Corporate Plan Financial Plan Context

28 March 2013

The Group has put together the Budget at a time

when the financial markets are still unsettled, though rising, the Public Sector is under pressure to reform pensions and freeze salaries with cuts being demanded by Government

Documents provided show the last approved budget as well as budgets proposed for the next 3 years

2013/2014 is fully worked up and can be taken as factual

The focus is therefore on 2013/2014

BACKGROUND

GROUP POSITION• APH has been dealing with financial difficulties since

formation and as such has been conditioned to operating under circumstances of prudence thus we are not affected by the recession as have other Housing Associations.

• APH has protected the people who have contributed to our overall performance, made no redundancies, given below inflation pay increases and having taken into account previous years review, posted what will be our best ever results, once again, together with a promise that surpluses will be the order of the day in future.

• APH have undertaken an exercise to ensure minimum increases in budgets and attempting to ensure a zero budget where possible

• Pressures are still on us despite our good performance and these pressures will continue for the next few years

The completion of the Stock Condition Survey and the effects of the Component Accounting changes have led to a stronger Balance Sheet.

We are also in possession of adequate cash reserves to ensure any of the Welfare Reform outcomes will not be a short term threat to us.

Full assumptions were presented to February Board and have been included in the calculation of the Budget data.

ASSUMPTIONS

BUDGET SUMMARY

Approved Budget Approved Budget Approved Budget Approved Budget

Budget 2012/13 Budget 2013/14 Budget 2014/15 Budget 2015/16

2012/13 % Change 2013/14 % Change 2014/15 % Change 2015/16 % Change

Revenue  

Gross Lettings Income 3,792,540 5.55% 3,960,375 4.47% 4,076,745 2.94% 4,196,940 2.95%

               

Income from Non Housing 34,9305 (59.28%) 43,550 24.68% 43,700 0.34% 43,860 0.37%

               

Total Revenue Income 3,827,470 5.24% 4,003,925 4.61% 4,120,445 2.91% 4,240,800 2.92%

INCOME

Income

Rent Increases take place in October so the effect of the 2012/13 (6.1%) and 2013/14 (3.1%) is to result in an increase during 2013/14 of 4.47%.Income in respect of Pioneer Homes Services results from the new St Peters partnership SLA which has been extended to cover 2013/2014 and to continue in the short term.

MAIN BUDGET EFFECTS

EXPENDITURE

Rent Costs 70,935 16.89% 188,846 (166.22)% 193,515 (2.47%) 197,115 (1.86%)               

Staffing Costs 819,143 (3.03%) 777,152 5.13% 792,5732 (1.98%) 807,844 (1.93%)               

Governance 95,395 (14.38%) 92,500 3.03% 46,250 50.00% 46,950 (1.52%)               

Management - General 155,553 (0.92%) 166,540 (7.06%) 170,435 (2.34%) 174,505 (2.39%)               

Management - Housing 119,953 10.18% 133,375 (11.19%) 138,320 (3.71%) 143,489 (3.74%)               

Services - Estates 497,724 (11.95%) 497,760 (0.01%) 509,045 (2.27%) 520,695 (2.29%)               

Maintenance 483,075 0.00% 655,000 (35.59%) 655,000 0.00% 655,000 0.00%               

Finance and Other 14,920 (0.78%) 16,005 (7.28%) 17,155 (7.18%) 18,720 (9.12%)           

Non Housing expenditure 14,612 38.53% 19,752 (35.18%) 20,022 (1.36%) 20,276 (1.27%)               

Depreciation 534,505 7.38% 533,855 0.12% 551,135 (3.24%) 552,705 (0.28%)               

Total Revenue Expenditure 2,805,815 5.16% 3,080,785 (9.80%) 3,093,450 (0.41%) 3,137,299 (1.42%)               

Surplus / (Deficit) 1,021,655 46.23% 923,140 (9.64%) 1,026,995 11.25% 1,103,500 7.45%

BUDGET SUMMARYApproved Budget Approved Budget Approved Budget Approved Budget

Budget 2012/13 Budget 2013/14 Budget 2014/15 Budget 2015/16

2012/13 % Change 2013/14 % Change 2014/15 % Change 2015/16 % Change

EXPENDITURE

Surplus / (Deficit) B/F 1,021,655 46.23% 923,140 (9.64%) 1,026,995 11.25% 1,103,500 7.45%               

Bank Interest Receivable 2,000 38.89% 13,200 560.00% 13,200 0.00% 13,200 0.00%               

Mortgage Interest Paid (660,000) 2.74% (636,955) 3.49% (640,785) (0.60%) (605,185) 5.56%               

Overall Surplus / (Deficit) 363,655 (123.38%) 299,385 (17.67%) 399,410 33.41% 511,515 8.12%

BUDGET SUMMARYApproved Budget Approved Budget Approved Budget Approved Budget

Budget 2012/13 Budget 2013/14 Budget 2014/15 Budget 2015/16

2012/13 % Change 2013/14 % Change 2014/15 % Change 2015/16 % Change

Expenditure Rents increase in October 2013 by 3.1% giving an overall increase in

Rents of 4.47% in the year 2013-2014.

All salaries are included at 100% of rate.Salaries include: -Across the board increase of 2.5%Modern Apprentices x 4 £ 24,000Pension Deficit £ 1,500

Total Salaries and on Costs have risen by 1.3750% from £1,161,677 to £1,177,645Additionally the contingency for Overtime, unknown maternity cases and bonuses is retained at £50,000 (2012/13 spend fully committed).

MAIN BUDGET EFFECTS

Rent Increase - 4.47% Maintenance – now excludes Component costs treated under

Capital. Salary increase proposed– 2.5% Inflation on Expenditure - Effect – 9.80% Inflation on Income – Effect – 4.61% Render Issues – Details Awaited, legal fees remain increased

through 2013/14 and 2014/15 Welfare Reform – Increased Rent Costs and other housing

expenditure inflated. Increase £132,000 (Contingency was(£75,000)

Arrears will only affect cash flow etc. as they are likely to increase , rather than be a budget item.

MAIN BUDGET EFFECTS

CAPITAL EXPENDITURE

Programme Funding - Nationwide 100,000 (100.00%) 100,000 0.00% 450,000 (350.00%) 600,000 (33.33%)

               Capital Expenditure - Scheme 250,000 (100.00%) 250,000 0.00% 250,000 0.00% 250,000 0.00%

               Capital Expenditure - Office 125,000 (108.33%) 125,000 (8.00%) 30,000 77.78% 20,000 33.33%

Total Capital Expenditure 475,000 (94.55%) 485,000 (2.11%) 730,000 (50.52%) 870,000 (19.18%)               

Overall Inflow / (Outflow) (475,000) (94.55%) (485,000) (2.11%) (730,000) (50.52%) (870,000) (19.18%)

EXPENDITUREApproved Budget Approved Budget Approved Budget Approved Budget

Budget 2012/13 Budget 2013/14 Budget 2014/15 Budget 2015/16

2012/13 % Change 2013/14 % Change 2014/15 % Change 2015/16 % Change

The effect of the Draft Budget, if approved in its present form, would change the profile of our Nationwide Loan position in reducing the amounts previously required. The facility of £12.5m will be slowly repaid until 2020-2021 when a small facility will be required to balance the books until 2024-2025 (est) when debt will be fully repaid.

The current approved 30 year finance plan has a Peak Debt of £11,114k arising in 2012/2013, with the loans being repaid in financial year 2028-2029

The changes therefore improve APH’s position.

FINANCE PLAN 2013 - 2016

The efficiencies arising from improved performance have set a stronger foundation for the future.

The new Budget and forecast for 2013/2014 onwards continues to be prudent yet robust enough to meet our requirements.

We have enough Loan facility with the Nationwide to meet the needs of the draft Finance Plan.

The additional amount of facility should be retained due to its low cost. To give it up and re-borrow later, if necessary, would be too expensive.

CONCLUSIONS

The budget has been drafted under existing protocols to ensure clarity in what is included.

Maintenance has been revised to show Revenue and Capital costs in line with Component Accounting changes

The amounts in the Finance Plan facilitates the delivery of the written Business Plan and Pioneer Way over the next 3 years .

CONCLUSIONS