The Association celebrated its 40th year in 2015. It is a traditional housing association and has only borrowed to invest in more housing properties or projects that add value to the Association's assets. The funders have set a 65% gearing limit, which means the borrowings of the Association cannot be more than 65% of the 'net worth' of the Association. This net worth calculation is 'historic', and compares loans to reserves and grants. A key aim of the Association is to provide properties for those in housing need and it has therefore sought to maximise the number of properties it can develop each year within this 65% gearing limit. The Board is determined to avoid a breach of gearing and therefore the financial plans are currently based on the gearing reaching a maximum of 63%, while at the same time negotiating with our funders on increasing the gearing to 75%.

In addition to providing 31 new homes and repurchased 1 home during 2015/16, the Association is committed maintaining its properties to a high standard.

How Every Pound Of Rent Is Spent

This pie chart shows how each £1 of rent and service charge we collected across the Association in 2015-16 was spent on managing and maintaining our homes or paying interest on the bank loans we have borrowed to build or improve them.

Breakdown of how £7.4m is spent:

How Every Pound Of Rent Is Spent

 

Therefore, in very broad terms, the Association spends a third of the income maintaining properties, another third in managing the properties and the final third on the interest on and repayment of the loans (from the surplus), that financed the building of the properties.

5-Year Summary

The financial results are for the last 5 years are summarised below. It should be noted that the 2015 figures have been restated in line with the transition to FRS102, which ensures our accounts are presented in a consistent way with the International Accounting Reporting Standards.  There is no requirement to re-state previous year’s figures:

 

Actual

Re-stated

  Actual

Actual

Actual

Actual

 

2016

2015

2015

2014

2013

2012

 

£'000

£000

£'000

£'000

£'000

£'000

Turnover

7,359

7,047

6,547

6,132

5,404

4,957

Operating costs

-4,916

-4,814

-4,551

-4,118

-3,713

-3,709

Operating surplus

2,443

2,232

1,996

2,014

1,691

1,248

Exceptional

-

-

-

189

-

-

Other

2

76

33

2

-

-

Net interest

-1,761

-1,689

-1,646

-1,475

-1,116

-1,040

Surplus for year

684

619

383

348

575

209

Operating margin

33%

32%

30%

33%

31%

25%

The level of turnover has been increasing steadily, reflecting the annual rental increase and the additions to housing stock. The higher growth in turnover in 2015/16 reflected new developments coming into management, namely Coed Y Llan, Llanidloes, Glan Yr Dwr, Newtown and the re-purchase at Cwrt Eglwys, Newtown.

It is important for the Association to generate surpluses, as it is these surpluses that enable the loans of the Association to be repaid.

Balance Sheet

The properties of the Association are essentially funded by grants and borrowing. Over time these borrowings need to be repaid. Therefore, the surpluses noted below will need to increase to enable the loans to be repaid over the next 35 years. 

Five year summary

Actual

Re-stated

Actual

Actual

Actual

Actual

 

2016

2015

2015

2014

2013

2012

 

£’000

£000

£’000

£'000

£'000

£'000

Fixed assets

98,105

93,849

97,741

92,823

91,862

80,669

Capital Grants

 

 

-56,249

-52,894

-52,652

-50725

 

98,105

93,849

41,492

39,939

39,300

29,944

Net current (liabilities) /assets

2,798

763

5

1,789

-2,129

1,674

Long term loans

-40,189

-35,673

-35,570

-36,185

-31,976

-26,998

Capital Grants

-53,348

-52,256

 

 

 

 

Long Term Creditors

-93,537

-87,929

 -35,570

-36,185

-31,976

-26,998

Net assets

7,366

6,683

5,927

5,543

5,195

4,620

Financed by:

 

 

 

 

 

 

Total capital & reserves

7,366

6,683

5,927

5,543

5,195

4,620

The Capital and Reserves to date essentially mean the Association has generated £7.4m cash to directly repay the loans originally arranged to build homes. It does not represent a level of available money to spend on new initiatives.

Value For Money

Decent housing brings numerous benefits, not least in terms of the positive impacts it can have on tenant's health & wellbeing, the educational attainment of individuals and on reducing energy bills. The lower levels of rent paid by people living in affordable housing are recognised as a particularly important means of preventing poverty or helping to mitigate its impact.

The Association is the beneficiary of significant sums of public money, in respect of Social Housing Grant (SHG) to help fund the homes it builds, also the Welsh Government and local authorities need to be satisfied these funds are being used effectively. In addition, the operating activities undertaken by the housing associations are being paid for from residents rents, and as these are often those on the lowest incomes it is critically important for the sector to show that best use is being made of that income.
Therefore, it is critical that the Association ensures it makes best use of its resources. This is at the heart of delivering Value for Money (VFM).

The concept of VFM is not new and generally is considered to cover three elements:

  • Economy - doing things at the 'best price'
  • Efficiency - doing things in the 'best way'
  • Effectiveness - doing the 'right things'

Regulatory Assessment

A Regulatory Assessment report is published for housing associations registered with the Welsh Government.

The Assessment sets out how effectively we have met the "delivery outcomes" relating to the provision of housing and governance and financial management matters.

The regulatory assessment reports will:

  • Summarise strengths and areas for improvements
  • Outline the level of regulatory engagement and describe the nature of that contract
  • Reaffirm the latest financial viability judgement

The regulatory assessment reports are published on this website and the Welsh Government website.

Further Information

The above information has concentrated upon the financial performance for the 2015/16 financial year and a summary of the financial performance in the past. A full copy of the Board of Management's report and financial statements can be viewed/downloaded using the link below:

Download Full Set of Accounts (2015-16)

Of equal importance are the financial plans for the future. The Association takes a long term view in managing and maintaining its properties. It therefore, produces long term financial forecasts for the next 35 years. These financial forecasts help demonstrate to the banks and building societies from whom we borrow money that the Association is able to repay the loans within timeframe they require. These financial plans also help the Welsh Government assess our financial strength and viability.