -
Schemes Completed 6,789 (6,789) -
Valuation adjustment (45,546) - (45,546)
Disposals (880) - (880)
As at 31st March 2014 435,533 8,131 443,664
Depreciation
As at 1st April 2013 - - -
Charge for the year (10,557) - (10,557)
Valuation adjustment 10,557 - 10,557
As at 31st March 2014 - - -
Social Housing and Other Grant
As at 1st April 2013 - (335) (335)
Additions (1,299) (2,694) (3,993)
Schemes Completed (971) 971 -
Valuation adjustment 2,270 - 2,270
As at 31st March 2014 - (2,058) (2,058)
Net Book Value
As at 31st March 2014 435,533 6,073 441,606
As at 31st March 2013 458,676 2,448 461,124
New Charter Homes Limited
Page | 31
Notes to the financial statements
For the Year Ended 31 March 2014
11 Tangible Fixed Assets – Freehold Housing Properties (continued)
A full valuation was performed in the year by Savills (L&P) Ltd, Chartered Surveyors, who are independent of the Group.
The valuation was based on Existing Use Value (Social Housing) as at 31st March 2014 and the valuations were undertaken
in accordance with the Royal Institution of Chartered Surveyors Appraisal and Valuation Manual.
£’000
Completed properties at valuation 435,533
Housing properties under construction at cost net of SHG and other grants 6,073
441,606
The reconciliation between the historical cost and the revaluation amount of properties as at 31st March is as follows:
2014 2013
£’000 £’000
Historical Cost 338,207 308,733
Social Housing Grant (30,166) (17,886)
Depreciation (19,961) (15,968)
Revaluation Reserve 153,526 186,245
441,606 461,124
Social Housing Grant
2014 2013
£’000 £’000
Total accumulated SHG receivable at 31 March 15,968 14,993
Capital Grants 3,993 975
Revenue Grants - -
19,961 15,968
Total Expenditure on housing properties
2014 2013
£’000 £’000
Capital expenditure 23,610 18,734
Revenue expenditure 12,858 12,652
36,468 31,386
New Charter Homes Limited
Page | 32
Notes to the financial statements
For the Year Ended 31 March 2014
12 Tangible Fixed Assets – Non-social housing
Freehold
Premises
Leasehold
Premises
Computers
and office
equipment
Furniture,
fixtures
and
fittings Total
£’000 £’000 £’000 £’000 £’000
Cost
At 1st April 11,683 401 65 39 12,188
Additions - - - - -
Disposals - - - - -
At 31st March 11,683 401 65 39 12,188
Depreciation
At 1st April 1,235 400 65 39 1,739
Charge for the year 161 - - - 161
Disposals - - - - -
At 31st March 1,396 400 65 39 1,900
Net Book Value
At 31st March 2014 10,287 1 - - 10,288
At 31st March 2013 10,448 1 - - 10,449
13 Debtors
2014 2013
£’000 £’000
Arrears of rent and service charges 5,326 6,226
Less: Provision for bad and doubtful debts (2,877) (3,292)
2,449 2,934
Housing benefit overpayments 439 372
Less: Provision for bad and doubtful debts (415) (345)
24 27
Rechargeable repairs 2,987 2,689
Less: Provision for bad and doubtful debts (2,779) (2,496)
208 193
Trade debtors 797 787
Less: Provision for bad and doubtful debts (74) (54)
723 733
Amount due from parent and fellow subsidiaries –trade 11,391 6,497
Amount due from parent and fellow subsidiaries –loans - 1,883
Prepayments and accrued income 46 91
Other debtors 1,911 972
16,752 13,330
New Charter Homes Limited
Page | 33
Notes to the financial statements
For the Year Ended 31 March 2014
13 Debtors (continued)
The amount due from the Parent and from fellow subsidiaries relates to loans made to New Charter Housing Trust Ltd -
£nil (2013 - £1,882,998). The loan was at a fixed interest rate of 5.25% and has now been repaid.
Rent and service charge arrears, net of provision for bad and doubtful debts, represents 4.05% (2013 - 4.97%) of the annual
rent and service charge receivable.
14 Creditors – Amounts falling due within one year
2014 2013
£’000 £’000
Amount due to parent undertaking 2,778 646
Trade creditors 452 637
Accruals and deferred income 1,398 1,347
Repairs and maintenance accruals 481 1,487
Accrual for properties under construction 297 284
Social housing grant received in advance - 37
Rent and service charges received in advance 775 721
6,181 5,159
15 Creditors – falling due after more than one year
2014 2013
£’000 £’000
Housing and development loans 311,300 299,217
Disposal proceed funds 277 370
311,577 299,587
16 Loans
2014 2013
£’000 £’000
Housing loans by
instalments
Housing loans by
instalments
In more than five years 313,550 301,550
New Loan facility arrangement fee (2,250) (2,333)
311,300 299,217
The housing loans are drawn down from total facilities of £350m and are secured by a fixed charge over the Company's
housing properties and other assets. There is an amount of £290.000m fixed at an average rate of 5.91% and £23.550m on
an average variable rate of 3.36% where possible rates will be fixed to minimise financial risk. The loan balance reported
includes the arrangement fee of £2.250m, which is amortised over the life of the loan (30 years).
New Charter Homes Limited
Page | 34
Notes to the financial statements
For the Year Ended 31 March 2014
16 Loans (continued)
The charges that the funders have on the Company’s properties are registered at the Land Registry.
Company
Breakdown of loans
£’000
Facility A
Nationwide Building Society 136,000
Royal Bank of Scotland 96,000
232,000
Facility B
Nationwide Building Society 34,000
Royal Bank of Scotland 24,000
58,000
Facility C
Nationwide Building Society 550
Royal Bank of Scotland -
550
Facility D
Nationwide Building Society 11,500
Royal Bank of Scotland 11,500
23,000
17 Disposal Proceeds Fund
2014 2013
£’000 £’000
At 1st April 370 304
Net sale proceeds recycled (93) 66
At 31st March 277 370
New Charter Homes Limited
Page | 35
Notes to the financial statements
For the Year Ended 31 March 2014
18 Reserves
Revenue
Reserve
Revaluation
Reserve Total
£’000 £’000 £’000
As at 1st April (6,088) 186,245 180,157
Surplus for the year 3,450 - 3,450
Surplus arising on revaluation - (32,719) (32,719)
As at 31st March (2,638) 153,526 150,888
19 Notes to the cashflow statement
a. Reconciliation of operating surplus to net cash inflow from operating activities
2014 2013
£’000 £’000
Operating surplus 20,215 18,774
Depreciation charges 10,745 8,630
(Increase) in debtors (3,422) (3,398)
Increase in creditors 928 846
Amortisation of loan arrangement fee 83 117
Loss on disposal on improvements to housing properties - -
28,549 24,969
b. Reconciliation of net cash outflow to movement in net debt
2014 2013
£’000 £’000
Movement in cash in the year - -
Change in net debt resulting from cashflows (12,000) (13,000)
Change in net debt (12,000) (13,000)
Net Debt at 1st April 301,550 288,550
Net Debt at 31st March 313,550 301,550
New Charter Homes Limited
Page | 36
Notes to the financial statements
For the Year Ended 31 March 2014
19 Notes to the cashflow statement (continued)
c. Analysis of changes in net debt
At 31st March
2013 Cashflows
At 31st
March 2014
£’000 £’000 £’000
Cash at bank and in hand - - -
- - -
Loans (301,550) (12,000) (313,550)
(301,550) (12,000) (313,550)
Change in net debt (301,550) (12,000) (313,550)
20 Capital Commitments
2014 2013
£’000 £’000
Capital expenditure that has been contracted for, but has not been
provided for in the financial statements
11,452
11,881
Capital expenditure that has been authorised by the Board of Directors,
but has not been contracted for
26,359
23,606
The amount contracted for at 31st March 2014 will be funded from grants and loans approved by local authorities and the
Homes Communities Agency or will be financed from private finance loans. The Board expect that the expenditure they
have authorised will be fully financed by the local authorities, the Homes Communities Agency or from private finance
loans.
21 Pensions
The Trust participates as a contributing member of the Greater Manchester Pension Fund, (administered by Tameside MBC
in accordance with the Local Government Pension Fund Regulations). The Scheme is a defined benefit scheme providing
benefits on final pensionable pay. The results and assumptions for the Group as at 31st March 2014 are as follows:
The pension cost is assessed in accordance with the advice of an independent professionally qualified actuary using the
projected unit method of valuation. Assets and liabilities have been identified on a group basis, but the split between each
individual Company is not available.
New Charter Homes Limited
Page | 37
Notes to the financial statements
For the Year Ended 31 March 2014
21 Pensions (continued)
Full Valuation 31st March 2014
Valuation method Projected unit
Value of assets £110,290,000
Investment return per annum 5.90%
Salary scale increases per annum 3.90%
Pension increase per annum 2.80%
The Pension contributions made by the Group in the year to 31st March 2014 totalled £3.414m covering 702 employees
(2013 - £3.436m, 581 employees). The employers contribution rate was 22.4% of pensionable salary. The Company
operates a pension scheme providing benefits based on final pensionable pay. The latest full actuarial valuation was
carried out at 31st March 2014 for FRS17 by a qualified independent actuary who was not an employee or officer of the
Company.
The estimated Employers contributions for the year to 31st March 2015 is approximately £3.715m, (2013 £3.210m).
The major assumptions used in this valuation were:
2014 2013 2012 2011 2010
Rate of increase in salaries 3.90% 4.60% 4.30% 4.30% 5.30%
Rate of increase in pensions in payment
and deferred pensions
2.80%
2.80% 2.50% 2.80% 3.80%
Discount rate applied on scheme liabilities 4.30% 4.50% 4.80% 5.50% 5.50%
Inflation assumption 2.80% 2.80% 2.50% 2.80% 3.80%
The assumptions used by the actuary are the best estimates chosen from a range of possible actuarial assumptions which
due to the timescale covered may not necessarily be borne out in practice.
Scheme Assets
The fair value of the scheme's assets, which are not intended to be realised in the short term and may be subject to
significant change before they are realised and the present value of the scheme's liabilities, which are derived from cash
flow projections over long periods and are thus inherently uncertain were:
Value at Value at Value at Value at Value at
2014 2013 2012 2011 2010
£’000 £’000 £’000 £’000 £’000
Equities 79,410 72,613 60,436 54,979 50,253
Bonds 18,749 17,144 15,541 14,161 12,001
Other - Property 6,617 5,042 4,317 4,165 4,500
Cash 5,514 6,051 6,044 9,996 8,250
Total value of assets 110,290 100,850 86,338 83,301 75,004
Present value of scheme
liabilities
(144,358)
(135,355) (111,474) (96,037) (127,339)
Surplus/(deficit) in the
scheme
(34,068) (34,505) (25,136) (12,736) (52,335)
New Charter Homes Limited
Page | 38
Notes to the financial statements
For the Year Ended 31 March 2014
21 Pensions (continued)
A deferred tax asset has not been recognised due to insufficient certainty over the timing of the surpluses that would
allow the asset to be realised.
Long
term
rate of
return
Long
term
rate of
return
Long
term
rate of
return
Long
term
rate of
return
Long
term
rate of
return
2014 2013 2012 2011 2010
Equities 6.60% 5.70% 6.30% 7.50% 7.80%
Bonds 3.80% 3.50% 3.90% 4.90% 5.00%
Other – Property 4.80% 3.90% 4.40% 5.50% 5.80%
Cash 3.70% 3.00% 3.50% 0.05% 0.05%
Reconciliation of defined benefit obligation
2014 2013 2012 2011 2010
£’000 £’000 £’000 £’000 £’000
Opening Defined Benefit Obligation 135,355 111,474 96,037 127,339 67,917
Current Service Cost 3,625 2,812 2,513 3,017 1,707
Interest Cover 6,115 5,391 5,316 6,528 4,755
Contributions by Members 1,000 989 988 971 1,021
Actuarial loss/(gain) 1,613 16,808 8,867 (27,573) 52,652
Past service Cost 401 434 369 (12,053) 720
Losses/(Gains) on Curtailments - - - - 135
Benefits Paid (3,751) (2,553) (2,616) (2,192) (1,568)
Closing Defined Benefit Obligation 144,358 135,355 111,474 96,037 127,339
Reconciliation of Fair Value of Employers Assets
2014 2013 2012 2011 2010
£’000 £’000 £’000 £’000 £’000
Opening Fair Value of Employer Assets 100,850 86,338 83,301 75,004 52,182
Expected Return on Assets 5,156 4,886 5,557 5,246 3,378
Contributions by Members 1,000 989 989 971 1,021
Contributions by Employer 3,414 3,436 3,453 3,445 4,152
Actuarial gain/(loss) 3,621 7,754 (4,346) 827 15,839
Benefits Paid (3,751) (2,553) (2,616) (2,192) (1,568)
Closing Fair Value of Employer Assets 110,290 100,850 86,338 83,301 75,004
Net Closing Balance (34,068) (34,505) (25,136) (12,736) (52,335)
New Charter Homes Limited
Page | 39
Notes to the financial statements
For the Year Ended 31 March 2014
21 Pensions (continued)
Actual Return on Employer Assets
2014 2013 2012
£’000 £’000 £’000
Actual Return on Scheme Assets 7,214 12,655 1,227
Analysis of Pension Costs in the Statement of Total Recognised Gains and Losses in the Trust Accounts
2014 2013 2012 2011 2010
£’000 £’000 £’000 £’000 £’000
Current Service Costs 3,625 2,812 2,513 3,017 1,707
Past Service Costs 401 434 369 (12,053) 720
Gains/(losses) on settlements or
curtailments
- - - - 135
4,026 3,246 2,882 (9,036) 2,562
Gains on settlements or curtailments recorded as non-operating items totalled £nil (2013: £nil).
Analysis of amounts included in other finance income/costs in the Trust accounts
2014 2013 2012 2011 2010
£’000 £’000 £’000 £’000 £’000
Expected return on pension scheme assets 5,156 4,886 5,557 5,246 3,378
Interest on pension scheme liabilities (6,115) (5,391) (5,316) (6,528) (4,755)
(959) (505) 241 (1,282) (1,377)
Analysis the amount recognised in statement of total recognised gains and losses in the Trust Accounts
2014 2013 2012 2011 2010
£’000 £’000 £’000 £’000 £’000
Actual gain/(loss) recognised in STRGL 2,008 (9,054) (13,213) 28,400 (36,813)
Cumulative Actuarial Gains and losses (29,435) (31,443) (22,389) (9,176) (37,576)
2014 2013 2012 2011 2010
£’000 £’000 £’000 £’000 £’000
Experience Gains/losses on assets 3,621 7,754 (4,346) 827 15,839
Experience gains/losses on liabilities (1,526) 138 (1,052) 9,635 -
Actuarial gains/(losses) recognised in
STRGL
2,008
(9,054) (13,213) 28,400 (36,813)
New Charter Homes Limited
Page | 40
Notes to the financial statements
For the Year Ended 31 March 2014
22 Legislative Provisions
The Trust is registered with the Homes and Communities Agency (HCA) under the Housing & Regeneration Act 2008
(Registration number LH4266).
23 Housing Stock
2014 2013
No No
Dwellings owned and in management:
- General Needs: Social Rent 13,445 13,702
- General Needs: Affordable Rent 689 324
- Housing for older people 675 673
- Supported Housing 97 98
14,906 14,797
24 Impairment
Under Financial Reporting Standard 11 (FRS 11), the Company is required to perform impairment tests on its housing
stock, so that properties are not shown at an amount exceeding their recoverable amount. It was considered that no
impairment write off was necessary. Where properties have been identified as having poor letting performance, we have
prioritised these as part of our development portfolio and invested monies to bring them up to a decent homes standard,
either by refurbishment or additional investment.
25 Ultimate Parent Undertaking
The company is a subsidiary undertaking of New Charter Housing Trust Limited, which is incorporated in the United
Kingdom.
The Company's principal address is:
Cavendish 249
Cavendish Street
Ashton-Under-Lyne
Cheshire
OL6 7AT
Copies of the financial statements of New Charter Housing Trust which include the results of the Company, can be
obtained from the registered office at the address above. No other accounts include the results of this company.
New Charter Homes Limited
Page | 41
Notes to the financial statements
For the Year Ended 31 March 2013
26 Related Party Transaction
As a member of the New Charter Housing Group, New Charter Homes has had the following transactions with its parent
and fellow subsidiaries.
Income Expenditure Debtors/(Creditors)
£’000 £’000 £’000
New Charter Housing Trust 2,977 22,695 (647)
Aksa Housing Association 169 10 165
Gedling Homes Limited 140 - 105
New Charter Building Company 3,568 23,853 330
Threshold Housing Project 42 - 9
Piccolo Communications Ltd - 114 -
Tameside Radio - 50 -
Family Support Charity - 30 -
Cavendish Property Developments 3,522 7,063 1,006
Great Neighbourhoods - - -
The Company has Local Authority Board Members and due to the nature of the relationship with Tameside Metropolitan
Borough Council, would like to acknowledge them as a related party.
These Members do not influence any contracts between the Company and the Council. The Company has tenant Board
Members which are charged rent for their property at arm’s length and do not benefit from any favourable terms.
The independent Board members have links with a number of organisations, including Tameside College, Pennine Care
NHS, Great Places Housing Group, Manchester City Council & Trafford Local Authority, Tameside 3rd Sector Coalition,
Depaul Trust North West Regional Committee, Christchurch Community Development. Again no advantage is gained from
these links.
27 Share Capital
The company is limited by guarantee, and therefore has no share capital.