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Financial Perspective at New Charter
Great Homes, Great Neighbourhoods, Great People
The New Charter Group was formed in March 2000 with the transfer of the
Tameside MBC housing stock and ancillary assets. It was, and remains,
a significant financial undertaking, and was charged with delivering
a massive programme of investment in the housing stock amounting to £224m
over a ten year period. Achievement of this programme,which is now substantially
complete, will remedy the levels of disinvestment which had grown due
to the lack of resources available to the Council, and will thereby ensure
that the pledges made to tenants prior to transfer are upheld. In March
2004 the Group decided to accelerate the pace at which this programme
of investment would happen, and also brought in a significant amount
of additional funds to address problems relating to the environment.
In November 2005 Aksa HA, (based in Oldham, but also owning stock in
Tameside, Bury and Manchester) joined the Group.
The Group has growth
as a clear objective, and a huge step was made in this context with the
transfer of Gedling BC housing stock to Gedling Homes in November 2008.
At that point Gedling Homes became a member of the New Charter Group.
The Group is clear that the viability of its business lies in the creation
and maintenance of sustainable communities - a well rounded investment
programme is the key to success.
External
Funding
As a Large Scale Voluntary Transfer, (LSVT), organisation
the financial structure of the Group is such that
the investment programme demands external funding.
At the point of transfer from the Council a long
term, facility of £213m underpinned the Group's
finances. In March 2004 this was increased to a total
of £270m, in order to provide resources to
address environmental issues and start a new build
development programme. In June 2007 this was increased
again to £290m, providing yet more development
opportunities. This facility has been agreed with
a syndicate of funders, and is controlled through
the operation of a formal Facility Agreement with
the Nationwide Building Society which has extended
loan finance of £170m. Our other partner in
the syndicate is the Royal Bank of Scotland, (£120m).
In addition Aksa has a funding facility of £13m,
(Royal Bank of Scotland (£8m) and Dexia (£5m)),
which was raised to purchase leased properties and
for future development opportunities.
The creation
of Gedling Homes was underpinned by a long term,
(30 year), loan facility of £35m provided by
Lloyds TSB plc.
Income
The main income base is the Group's rental income stream
which is currently valued at £65m annually. The Group
is progressing towards meeting the Government's requirement
relating to "Rent Reforms". This means that by
2012 the rents payable on the Group's housing stock will
be at a level determined by a formula which reflects the
value of properties and relative earnings levels in the region.
This has been reflected in the annual approval by the Boards
of a "Rent Plan" which forms an integral element
of the Group's overall Business Plan.
Expenditure
The fundamental element of expenditure reflects the Repairs
Maintenance and Investment programme. The Group was originally
formed to deliver a significant amount of investment in its
housing stock - in nine years around £310m has been
spent in line with these plans. In 2009/10 a further £27m
will be spent. Delivery of this programme, investing in the
Group's wider regeneration role and the day-to-day management
of the housing stock together with the overall business and
information services infrastructure is estimated to cost
around £20m. The cost of servicing the loan finance
is around £16m. Having established its core business,
and delivered the promises about investment which were made
prior to the transfer the Group is now looking to undertake
development schemes - in 2009/10 £12m will be directed
this way.
Whilst the original New Charter investment programme
is moving towards completion, the creation of Gedling Homes
saw the start of this process in north Nottingham. Over the
next five years around £41m will be spent in the area
- delivery of this programme will build upon the learning
and experience now contained within the Group.
Financial
Governance
The Boards of the Companies within the Group, under the overall direction
of the Board of New Charter Housing Trust, ("the Parent"),
are statutorily responsible for putting in place and implementing
effective financial control mechanisms. To facilitate this the Group
employs the services of Beevers & Struthers to provide the internal
audit function, with Baker Tilly as external auditor. These functions
are discharged through the formal operation of the Group's Audit
Committee. Similarly the Tenant Services Authority, (which replaced
the Housing Corporation in December 2008), exercises a regulatory
role with regard to the Registered Social Landlord elements of the
Group, (New Charter Housing Trust Ltd; New Charter Homes Ltd; Gedling
Homes and Aksa HA). The Group operates a Finance Committee which
has responsibility for overall financial control and which reports
to the Trust Board. The nature and size of the Group's Loan Facility
demands external advice which is provided by JC Rathbone Associates
Ltd.
Financial
Control
The Group discharges this responsibility through its Group
Director of Finance and Deputy Group Chief Executive, Martin Frost.
He is assisted by Jacqui Fieldhouse , (Deputy Director of Finance)
who has responsibility for financial planning and control, including
budget and final accounts issues and financial risk management. Julie
Vickers, as Head of Revenues, is responsible for the effective billing,
collection and recovery of all revenues due to the Group, (around £65m
annually). Alan Clarke, (Head of Information Systems), heads up a
team which ensures that the Group has the information and communication
systems which are a fundamental requirement of the organisation.
Financial
Performance
An overview of financial performance in 2008/09 can be seen
in the Group's Annual Report, (on the Annual Reports page). Information
related to 2009/10 will be published on completion of the final accounts
for the year, which will be by September 2010. More detailed information
is also available in the Directors Report and Financial Statements
for each of the Group companies, which are available on the Financial
Reports' page.
The Tenant Services Authority was created in December
2008 and is responsible for ensuring that housing
associations are financially viable, (taking over
the role which was previously that of the Housing
Corporation).
The TSA issued its regulatory judgement
on the New Charter Group in January 2009 which
was that:
"The group meets the expectations
set out in the Regulatory Code in terms of financial
viability."
The TSA's Regulatory Judgement document is here...
The TSA public site: Tenant Services Authority
