new charter housing (north) limited · as a member of the new charter housing trust group we adopt...

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


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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.

http://www.newcharter.co.uk/value-for-money


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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


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

http://www.frc.org.uk/auditscopeukprivate


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]


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.


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


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 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)


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.



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)


Page | 24



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.


Page | 25



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.


Page | 26



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


Page | 27



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)


Page | 28



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.


Page | 29



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.


Page | 30



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


Page | 31



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


Page | 32



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


Page | 33



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).


Page | 34



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



58,000

Facility C

Nationwide Building Society 550

Royal Bank of Scotland -

550

Facility D



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


Page | 35



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


Page | 36



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.


Page | 37



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)


Page | 38




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)


Page | 39




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)


Page | 40



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.


Page | 41



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.

new charter housing (north) limited · as a member of the new charter housing trust group we adopt...

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