Bevan..Buckland
Chartered accountants, tax and financial planners
industria
Report and financial statements
For the year ended 31 March 2013
,N0,.i;
ASTAL
housing group
Y
C6astai Housing Group Limited
Report and financial statements for the year ended 31 March 2013
Information
Industrial and Provider._
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'. iety
30438R
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e ment
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L146
<umber
Registelc ___ice :
220 High Street
Swansea
Board :
Francis Jones (Chair)
Kay Howell (Vice Chair)
Natalie Morgan (Treasurer)
Michael Burr
Kirsty Ellis
Ioan Evans
Elizabeth Finn (Tenant) resigned December 2012
Patricia Heywood Jones (Tenant)
Carol Hill
Sandra Jones (Tenant)
Clive Owen
Mike Ward (Tenant)
Chief Executive a -n d. Secretary:
Timothy Blanch
Executive Directors:
Christopher Gange (Deputy Chief Executive and Director
of Housing Services)
Debbie Green (Group Director of Finance and IT Services)
Gerraint Oakley (Director of Development)
Caroline Belasco (Director of Organisational Development,
appointed May 13)
Bankers :
Barclays Bank PLC
The Kingsway
Swansea
SOliCitt; i'
Morgan Cole
Kings Road
Swansea
Morgan La Roche
Phoenix Way
Swansea
Devonshires
Salisbury House
London Wall
London
Bevan & Buckland
Langdon House
Langdon Road
SA1 Swansea Waterfront
Coastal Housing Group Limited
Report and financial statements for the year ended 31 Marc
2
Index to the financial statements
Chairman's statement
Operai:o
1
nr7f7nancial review
2
Report -<
Report
on Corpo
7
audirlor
lacvorrkaAce matter-5:
) Coastal liouF-J g Group Limited
11
odffn t report to the members of Coastal Nouslno
Lirnfted
12
ConsollOated, lne,orrie and expenditure account
14
Asso Cation nFc:.ome and expert '..ure account
15
Statement o, f.r.:dal !ecognised surplus
Consod
b
eSNe et
and deficits
16
17
Assoc lation balanc,:v sheet
18
Consolidated oast flow statement
19
Association cash flow statoo I
20
Notes to thf . financial statem:
t
.
21
Coastal lousing Group Limited
Report and financial statements for the year ended 31 March 2013
Chairman's statement
Over the last year the economy continued to present challenges for housing associations, our tenants and
the housing market. UK Government policy is also impacting, and our corporate plan highlights the
challenges we and our tenants face in relation to government policy, the economic recession and welfare
reform. We are seeing an increase in poverty, social exclusion and the relatively new phenomenon of in
work poverty. Demographic factors will continue to impact; we have an ageing population and also face
increasing demands from younger people who, because of a shortage of affordable housing, will struggle
to get on the property ladder or to access good quality private rented accommodation. Government policy
in Wales remains broadly favourable to social housing compared with England, but the social housing
grant budget in Wales has still decreased by circa 40 %, albeit the Finance and Housing Ministers have
transferred additional monies into the capital housing budget during last year. Our financing requirements
are increasingly being met by the capital markets, often providing funding at historically low interest rates.
However land prices have remained stubbornly high during the recession and developers and contractors
alike are pulling out of activities west of Cardiff.
However as a Board we are committed to working closely with the management team to ensure that
Coastal remains a sustainable, growing and vibrant organisation committed to delivering services that
tenants want, and to working with local authority partners on innovative mixed use regeneration schemes.
We do this by our ability to manage complexity and by taking measured risks to meet our strategic
objectives. We continue to ensure that Coastal is a financially strong organisation with high levels of
organisational capability to solve problems and deliver innovations in service delivery through lean systems
thinking and a highly visible, accessible and hands on housing management service.
From a governance perspective during the year we reviewed our Board and sub -committee structures and
created a Finance and Development sub -committee to facilitate greater scrutiny of our financial position
and delivery of our development strategy. The main Board retains the overall strategic focus and agrees
with management team a formal annual plan of areas for consideration which are timetabled in during the
year. We are fortunate to have a good set of skills, and age and gender diversity on our Board as well as a
high level of local knowledge brought by both independent and tenant members. We have identified the
need for additional treasury expertise on the Board and are hopeful that we will have successfully recruited
to this role by the autumn.
I am delighted that these accounts show a strong financial performance for the year with an operating
surplus of nearly 10% enabling us to reinvest in services to tenants and to build more homes. We have
sufficient funding for our current development programme and we have reviewed our Treasury strategy
and are now confident that we have a plan to finance our activities over the next five year planning cycle.
Our tenants continue to be very satisfied with our service delivery. In particular our new in house
maintenance service, set up at the beginning of the year, is proving both very popular with tenants and is
also making savings in the way we deliver day to day repairs. As a result we are continuing to grow this
team so that it can take on more repairs work and start to work in our empty properties too. Our
independent living floating support service for older people continues to work very well and building on
this success we will be merging all our support services under a dedicated manager to ensure that our
services are tailored as well as they can be to meet the needs of our tenants in dealing with issues resulting
from the welfare reforms.
This year also saw the completion of phase one of our Urban Village regeneration scheme in High Street
Swansea. We moved our main office up to High Street in spring 2012 and have had very positive feedback
from staff and stakeholders alike about the modern and creative open plan working environment. Staff
engagement reached new levels during the year, and I was very pleased to attend the Sunday Times 100
Best Companies Awards in London in February where Coastal came 13th overall in the Best Not -ForProfit Organisations to work for list.
Finally I would like to thank my fellow Board members for their contributions and support, and in
particular Elizabeth Finn who retired during the year. Thanks are also due to the management and staff
for their dedication, enthusiasm and hard work, to our lenders for their financial support, and to our
tenants for the way they engage with Coastal.
Co -s ,171 HOe.nsin Group L8rV4¢te„.k
and $Ir1,.øsnc@.ø,.d statements for the year ended 31 March 2013
Re
2
Operating and financial review
Principal activities
The group comprises Coastal Housing Group Limited ('the association), and its subsidiary undertakings
Pennant Housing Association Limited (together 'the group.')
The principal activities of the Group are the development and management of social housing, the
construction of housing to be disposed of on Low Cost Home Ownership terms, and associated
regeneration activities.
The association is charitable and the subsidiary is non charitable. Both are registered as social landlords
with the Welsh Government and operate two key business streams:
e
e
housing for rent and associated support services, and
low -cost home ownership.
As well as managing over 5,000 properties, the group continues to have a significant development
programme and brought 32 new properties into management last year. The Group also continues to
specialise in urban housing -led regeneration projects. In addition the Group provides properties leased
from the Welsh Housing partnership at intermediate rents to people who cannot get on the property
ladder.
Business and fin_ .. icial review
The board is pleased to report a surplus for the year of L2,034,000 (2012: 2,163,000.) We have
continued to invest in both our existing housing stock and undertake a series of new developments, for
both rent and sale. The Group continues to do well in accessing social housing grant and has a robust
development plan in place for the medium term.
This was the third year in which we received a financial viability judgement from the Welsh Government
under the new regulatory regime. The judgement as at 31 March 2013 was a Pass on the basis that the
Group has adequate resources to meet current and future business and financial commitments. The
judgment also noted that the Association has adequate private financing in place to fund its forecasted
spending on property maintenance and improvements, and it has sufficient income generating ability to
service such borrowings, and the level of costs included in the forecast appears to be reasonable in order
to maintain our stock to the Welsh Housing Quality Standard.
The group also commenced a reorganisation of all its departments to take account of our growth, to
concentrate specialist services and to ensure that our structures remains fit for purpose to deliver the
right services to our tenants at the right time in the light of welfare reform.
arot.ip Limited
firuarac…e,N statements for the year ended 3
Report
March 2013
Operating and financial review
Business and financial review (c ?, "nued)
The group's five -year income and expenditure accounts and balance sheets are summarised below:
Table 1 - Group highlights, five -year summary
For the year ended 31 March
Income and Expenditure account (œ'000)
Total turnover
Operating surplus
Surplus for the year transferred to reserves
Balance Sheet (œ'000)
Intangible assets: Goodwill
Housing properties, net of depreciation
Social housing grant and other grants
Investments
Homebuy grants & Loans
Other fixed assets
Fixed assets
Long term debtors
Net current assets
Total assets less current liabilities
Loans (due over one year)
Provision for liabilities
2013
2012
2011
2010
2009
19,316
4,317
[restated]
23,618
5,384
2,034
21,078
4,941
2,163
22,237
5,256
3,262
19,860
3,741
5,411
3
6
328,601
(192,176)
317,601
(188,503)
300,967
(188,391)
266,347
(173,102)
257,840
(167,409)
136,425
129,098
112,576
93,248
90,437
8,872
303
3,562
8,084
304
3,398
8,382
238
3,121
7,382
(15)
485
(131)
3,259
3,408
149,162
140,884
124,317
103,874
94,199
50
201
7,093
15 6, 25 5
2,156
143,040
11,738
136,055
6,268
110,192
6,074
100,474
(125,426)
(742)
30,087
(113,810)
(1,177)
28,053
(109,606)
25,889
(86,402)
(474)
23,316
(82,147)
(416)
17,911
14
14
14
14
20
30,073
28,039
25,875
23,302
17,891
30,087
28,053
25,889
23,316
17,911
No
No
No
No
No
5,043
4,912
4,719
4,675
4,843
(560)
901
Reserves
: restricted
: designated
: revenue
: revaluation
: total
Housing properties owned at year end:
Social housing
Non -social housing
Statistics:
Operating surplus as % of turnover
Surplus for year as % of income from lettings
Rent losses (voids and bad debts as % of rent and
-
-
22.8%
31%
3.4%
23.4%
32%
2.4%
23.6%
35.9%
2.7%
18.8%
26.7%
3.4%
22.3%
31.8%
1.8%
1.3%
1.7%
1.5%
2.3%
4.2%
1.8
1.3
2.2
1.5
1.2
57%
53%
52%
46%
48%
service charges receivable)
Rent arrears (gross arrears as % of rent and service
charges receivable)
Liquidity (vrrent assets divided by airrent liabilities)
Gearing (total loans as (Yo of capital grants and reserves)
Ccas'
r3?¨
-
tŠln
_s far the year ended 31 It
2013
Operating and financial review
Objectives and strategy
Our overarching vision is
"To offer a choice of homes that you, your friends, your parents, or your children would be proud to live
in, and that meet the needs of the communities that we serve, and to contribute to the social and economic
development of the areas within which we work."
What we are planning to do to deliver our vision, and create a sustainable organisation and sustainable
tenancies, is underpinned by the following objectives:
Growth - to grow by increasing the supply of housing and widening our offer
Welfare reform - to support tenants and applicants through the changes in welfare benefits
Homes - to improve the quality of our housing stock.
Regeneration - to contribute to the regeneration of the areas that we serve
Services - to improve further our services to tenants
Services for older people - to develop a wide range of housing and services for older people
Support services - to meet the housing needs of young people and support tenancies
Organisation - to create a lean, agile and innovative organisation
Stakeholders - to build support from partners, funders, contractors, suppliers and the regulator
Financial strength - to build financial strength and maintain close relationships with funders
e
a
Senior management and the board have developed a clear action plan quarter by quarter to monitor our
delivery of these objectives.
Value fer
?.1>;:nF
Our value for money strategy directly supports our corporate objectives. During the year value for money
savings were used to:
e
reinvest in service improvements,
reinvest in our stock,
reinvest in our communities,
reduce financing costs of delivering new homes, and
make capital repayments on loans.
Value for money methodology
The drive to pursue and achieve value for money is both explicit and implicit in the way we work at
Coastal. Achieving value for money is not something that is considered separately from the day job, it is an
integral part of it. In practice a number of interlinked practices support Coastals delivery of value for
money:
lean systems thinking,
engaged empowered staff and an entrepreneurial culture,
a collaborative governance model,
pro -active relationships with stakeholders,
procurement, and
treasury management
Coastal Housing Group Limited
Report and financial statements for t
?ae?e?z
??
??.? 2013
Operating and financial review
Risks and uncertainties
Risks that may prevent the group achieving its objectives are considered and reviewed annually by the
senior management team and board as part of the corporate planning processes. Our most recent
strategic risk review took place in January 2013 and was facilitated by Zurich Risk Management. The risks
identified were recorded and assessed in terms of their impact and probability. Major risks, presenting the
greatest threats to the group, are reported to the board every six months together with action taken to
manage the risks. The major risks to successful achievement of the group's objectives are considered
below.
The main risks facing the Group are:
Welfare reform - Many tenants of the Group are under - occupying their homes under the definition in the
new welfare benefit changes. As a result they face a reduction in income and may not be able to pay all
their rent. Universal credit starts in October 2013 for new claimants, who will be paid all their benefits
direct four weekly in arrears.
Increased support requirements for all tenants - As a consequence of welfare refoitn, general needs
tenants will need support as well as older people and people with special needs. They will need support in
areas such as responding to bedroom tax, claiming universal credit and managing their money.
Organisational development - We need to continue to formalise our management and perfoiniance
framework at senior level to ensure that we consolidate the step changes required to be fit for purpose in a
challenging environment.
Developing new income streams and making further efficiency savings - Welfare reform will reduce
our income. We will need to have the organisational skills and capacity to develop new income streams
and make further savings.
Understanding of our business model - We are developing our business model in response to a
changing environment driven by changes both in Wales and emanating from Westminster. There is
sometimes a lack of understanding on the part of local and national government of the impact on
Associations of these fundamental changes that are taking place in public funding, the market and the
environment. As a result they do not fully understand why or how we are adapting the way we work, or
the challenges we are resolving.
Regeneration - The group is heavily committed to mixed use regeneration, particularly in and around
High St, Swansea. This carries both financial and reputational risk if the programme does not succeed.
Mixed development model and impact of housing market - The Group is working towards a mixed
development model. A key part of that model is the sale of properties. A further fall in the housing
market, land values remaining inflated, and / or risk averse pricing from contractors may make this
difficult to deliver.
We have put together clear action plans to mitigate these risks as much as possible, at a high level our
corporate objectives are designed, amongst other things, to mitigate these risks.
fi[
CoastaE Housing g-rew, i-¡i,.ite½i
rnerats far the year ended 31 March 2013
Re[acrt
Operating and financial review
Capital structure and treasury p ficy
The group borrowed a further L12.4 million during the year, to develop general housing. By the year end
group borrowings amounted to œ127.3 million of which œ1.9 million falls due to be paid within the next
year:
Maturity
Within one year
Between one and two years
Between two and five years
After five years
2013
2012
œm
Lm
1.9
1.9
6.7
1.1
116.8
127.3
1.3
4.5
108
114.9
The group borrows, principally from banks and building societies, but also more recently from the capital
markets, at both fixed and floating rates of interest. The fixed rates of interest range from 3.09% to
11.60% as compared with variable rates which had a range of 1.07% to 2.24 %.
The trend information in Table 1 shows that gearing, calculated as total loans as a percentage of capital
grants and reserves, had increased to 57% by 31 March 2013 (2012: 53 %) meaning that at the year end
the group was more highly geared than at any time during the past five years. During the next twelve
months further planned borrowings to finance new developments could increase the gearing to just over
60% which is well inside our gearing covenants of 70 %. Our financial forecasts show the gearing
remaining at just over 60% for the next two to three years, still well within our covenants.
The group's lending agreements require compliance with a number of other financial and non -financial
covenants. The group's position is monitored and reported to the board each quarter. Recent reports
confirmed that the group was in compliance with its loan covenants at the balance sheet date and the
board expects to remain compliant in the foreseeable future.
The group has cash balances of œ8.1 million at 31 March 2013 (2012: œ4 5 million) and the current
(liquidity) ratio stands at 1.8 (2012: 1.3.) The group monitors cash flow forecasts closely to ensure that
sufficient funds are available to meet liabilities when they fall due, whilst not incurring unnecessary
finance costs, by only drawing on loan facilities when required.
Future
e.V
©r4 ')t
evts
A key influence on the timing of borrowings is the rate at which development activity takes place and the
levels of grant funding available. The board has approved plans to spend almost œ18 million during the
next financial year to develop general housing for rent and for sale. Undrawn loan facilities of œ21.5
million are available under existing arrangements and we are currently negotiating further new facilities.
We also continue to invest in our stock and in the year we spent œ3.45 million maintaining our homes to
WHQS, and we are adapting our services for tenants to help them to deal with the issues arising from
welfare reform.
Statement of compliance
In preparing this Operating and Financial Review and Board report, the board has followed the
principles set out in the SORP 2010.
Cocst?B Housing Group Umcted
Report and financia stageeBSersts for the year ended 31 Mnr,oh 2013
7
Report of the board
The Board of Coastal Housing Group Limited is pleased to present its report together with the audited
financial statements of Coastal Housing Group Limited (the association) and Coastal Housing Group
Limited Group (the group) for the year ended 31 March 2013.
Principat activities, business review and future develops wants
Details of the group's principal activities, its performance during the year and factors likely to affect its
future development are contained within the Operating and Financial Review, which precedes this report.
Board members trld executive L
The board members and executive directors of the group are set out on page 1. During the year one of
our tenant Board members, Elizabeth Finn resigned and we will be recruiting new tenant members at our
AGM in July 2013. The executive directors are the chief executive and other members of the group's
senior management team. They act as executives within the authority delegated by the board. Group
insurance policies indemnify board members and officers against liability when acting for the group.
Terms and Conditions
The senior management team are employed on the same terms as other staff, their notice periods ranging
from three to six months. The executive directors are also members of the Social Housing Pension
Scheme, a defined benefit (final salary) pension scheme. They participate in the scheme on the same
terms as all other eligible staff.
Employees
We recognised that the success of our business depends on the quality and engagement of our staff. We
have maintained our investment in staff through training and other self development opportunities and
in particular we have run a very successful leadership course for staff within the group with line
management responsibilities. Our success in developing and engaging our staff was reflected in us
achieving the maximum possible "three star status" and coming 13th overall in the Best Companies, not
for profit list. We were also recognised for our outstanding achievements in promoting health and wellbeing for all our staff. The board is also aware of its responsibilities on all matters relating to health and
safety. The group has clear health and safety policies and provides staff training and education on health
and safety matters.
Financial risk m:
agement objet
res and policies
The group uses various financial instruments, including loans and cash to raise finance for the group's
operations. The existence of these financial instruments exposes the group to a number of financial risks.
The main risks arising from the group's financial instruments are considered by the directors to be
interest rate risk, liquidity risk and credit risk. The board review and agree policies for managing each of
these risks and they are summarised below.
Interest rate risk
The group finances its operations through a mixture of retained surpluses and bank borrowings. The
group's exposure to interest fluctuations on its borrowings is managed by the use of both fixed and
variable rate facilities.
Liquidity risk
The group seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable
needs and invests cash assets safely and profitably. In addition to drawn borrowings the group has
œ21.5million of undrawn committed facilities.
Credit risk
The group's principal credit risk relates to tenant arrears. This risk is managed primarily by an area based
generic housing service and the close relationship our staff have with their tenants. We are as well
advanced as we can be with understanding our tenant profile information and adapting our services to
meet the challenge of welfare reform.
Group L_:-eh`C-,?
Socastnt Hcus
Report and fi@naruoÔa@ statements for the year en-ed 31 March 2013
Report of the board
G ng concern
The group's business activities, its current financial position and factors likely to affect its future
development are set out within the Operating and Financial Review. The group has in place long -term
debt which provides adequate resources to finance committed reinvestment and development
programmes, along with the group's day to day operations. The group 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 group has adequate resources to continue
in operational existence for the foreseeable future, being a period of twelve months after the date on
which the report and financial statements are signed. For this reason, it continues to adopt the going
concern basis in the financial statements.
Coastal Housing Group Limited
Report and financial statements for the year r-
I&'!. % 2013
Report of the board
[..ternal controls assurancc
The board acknowledges its overall responsibility, applicable to all organisations within the group, for
establishing and maintaining the whole system of internal control and for reviewing its effectiveness.
The system of internal control is designed to manage, rather than eliminate, the risk of failure to achieve
business objectives, and to provide reasonable assurance against material misstatement or loss.
The process for identifying, evaluating and managing the significant risks faced by the group is ongoing
and has been in place throughout the period commencing 1 April 2012 up to the date of approval of the
report and financial statements.
Key elements of the control framework include:
board approved terms of reference and delegated authorities for audit, and finance
and development sub -committee,
clearly defined management responsibilities for the identification, evaluation and control of
significant risks,
robust strategic and business planning processes, with detailed financial budgets and forecasts,
appropriate recruitment, retention, training and development policies for all staff,
established authorisation and appraisal procedures for development and other significant
commitments,
a documented approach to strategic treasury management,
regular reporting to the appropriate committee on key business objectives and outcomes,
board approved whistle -blowing and fraud policies covering prevention, detection
and reporting, together with recoverability of assets, and
regular monitoring of loan covenants and requirements for new loan facilities.
The board cannot delegate ultimate responsibility for the system of internal control but has delegated
authority to the audit committee to regularly review the effectiveness of the system of internal control.
The board receives audit committee meeting minutes. The annual report of the internal auditor has been
reported to the Board.
Community H - -sin_ 1
- C__arter for G_ _)d Governanc_,
We are pleased to report that the group commits to achieving the highest standards of Governance as
set out in Community Housing Cymru's charter.
A review of governance arrangements has been undertaken during the year and the creation of the
Finance and Development sub -committee to enable detailed scrutiny of financial and development
related issues. The Coastal Board also has a Remuneration Committee which considers the annual pay
award, and also convenes from time to time on an ad hoc basis to consider relevant issues around
staffing structure, staff pay progression and remuneration.
iG
year ended 31 Wietrch 2013
Report of the board
statement c
F
he respom>.
ies of the board fa. he re © rt and financia
statements
The board is responsible for preparing the report and financial statements in accordance with applicable
law and regulations.
Industrial and Provident Society legislation requires the board to prepare financial statements for each
financial year. Under that law the directors have elected to prepare the financial statements in accordance
with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards
and applicable laws.) Under the Industrial and Provident Society legislation 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 and surplus or deficit of the association and group 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 accounting estimates that are reasonable and prudent;
state whether applicable UK Accounting Standards and the Statement of Recommended Practice
(SORP) Accounting by Registered Housing Providers Update 2010, have been followed, subject
to any material departures disclosed and explained in the financial statements;
prepare the financial statements on the going concern basis unless it is inappropriate to presume
that the association will continue in business.
The board of management is responsible for maintaining an adequate system of internal control and
keeping proper accounting records which disclose with reasonable accuracy at any time the financial
position of the Association and enable them to ensure that the financial statements comply with the
Industrial and Provident Societies Acts 1965 to 2002, paragraph 17 of Schedule 1 to the Housing Act
1996, and the Accounting Requirements for Social Landlords Registered in Wales General Determination
2009. It is also responsible for safeguarding the assets of the Association and hence for taking reasonable
steps for the prevention and detection of fraud and other irregularities.
In so far as each of the directors is aware:
there is no relevant audit information of which the association's auditors are unaware; and
the directors have taken all steps that they ought to have taken to make themselves aware of any
relevant audit information and to establish that the auditors are aware of that information.
Annual general n
ng
The annual general meeting will be held on 25 July 2013 at Swansea Rugby Club.
xte,
al auditorsø
A resolution to re- appoint Bevan & Buckland will be proposed at the forthcoming annual general meeting.
The report of the board was approved by the board on 18 July 2013 and signed on its behalf by:
Francis Jones, Chairman
Coastal F#ousing Group Limited
Report and financial statements for the year ended 31 March 2013
Report by the Independent auditors to Coastal Housing
Group Limited on Corporate Governance matters
In addition to our audit on the financial statements for the year ended 31 March 2013, we have
reviewed the Board's statement on the company's compliance with the Welsh Assembly Government
Circular 02/10, Internal Controls and Reporting ( "the Circular. ")
The objective of our review is to enable us to conclude on whether the Board has provided the
disclosures required by the Circular and whether the statement is consistent with the information of
which we are aware from our audit work on the financial statements.
We are not required to form an opinion on the effectiveness of the group's corporate governance
procedures or its internal financial control.
Opinion
With respect to the Board's statement on internal financial control on page 6, in our opinion the
Board of Management has provided the disclosures required by the Circular and the statement is
consistent with the information of which we are aware from our audit work in the financial
statements.
cJa-k-d
Bevan & Buckland
Chartered Accountants & Statutory Auditors
Langdon House
Langdon Road
Swansea
SA1 8QY
Date:
Oull Z01,
11
e; Group Limited
GS'a 41ˆ Y
i, apart
12
saa2emenEs tor the year ended 31 March 2013
r‡;;r
Independent auditor's report to the members of
Coastal Housing Group Limited
We have audited the financial statements of Coastal Housing Group Limited for the year ended 31
March 2013 which comprise the consolidated and association income and expenditure accounts, the
consolidated and association statements of total recognised surpluses and deficits, the consolidated and
association balance sheets, the consolidated cash flow statement and the related notes. 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 group's housing association's members, as a body, in accordance with
regulations made under Section 4 of the Friendly and Industrial and Provident Societies Act 1968. Our
audit work has been undertaken so that we might state to the group's housing association'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 peiniitted by law, we do not accept or assume responsibility to anyone other than the
group's housing association and the housing association's members as a body, for our audit work, for
this report, or for the opinions we have formed.
Respective resrzti
;
:lpilities of the be
arrf auditors
As explained more fully in the Statement of Responsibilities of the Board (set out on page 10), the Board
is responsible for the preparation of the financial statements and for being satisfied that they give a true
and fair view. 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 financie i statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements
sufficient to give reasonable assurance that the financial statements are free from material misstatement,
whether caused by fraud or error. This includes an assessment of whether the accounting policies are
appropriate to the group's circumstances and have been consistently applied and adequately disclosed,
the reasonableness of significant accounting estimates made by the Board of Management, and the
overall presentation of the financial statements. In addition, we read all the financial and non -financial
information in the financial statements to identify material inconsistencies with the audited financial
statements. If we become aware of any apparent material misstatements or inconsistencies, we consider
the implications for our report.
Opinion on fire ncial statements
In our opinion the financial statements:
give a true and fair view of the state of the group's and the parent association affairs as at 31
March 2013 and of the group's and the parent association income and expenditure for the
year then ended;
have been properly prepared in accordance with the Industrial and Provident Societies Acts,
1965 to 2002, the Housing and Regeneration Act 2008 and The Accounting Requirements for
Registered Social Landlords General Determination (Wales) 2009.
Lit-rated
6'cas. l [ticfrsirv: Crc
Leper drew firtartcia[ stnmerctersts for the year hded 31 March 2013
Independent auditor's report to the members of Coastal
Housing Group Limited
::.r ?.,
to report by exception
Matters on which we are
We have nothing to report in respect of the following matters where the Industrial and Provident
Societies Acts, 1965 to 2002 requires us to report to you if, in our opinion:
a satisfactory system of control over transactions has not been maintained; or
the association has not kept proper accounting records; or
the financial statements are not in agreement with the books of account; or
we have not received all the information and explanations we need for our audit.
Bevan & Buckland
Chartered Accountants
Swansea
Coastal Housing Group Limited
Report and financial statements for the year ended 31 March 2013
14
Consolidated income and expenditure account
2013
Note
Turnover: Group and share of joint ventures
Less: share of joint venture turnover
œ'000
2012
,E'000
23,812
21,078
12
(194)
-
Group turnover:
3
23,618
21,078
Operating costs
3
Group operating surplus:
3
(18,234)
5,384
117
(16,137)
4,941
5,501
4,941
188
314
70
Share of operating profit in joint venture
Surplus on sale of fixed assets -housing properties
Interest receivable and other income
Group
Joint venture
Interest payable and similar charges
Group
Joint venture
Surplus on ordinary activities before taxation
Tax on surplus on ordinary activities
Surplus for the financial year
-
6
61
12
4
7
(3,539)
(179)
(3,138)
12
2,036
2,187
10
(2)
(23)
5
2,034
2,164
Revenue reserve brought forward
28,039
25,875
Revenue reserve carried forward
30,073
28,039
The accompanying notes form part of these financial statements.
Historical cost surpluses and deficits were identical to those shown in the income and expenditure
account.
The financial statements were approved by the Board of Directors
Board member
Secretary
Coastal Housing Group Limited
Report and financial statements for the year ended 31 114 ch 2013
15
Association income and expenditure account
Note
2013
,E'000
f'000
Turnover: continuing activities
3
23,456
20,996
Operating costs
Operating surplus: continuing activities
3
(18,137)
5,319
(16,187)
4,809
Surplus on sale of fixed assets -housing properties
Interest receivable and other income
Interest payable and similar charges
Surplus on ordinary activities before taxation
Tax on surplus on ordinary activities
Surplus for the financial year
3
188
314
6
61
7
(3,511)
2,057
69
(3,138)
10
-
5
2,057
The accompanying notes form part of these financial statements.
Historical cost surpluses and deficits were identical to those shown in the income and
expenditure account.
The financial statements were approved by the Board of Directors.
Chairman
Board member
2012
Secretary
2,054
2,054
le
Coastal Housing Group Limited
Report and financial staten ants for the year ended 31 March 2013
Statement of total recognised surpluses and deficits
Association
Group
Total recognised surpluses and deficits Since
last report
2013
2012
2013
2012
C000
L'000
L'000
L'000
2,034
2,164
2,057
2,054
Coastal Housing Group Limited
17
Report and financial statements for the year e
ed 34
arch 2E113
Consolidated balance sheet
Note
2013
2012
œ'000
œ'000
327,044
(186,894)
Tangible assets
Housing properties - gross cost
Social housing grant
Other grants
Depreciation
11
11
339,381
(190,482)
(1,694)
(10,780)
136,425
Investments
Investment in Joint Venture
Share of gross assets
Share of gross liabilities
Housing grant in Joint Venture
13
8,184
7,776
12
12
12
8,182
(4,686)
(2,808)
1,208
Homebuy loan
Homebuy grant
14
14
4,404
Other tangible fixed assets
15
(4,101)
145,600
3,562
149,162
4,350
(4,046)
137,486
3,398
140,884
2,715
4,694
8,055
15,464
(8,371)
7,093
156,255
2,504
3,064
4,534
10,102
(7,946)
2,156
143,040
(125,426)
(742)
(113,810)
(1,177)
30,087
28,053
30,073
28,039.
14
14
30,087
28,053
11
(1,610)
(9,442)
129,098
-
(900)
Current assets
Stock and Work in progress
Debtors
Cash at bank and in hand
17
18
Creditors: amounts falling due within one year
Net current assets
Total assets less current liabilities
20
Creditors: amounts falling due after more than one year
Provisions for liabilities
21
23
Capital and reserves
Revenue reserve
Restricted reserve
25
Consolidated funds
25
The accompanying notes form part of these financial statements.
zsA3
The financi
atements were approved by the Board of Directors.
oa
member
Secretary
Coastal Housing Group Limited
Report and financial statements for the year ended 31 iksarch 2013
18
Association balance sheet
2013
Note
,x'000
2012
;x'000
Housing properties
Social housing grant
Other grants
Depreciation
11
339,381
(190,482)
(1,694)
(10,780)
327,044
(186,894)
(1,610)
(9,442)
Investments
Homebuy loan
Homebuy grant
13
14
14
Other tangible fixed assets
15
136,425
8,014
3,026
(2,723)
144,742
3,552
148,294
129,098
7,776
2,923
(2,619)
137,178
3,379
140,557
Debtors: amounts falling due after more than one year
19
1,700
1,700
-
17
18
969
4,907
7,442
13,318
(7,731)
5,587
155,581
2,094
2,982
4,012
9,088
(7,300)
1,788
142,345
(125,426)
(740)
(113,810)
(1,177)
29,415
27,358
29,401
27,344
14
14
29,415
27,358
Tangible assets
11
11
Current assets
Stock and Work in progress
Debtors
Cash at bank and in hand
Creditors: amounts falling due within one year
Net current assets
Total assets less current liabilities
20
Creditors: amounts falling due after more than one year
Provisions for liabilities
21
23
Capital and reserves
Revenue reserve
Restricted reserve
25
Association's funds
25
The accompanying notes form part of these financial statements.
ocik.ki 296
The financial statements were approved by the Board of Directors.
Chairman
g¢ member
Secretary
Coastal Housing Group Limited
Report and, financial statements for the year ended 31 March 2013
19
Consolidated cash flow statement
Group
Net cash inflow from operating activities
2013
2012
Note
œ'000
œ'000
28
5,299
7,126
Returns on investments and servicing of finance
Interest received
Interest paid
Post Acquisition Share in Joint Venture
(3,539)
(58)
Net cash outflow from returns on investments and servicing
of finance
(3,536)
(3,068)
(23)
(51)
(13,427)
(22,038)
112
(716)
5014
61
70
(3,138)
Taxation
Corporation tax paid
Capital expenditure and financial investment
Purchase and construction of housing properties
Social housing grant - received
Purchase of other fixed assets
Sale of housing properties
Others grants received
Purchase of investments
Purchase of WHP investment
Grant from Welsh Assembly for WHP
3,588
(483)
635
84
(560)
(2,346)
1,908
(10,601)
Net cash outflow from capital expenditure and financial
investment
1722
(1208)
900
(16,214)
Financing
Loans received
Housing loans repaid
26,414
Net cash inflow from financing
29
(14,032)
12,382
Increase /(decrease) in cash
29
3,521
The accompanying notes form part of these financial statements.
5,000
(2,512)
2,488
(9,719)
CoastaC Housing Group Limited
20
Report ansi financial statements for the year ended 31 Larch 2013
Association cash flow statement
Association
Note
Net cash inflow from operating activities
28
2013
2012
œ'000
œ'000
4,913
6,868
Returns on investments and servicing of finance
61
69
Interest received
Interest paid
(3,511)
(3,138)
Net cash outflow from returns on investments and servicing
of finance
(3,450)
(3,069)
Purchase and construction of housing properties
Social housing grant - received
Other grants
Loan to Subsidiary
Purchase of other fixed assets
Sale of other housing properties
Sale of investments
(13,427)
3,588
84
(1700)
(483)
635
888
(22,038)
112
Net cash outflow from capital expenditure and financial
investment
(10,415)
(16,118)
26,414
(14,032)
5,000
(2,512)
Capital expenditure and financial investment
-
-
(716)
4,994
1,530
Financing
Loans received
Housing loans repaid
Net cash inflow from financing
29
12,382
2,488
Increase /(decrease) in cash
29
3,430
(9,831)
The accompanying notes form part of these financial statements.
Group Limited
Report and financia 3 statements for the year ended 31 NII?,trCh 2013
Coasta@
Notes to the financial statements
Lega st
The association is registered under the Industrial and Provident Societies Act 1965 and is a registered
social landlord with charitable status.
2
w
i
polick=4
Basis of accounting
The financial statements of the group and association are prepared in accordance with UK Generally
Accepted Accounting Practice (UK GAAP) and the Statement of Recommended Practice: Accounting
by Registered Social Housing Providers Update 2010 and comply with the Accounting Requirements
for registered social landlords General Determination 2009.
Basis of consolidation
The consolidated financial statements include the results of Coastal Housing Group Limited and its
subsidiary Pennant Housing Association Limited which is also a registered social landlord. -The Group'
The group accounts consolidate the accounts of the association and all its subsidiaries at 31 March
using merger accounting under the requirements of FRS 6. The Association is required under the
provisions of Section 13 of the Industrial and Provident Societies Act 1965 to prepare group accounts.
The consolidation has been carried out in accordance with current accounting standards in order to
show the financial information for the group as a single economic entity.
Turnover and revenue recognition
Turnover comprises rental income receivable in the year, income from shared ownership first tranche
sales, sales of properties built for sale and other services included at the invoiced value (excluding
VAT) of goods and services supplied in the year and revenue grants receivable in the year.
Rental income is recognised from the point when properties under development reach practical
completion or otherwise become available for letting. Income from first tranche sales and sales of
properties built for sale is recognised at the point of legal completion of the sale. Revenue grants are
receivable when the conditions for receipt of agreed grant funding have been met. Charges for support
services funded under Supporting People are recognised as they fall due under the contractual
arrangements with Administering Authorities.
Deferred taxation
The payment of taxation is deferred or accelerated because of timing differences between the
treatment of certain items for accounting and taxation purposes. Except as noted below, full
provision for deferred taxation is made under the liability method on all timing differences that
have arisen, but not reversed by the balance sheet date.
In accordance with FRS 19, deferred tax is not provided for gains on the sale of non -monetary
assets, if the taxable gain will probably be rolled over.
Deferred tax is measured at the tax rates that are expected to apply in the periods when the timing
differences are expected to reverse, based on tax rates and law enacted or substantively enacted at
the balance sheet date. Deferred tax assets and liabilities are not discounted.
21
Coastal Housing Group Limited
Report and financial statements for the year ended 31 March 2013
22
Notes to the financial statements
Value Added Tax
The group charges Value Added Tax (VAT) on some of its income and is able to recover part of the VAT it
incurs on expenditure. The financial statements include VAT to the extent that it is suffered by the group and
not recoverable from HM Revenue and Customs. The balance of VAT payable or recoverable at the year -end
is included as a current liability or asset.
Interest payable
Interest is capitalised on borrowings to finance developments to the extent that it accrues in respect of the
period of development if it represents either:
a)
interest on borrowings specifically financing the development programme after deduction of
social housing grant (SHG) received in advance; or
b)
a fair amount of interest on borrowings of the association as a whole after deduction of SHG
received in advance to the extent that they can be deemed to be financing the development
programme.
Other interest payable is charged to the income and expenditure account in the year.
Pensions
The Association participates in the industry wide defined benefit final salary pension scheme. Contributions
are based on pension costs across the various participating associations taken as a whole. As such this
therefore represents a multi- employer defined benefit scheme where the Association is unable to identify its
share of the underlying assets and liabilities on a consistent and reasonable basis. In accordance with r'RS17
therefore the scheme has been treated as if it were a defined contribution scheme, details of the performance
of the scheme being shown by way of note in the financial statements. The organisation also contributes to a
Norwich Union defined contribution scheme for members of the former Dewi Sant Housing Association.
Housing properties
Housing properties are principally properties available for rent and are stated at cost less depreciation. Cost
includes the cost of acquiring land and buildings, development costs, interest charges incurred during the
development period and expenditure incurred in respect of improvements. Housing properties - depreciation
is charged on the historic cost of property components after deducting grants. Grant is allocated to land and
the main structure of the property and not to other components. The depreciable amounts are written off
over the estimated useful economic lives from the date of purchase / build. Freehold land is not depreciated.
Leasehold properties are depreciated over the remaining period of the lease.
Works to existing properties which replace a component that has been treated separately for depreciation
purposes, along with those works that result in an increase in net rental income over the lives of the
properties, thereby enhancing the economic benefits of the assets, are capitalised as improvements. Where a
housing property comprises two or more components with substantially different useful economic lives then
each component is accounted for separately. Expenditure relating to the subsequent replacement or renewal
of components is capitalised as incurred. Depreciation is charged on cost less social housing grant on a
straight line basis over the components expected economic lives. Housing properties are broken down into
the following three components, structure, windows and roofs.
Shared ownership properties are not depreciated on the basis that the residual value is likely to be greater
than the net cost.
Coastal Housing Group Limited
Report an fhiancial statements for the year ended 31 March 2013
23
Notes to the financial statements
Social housing grant
Social housing grant (SHG) is receivable from the Welsh Government (the WG) and is utilised to reduce
the capital costs of housing properties, including land costs. It is allocated to the land and structure
components of the associated asset in proportion to their cost. Grant receivable in respect of identifiable
components is allocated to those components.
SHG due from the WG or received in advance is included as a current asset or liability. SHG received in
respect of revenue expenditure is credited to the income and expenditure account in the same period as
the expenditure to which it relates.
SHG is subordinated to the repayment of loans by agreement with the WG. SHG released on sale of a
property may be repayable but is normally available to be recycled and is credited to a Recycled Capital
Grant Fund and included in the balance sheet in creditors.
Where individual components are disposed of and this does not create a relevant event for recycling
purposes, any grant which has been allocated to the component is released to the income and expenditure
account. Upon disposal of the associated property, the group is required to recycle these proceeds, as
such a contingent liability is disclosed to reflect this.
Other grants
Other grants are receivable from local authorities and other organisations. Capital grants are utilised to
reduce the capital costs of housing properties, including land costs. Grants in respect of revenue
expenditure are credited to the income and expenditure account in the same period as the expenditure to
which they relate.
Depreciation of housing properties
The group separately identifies the major components which comprise its housing properties, and
charges depreciation, so as to write -down the cost of each component to its estimated residual
value, on a straight line basis, over its estimated useful economic life.
Where SHG has been allocated to a component; the depreciable amount is arrived at on the basis of
original cost, less the proportion of SHG and other grants attributable to the component, less residual
value.
The group depreciates the major components of its housing properties at the following annual rates:
Structure
Roofs
Windows
1% to 10%
2%
3%
Freehold land is not depreciated.
Properties held on leases are amortised over the life of the lease or their estimated useful economic
lives in the business, if shorter.
Coastal Housing Group Limited
Report and finarsciaf statements for the year ended 31 March 2013
24
Notes to the financial statements
Development costs
Development costs are capitalised in as much as they comprise purchase price, directly attributable costs
to bring the properties into working condition for their intended use and incremental costs that would
have been avoided only if the properties had not been constructed as required. Any other development
costs which are not directly attributable have been written off to the Income and Expenditure account.
Hostels managed by agents
Revenue grant received in relation to these schemes is included in turnover. A substantial portion of the
grant is paid over to the managing agent, this expenditure being incorporated in operating costs.
Managing agents collect rent on the schemes, which is applied by them towards the cost of housing the
residents. In accordance with FRS5 this income and expenditure has been excluded for the accounts of
the Association.
Impairment
Housing properties, including those with individual components, which are depreciated over a period in
excess of 50 years are subject to impairment reviews. Other assets are reviewed for impairment if there is
an indication that impairment may have occurred.
Where there is evidence of impairment, fixed assets are written down to their recoverable amount, being
the higher of the net realisable value or the value in use to the group. Any such write down is charged to
operating surplus.
Other tangible fixed assets
Depreciation is provided evenly on the cost of other tangible fixed assets to write them down to their
estimated residual values over their expected useful lives. No depreciation is provided on freehold land.
The principal annual rates used for other assets are:
Freehold commercial buildings
Fixed plant & machinery
Furniture, fixtures and fittings
Computers and office equipment
Motor vehicles
Scheme assets
3 -150 years
4 -30 years
5 -10 years
3 -5 years
5 years
4 -30 years
Leased assets
Assets held under finance leases are included in the balance sheet and depreciated in accordance with the
group's normal 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 over 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.
Coastal IFiousing Group Limited
Report and financial statements for the year ended 31 March 2013
25
Notes to the financial statements
Properties for sale
Shared ownership first tranche sales, completed properties for outright sale and property under
construction are valued at the lower of cost and net realisable value. Cost comprises materials, direct
labour and direct development overheads. Net realisable value is based on estimated sales price after
allowing for all further costs of completion and disposal.
Fixed asset investments
Investments held as fixed assets are stated at cost.
Current asset investments
Investments held as current assets are stated at the lower of cost and fair value determined on an
individual scheme basis.
Home buy option
Where the Organisation received an allowance from Welsh Assembly Government to administer the sale
of property under the "Home Buy Option" initiative and in turn has made an interest free loan to the
purchaser secured by a Charge on the property, the whole of the loan, together with allowances has been
transferred to investments and matched with Housing Association Grant retained.
Investment property
In accordance with Statement of Standard Accounting Practice 19, no depreciation is provided in respect
of freehold investment properties. Investment properties are accounted for at valuation.
Joint ventures
The Group will account for the joint venture under the gross equity method in line with FRS9. The
investment is initially recognised at cost and adjusted thereafter for the post -acquisition change in share of
net liabilities.
Reserves
The group establishes restricted reserves for specific purposes where their use is subject to external
restrictions.
Restricted reserve
A special reserve has been created representing funds transferred from Hanover Housing Association
Limited to cover improvements or major repair costs on traditionally funded schemes.
26
CcastaE Hat/sing Cir½up
port and t•ruaatc6aE statements for the year ended 31 M
013
cE
Notes to the financial statements
Particulars of turnover, cost ofgx
;. a.nn c pcga: .r <rg surplus
ope
Group - continuing activities
2013
Social housing lettings
Turnover
Operating
costs
Operating
surplus
,x'000
,x'000
œ'000
20,604
(16,245)
4,359
682
1,484
103
583
162
(831)
(344)
(121)
(522)
(171)
(149)
1,140
23,618
(18,234)
5,384
Other social housing activities
Development costs not capitalised
Management services
First tranche shared ownership sales
Other
Pennant Homes
(18)
61
(9)
2012
Social housing lettings
Turnover
Operating
costs
Operating
surplus
,x'000
,x'000
œ'000
18,435
(14,396)
683
1,422
(696)
(366)
(118)
(343)
(194)
(24)
16,137
4,039
Other social housing activities
Development costs not capitalised
Management services
First tranche shared ownership sales
Other
Pennant Homes
Caf‚ Nisse
93
363
82
21,078
(13)
1,056
(25)
20
(112)
(24)
4,941
27
Coastal Heusi Gr up Limited
Report and financial statements for the year ended 31 March 2013
Notes to the financial statements
=gars of turnover, cost of sales, operating costs and operating surplus
Association - continuing activities
2013
Social housing lettings
Turnover
Operating
costs
Operating
surplus
œ'000
œ'000
œ'000
20,604
(16,319)
4,285
682
1,484
103
583
23,456
(831)
(344)
(121)
(522)
(18,137)
(149)
1,140
Other social housing activities
Development costs not capitalised
Management services
First tranche shared ownership sales
Other
(18)
61
5,319
2012
Social housing lettings
Turnover
Operating
costs
Operating
surplus
œ'000
œ'000
œ'000
18,435
(14,663)
3,772
683
1,422
93
363
20,996
(697)
(366)
(118)
(343)
(14)
1,056
Other social housing activities
Development costs not capitalised
Management services
First tranche shared ownership sales
Other
(16,187)
(25)
20
4,809
øaaskal Housing i3-s-t;ta.ts. Limited
rd
2t3
tieaanslal statements for the yes_
Notes to the financial statements
rt!r?! l r rtf Fru-orric
d expenditure from sec:a housing letting
Group and Association
2012
2013
General
needs
housing
Total
œ'000
c000
,C'000
Rent receivable net of identifiable service charges
Service income
17,367
3,341
17,367
3,341
15,424
3,115
Net rental income
Other revenue grants
20,708
277
20,708
277
18,539
243
Turnover from social housing lettings
20,985
20,985
18,782
2,033
4,406
2,615
4,221
317
904
2,033
4,406
2,615
4,221
317
904
2,690
3,866
2,622
4,080
14,496
14,496
14,781
6,489
6,489
4,001
278
278
254
Management
Services
Routine maintenance
Major repairs expenditure
Bad debts
Depreciation of housing properties
Operating costs on social housing lettings
Operating surplus on social housing lettings
Void losses
Total
112
812
-Coastal Housing Group Limited
Report and financial statements for the year ended 31 March 2013
Notes to the financial statements
4
frø.covr,rr+ndation in manenenneint and development
At the end of the year accommodation in management for each class of accommodation was as follows:
Association
Group
2013
2012
2013
2012
No
No
No
No
4918
32
4918
32
93
4858
32
22
93
4858
32
22
5,043
4,912
5,043
4,912
Social housing
General
Shared ownership
Welsh Housing partnership
Total managed
5
Operating surplus
The operating surplus is arrived at after charging /(crediting):
Association
Group
Depreciation
Surplus on disposal of fixed assets
Operating lease rentals
Auditors' remuneration (including VAT)
Amortisation of goodwill
6
Inter st rg .t.
iv iz.l
2013
2012
2013
2012
œ'000
œ'000
œ'000
œ'000
126
1,406
314
165
24
18
1,406
314
165
20
126
29
1
ñnd other income
Association
Group
2013
2012
œ'000
2012
œ'000
œ'000
œ'000
61
70
61
69
2013
Interest receivable and similar income
7
Interest pay
and similar charges
Association
Group
2013
2012
2013
2012
œ'000
œ'000
œ'000
œ'000
Loans and bank overdrafts
3,885
3,502
3,857
3,502
Interest payable capitalised on housing
properties under construction
(346)
(364)
(346)
(364)
3,539
3,138
3,511
3,138
Cen5$a[ Reusing Grots,
?s?uátes?
Report and financial statements for the year ended 31 March 2013
Notes to the financial statements
Emp1e.FI u-.a
.
Average monthly number of employees expressed as full time equivalents:
Association
Group
2013
No
No
Corporate support
Development and Pennant
Housing
Other activities
2012
2013
2012
No
No
30
28
18
15
129
-
123
14
30
12
123
-
-
177
185
172
165
2013
2012
2013
2012
œ'000
œ'000
œ'000
œ'000
4,526
348
4,025
307
3,913
251
241
4,401
337
247
5,125
4,573
4,985
4,455
28
20
129
Employee costs:
Association
Group
Wages and salaries
Social security costs
Other pension costs
301
241
Stwial Housing Pension Scheme ((: Troup and Assoc‹a ion)
Coastal Housing Group Limited participates in the Social Housing Pension Scheme (the Scheme.) The
Scheme is funded and is contracted -out of the State Pension scheme.
It is not possible in the normal course of events to identify on a consistent and reasonable basis the share
of underlying assets and liabilities belonging to individual participating employers. This is because the
Scheme is a multi- employer scheme where the Scheme assets are co- mingled for investment purposes, and
benefits are paid from total Scheme assets. Accordingly, due to the nature of the Scheme, the accounting
charge for the period under FRS17 represents the employer contribution payable.
The Trustee commissions an actuarial valuation of the Scheme every three years. The main purpose of
the valuation is to determine the financial position of the Scheme in order to address the level of future
contributions required so that the Scheme can meet its pensions obligations as they fall due.
The last formal valuation of the Scheme was performed as at 30 September 2011 by a professionally
qualified Actuary using the Projected Unit Method. The market value of the Scheme's assets at the
valuation date was L2,062 million. The valuation revealed a shortfall of assets compared with the value of
liabilities of œ1,035 million, equivalent of a past service funding level of 67.0 %.
The Scheme Actuary has prepared an Actuarial Report that provides an approximate update on the
funding position of the Scheme as at 30 September 2012. Such a report is required by legislation for years
in which a full actuarial valuation is not carried out. The market value of the Scheme's assets at the date of
the Actuarial Report was œ2,327 million. The Actuarial Report revealed a shortfall of assets compared
with the value of liabilities of œ1,241 million, equivalent to a past service funding level of 65 %.
Coastal Housing Group Limited
Report and financial statements for the year ended 31 March 2013
31
Notes to the financial statements
B -ard
.
embers and executFves
2012
2013
Aggregate emoluments
Basic
salary
Benefits
in kind
Pension
contributions
Total
;x'000
,x'000
;x'000
,x'000
Total
,.'000
432
-
29
461
450
The highest paid senior executive during the period was the Chief Executive. The total emoluments of
the highest paid senior executive excluding pension contributions were L113,221 (2012 œ109,924.)
Pension costs are shown as contributions paid on the senior executive's behalf. The number of senior
executives accruing retirement benefits is 5 (2012: 5.)
Board members
None of the board members received emoluments. Expenses paid to Board Members amounted
to œ271 (2012:L720).)
Coastal Housing Group Limited
Report and financial statements for the year ended 31 March 2013
32
Notes to the financial statements
10
Tax on surplus on orc.
activities
Association
Group
;;'000
2012
;E'000
4
30
4
30
(2)
(7)
2
23
2013
2013
;E'000
2012
L'000
Current tax
UK corporation tax on surplus for the year
Overprovision
Deferred tax
Net origination and reversal of timing
differences
Association
Group
2013
2012
,x'000
L'000
(21)
133
(4)
26
Current tax reconciliation
Taxable Surplus on ordinary activities before
tax
Theoretical tax at UK corporation tax rate
Group - 20% (2012: 20 %)
Association - 0% (2012: 0 %)
- depreciation
- capital allowances in excess of
depreciation
- non - taxable income
other non -deductible expenditure
gain from non -trading loan relationship
Current tax charge
-
2
-
2
(1)
(15)
12
10
(4)
4
30
4
2
2013
p000
2012
,x'000
Coastal Housing Group Limited
aort and financial statements for the year ended 31 March 2013
33
Notes to the report and financial statements
11
Tana ?b e dix d assets - properties
Group & Association
housing
properties
held for
letting
Housing
properties
for letting
under
construction
Completed
shared
ownership
housing
properties
Total
housing
properties
œ'000
œ'000
œ'000
œ'000
284,846
35,361
11,354
6,837
295
327,044
12,784
(2)
(25)
46,713
7,107
(447)
339,381
(9,324)
(1,313)
-
(118)
(30)
(9,442)
(1,343)
5
-
-
5
(10,632)
-
(148)
(10,780)
(170,370)
(107)
313
(170,164)
(14,814)
(3,809)
(1,710)
-
15
(18,623)
(1,695)
(186,894)
(3,916)
328
(190,482)
(800)
-
(800)
(810)
(84)
(894)
-
(1,610)
(84)
(1,694)
At 31 March 2013
103,965
27,196
5,264
136,425
At 31 March 2012
104,352
19,737
5,009
129,098
Social
Cost
At 1 April 2012
Additions
Disposals
At 31 March 2013
1,135
(420)
285,561
Depreciation
At 1 April 2012
Depreciation charged in year
Eliminated on disposal
At 31 March 2013
Social housing grant
At 1 April 2012
Additions
Recycled
At 31 March 2013
-
Other capital grant
At 1 April 2012
Additions
At 31 March 2013
-
Net book value
34
Coastal F ousing Group Limited
Repert <,.r.1 financial statements for the year ended 31 March 2013
Notes to the report and financial statements
Tangible fixed assets -
_
_
rt
__
Social housing grant
Association
Group
Total accumulated social housing grant
received or receivable at 31 March:
Opening Grants
Additions
Recycled
Closing grants
2013
2012
2013
2012
;;'000
x'000
œ'000
,;'000
186,894
3,916
187,592
2,206
(2,904)
186,894
186,894
3,916
187,592
2,206
(2904)
186,894
(328)
190,482
(328)
190,482
Housing properties book value, net of depreciation and grants
Association
Group
Freehold land and buildings
Long leasehold land and buildings
Short leasehold land and buildings
2013
2012
2013
2012
;;'000
;;'000
;;'000
;;'000
127,517
8,193
715
120,143
8,227
728
127,517
8,193
715
136,425
129,098
136,425
120,143
8,227
728
129,098
Component accounting
The group has adopted the Statement of Recommended Practice (SORP) Accounting by Registered
Social Housing Providers Update 2010 since 31 March 2012. This has required the group to identify
the major components which make up its housing property assets and depreciate these over
individual useful economic lives.
35
Coasta> ;;c sŽng Group
Report and financial statemerts for the year ended 31 March 2013
otes to the report and financial statements
12
‹ it Venture
The Joint Venture relates to a 30% holding in the Welsh Housing Partnership, a company incorporated
in the United Kingdom. The principle activity of the business is to develop properties and lease them to
Housing Associations. Their principle place of business is the Seren Group offices at The Old Post
Office, Exchange House, High Street, Newport, NP20 1AA. The company was incorporated in August
2011 and the financial statements have been prepared to 31st December 2012 representing a seventeen
month period. The year end does not coincide with the Coastal Housing Group year end of 31st March
2013. Coastal Housing Group share of the loss from the 31st December 2012 period have been
absorbed into their March 2013 year end via the gross equity method.
The Coastal Housing Group's share of the joint venture at 31st December 2012 was as follows:
December
2012
œ'000
Turnover
194
Administrative expenses
(77)
Operating surplus:
117
Interest receivable and other income
Interest payable and similar charges
Other Finance costs
Surplus on ordinary activities before taxation
Tax on surplus on ordinary activities
Surplus for the financial year
Fixed Assets
4
(124)
(55)
(58)
(58)
7,380
Current Assets
698
Creditors: amounts falling due within one year
(21)
Creditors: amounts falling due after more than one year
Shareholders' funds
(4,665)
3,392
Coastal share of the investment in WHP is as follows:
March 2013
,x'000
WHP investment as at 31 December 2012
Add investment cost for 3 month period to 31 March 2013
Less Welsh Assembly grant
Loss on interest in WHP Joint Venture
3,450
104
(2,808)
746
(58)
688
Coastalwousing Group Limited
Report a: ^+ financial statements for the year ended 31 March 2013
36
Notes to the report and financial statements
13
F
ass
i
estme r
Association
Group
2013
2012
2013
,x'000
,x'000
;E'000
2012
Commercial Properties
Residential Properties
5,572
5,268
5,572
,x'000
5,268
Other individual properties
2,612
2,508
2,442
2,508
8,184
7,776
8,014
7,776
In line with the accounting policy fixed asset investments are accumulated for at valuation. The Board of
Management are confident that the cost of these properties is a fair reflection of their market value based
upon the leases that are in place.
The commercial properties were values by CLC Chartered Surveyors dated Nov 2011.
The investment in Welsh Housing Partnership represents a joint venture with Seren Group Limited,
Hendre Limited and Cymdeithas Tai Clywd Limited (see note 13.)
1,
_lomebuy
Group
The assets represent secured interest free loans to freeholders on 173 (2012: 167) properties acquired
under the 'Home Buy Option Initiative' which has been funded by Housing Association Grant. At 31
March 2013 these investments amounted to L4,404,000 (2012: L4,350,000.) There is also grant attached to
these properties. This amounted to L 4,101,000 (2012: L4,046,000.)
Association
The assets represent secured interest free loans to freeholders on 79 (2012: 72) properties acquired under
the 'Home Buy Option Initiativ‚ which has been funded by Housing Association Grant. At 31 March
2013 these investments amounted to L3,026,000 (2012: œ2,923,000.) There is also grant attached to these
properties. This amounted to œ2,723,000 (2012: œ2,619,000.)
Coastal Housing Group Limited
Report and financial statements for the year ended 31 March 2013
37
otes to the report and financial statements
fixad E,sSO
15
- Ott :r
Freehold
offices
L'000
Cost
At 1 April 2012
Additions
Disposals
Group
Furniture,
Computers
fixtures
and
and office
fittings
equipment
Motor
vehicles
Total
E'000
,x'000
;E'000
,E'000
2,104
316
5,401
161
2,933
319
48
3
-
483
-
(34)
(34)
2,107
477
3,252
14
5,850
(142)
(19)
(165)
(72)
(1,648)
(228)
(48)
At 31 March 2013
Depreciation
At 1 April 2012
Charged in the year
Released on disposal
(161)
(237)
(1,876)
(14)
(2,003)
(319)
34
(2,288)
1,946
240
1,376
-
3,562
1,962
151
1,285
-
3,398
-
34
At 31 March 2013
Net book value
At 31 March 2013
At 31 March 2012
Freehold
offices
c000
Association
Furniture,
Computers
and office fixtures and
fittings
equipment
L'000
L'000
Motor
vehicles
Total
;E'000
f'000
2,917
319
48
-
5,367
483
-
(34)
14
5,816
Cost
At 1 April 2012
Additions
Disposals
At 31 March 2013
2,104
298
3
161
(34)
2,107
459
3,236
(142)
(19)
(159)
(66)
(1,639)
(225)
-
-
-
34
(161)
(225)
(1,864)
(14)
(1,988)
(310)
34
(2,264)
At 31 March 2013
1,946
234
1,372
-
3,552
At 31 March 2012
1,962
139
1,278
-
3,379
Depreciation
At 1 April 2012
Charged in the year
Released on disposal
At 31 March 2013
(48)
-
Net book value
asta, ;:::easing Group Lind ed
;port and financial statements for the year ended 31 March 2013
38
otes to the report and financial statements
16
Lrv:,stanents i sub::xa""t les
As required by statute, the financial statements consolidate the results of Pennant Housing Association
Limited which was a subsidiary of the association at the end of the year. The association has the right to
appoint members to the boards of the subsidiary and thereby exercises control over it. Pennant Housing
Association Limited are registered social landlords.
Coastal Housing Group Limited is the ultimate parent undertaking.
17
Stock and work in pro ress
Association
Group
Stock and work in progress
18
2013
2012
2013
2012
:x'000
;x'000
L'000
;x'000
2,715
2,504
969
2,094
2013
2012
,x'000
L'000
2013
;E'000
2012
;E'000
646
(347)
299
524
(170)
354
646
(347)
524
(170)
299
354
3,636
587
172
1,915
609
186
3,636
800
172
1,915
527
186
4,694
3,064
4,907
2,982
Debtors
Association
Group
Due within one year
Rent and service charges receivable
Less: provision for bad and doubtful debts
Accrued income
Other debtors
Prepayments and accrued income
Coastal Housing Group Lrv. ?ted
39
Report and financial statements for the year ended 31 March 2013
otes to the report and financial statements
19
Debtors falling due after one year
Association
Group
2013
2012
2013
2012
;:'000
;:'000
œ'000
;:'000
1,700
1,700
Intercompany loan
20
Creditors: amounts fal n due within one year
Association
Group
Debt (note 23)
Rent and service charges received in
advance
Recycled capital grant fund
Corporation tax
Other taxation and social security
Other creditors
Accruals and deferred income
Maintenance expenditure
Capital expenditure on housing property
21
Crec
)rs: amounts fallin-
2013
2012
2013
2012
,:'000
œ'000
;:'000
;:'000
1,926
1,160
1,926
1,160
419
2,850
419
2,255
264
2,146
-
-
292
992
859
383
646
264
2,741
30
168
916
908
470
1,289
292
982
828
383
646
156
987
828
470
1,289
8,371
7,946
7,731
7,300
4
ue k p øer more than one year
Association
Group
Debt (note 23)
2013
2012
2013
2012
;:'000
œ'000
;:'000
;:'000
125,426
113,810
125,426
113,810
Coastal Housing Group Limited
Report and financial statements for the year ended 31 W arch 2013
40
otes to the report and financial statements
?2
)ebt analysis
Borrowings
Association
Group
2013
2012
L'000
L'000
2013
;C'000
œ'000
2012
1,926
1,160
1,926
1,160
125,426
113,810
125,426
113,810
Due within one year
Bank loans
Due after more than one year
Bank loans
Security
Bank loans are secured by fixed charges on individual properties.
Terms of repayment and interest rates
The loans with Banks and Building Societies are secured by fixed charges on individual properties.
Long term finance from Banks or Building Societies represents loans taken out over a 25 -35 year
period. Interest rates on the fixed rate loans ranged from 3.09% to 11. 6% as compared with
variable rates which had a range of 0.6% to 2.23 %.
Based on the lender's earliest repayment date, borrowings are repayable as follows:
Association
Group
Within one year or on demand
One year or more but less than two years
Two years or more but less than five years
Five years or more
2013
:C'000
f'000
2013
:C'000
2012
,E'000
1,926
1,913
6,680
116,833
127,352
1,160
1,354
4,454
108,002
114,970
1,926
1,913
6,680
116,833
127,352
1,160
1,354
4,454
108,002
114,970
2012
Coastal Housing Group Limited
Report and financial statements for the year ended 31 March 2013
41
Notes to the report and financial statements
Obligations under operating leases
Group & Association
Due within one year
Due between one and five years
Due after more than five years
2013
2012
2013
2012
L'000
L'000
L'000
œ'000
33
576
-
9
174
91
261
-
-
294
174
100
2013
2012
2013
2012
,x'000
œ'000
;x'000
L'000
4
10
(2)
(7)
2
3
576
23
Other
Land & Buildings
Provisions for liabilities
The provision of œ739,878 is made up of :a) Defects in Mariners Court œ588,035
b) Impairment Provision for Copper Quarter œ140,873
c) Tal y Wem œ10,970
Deferred tax
Association
Group
At 1 April 2012
Transfer from income and expenditure
account
At 31 March 2013
?'.4
Share cap = =.
I
The association is limited by guarantee and therefore has no share capital. Each member (see numbers
below) agrees to contribute œ1 in the event of the association winding up.
Number of members at 31 March
2013
2012
No
No
174
179
Coo sta_ Housing Group Limed
42
Report and financial statements for the year ended 31 March 2013
Notes to the report and financial statements
25
Reserves
Group
At 1 April 2012
Surplus for the year
At 31 March 2013
Total
Restricted
reserve
Revenue
reserve
reserves
œ'000
œ'000
œ'000
14
28,039
2,034
30,073
28,053
2,034
30,087
Revenue
reserve
reserves
-
14
Association
Restricted
reserve
;;'000
At 1 April 2012
Surplus for the year
At 31 March 2013
14
œ'000
27,344
14
2,057
29,401
Total
œ'000
27,358
2,057
29,415
' sidiary C r _ ar_r
As required by statute, the financial statements consolidate the results of Pennant Housing
Association Limited which is a subsidiary of the association at the end of the year. The association
has the right to appoint members to the board and thereby exercise control over the subsidiary.
27
Intercompany Loan
Pennant Housing Association Limited have a loan agreement with Coastal Housing Group Limited in
that a maximum borrowing of œ5m can be taken at any one given time and interest is charged at a rate
of 5% per annum on this loan. Interest charged to Pennant Housing Association Limited during the
year amounted to œ29,325.
Coastal Housing Group Limited
Report and financial statements for the year ended 31 March 2013
43
Notes to the report and financial statements
28 Net cash inflow
2 opera
id activities
Association
Group
Operating surplus
Depreciation of tangible fixed assets
Goodwill amortisation
2013
2012
L'000
L'000
2013
;E'000
2012
,E'000
5,384
1,657
4,941
1,417
5,319
1,648
4,809
1,406
-
1
7,041
6,359
6,967
6,215
-
2
(130)
278
617
7,126
(1,925)
308
(437)
4,913
(98)
-
Working capital movements
Decrease in stock
(Increase) in Debtors
Increase in Creditors
Provisions
Net cash inflow from operating activities
(1,630)
321
(433)
5,299
29 Reconciliation of net cat =_ f =_w to r__ove_ient in
124
627
6,868
_ _'_
Association
Group
Increase /(decrease) in cash
Cash flow from increase in debt and lease
finance
Movement in net debt for the period
Net debt at 1 April 2012
Net debt at 31 March 2013
-
2013
2012
L'000
;x'000
2013
;E'000
2012
;E'000
3,521
(9,719)
3,430
(9,831)
(12,382)
(8,861)
(110,436)
(119,297)
(2,488)
(12,207)
(98,229)
(110,436)
(12,382)
(2,488)
(12,319)
(98,639)
(110,958)
(8,952)
(110,958)
(119,910)
Coastal Housing Group Limited
Report and financial statements for the year ended 31 k i.arch 2013
44
Notes to the report and financial statements
30 An i
r: is of c ;anges in net dc "_ _
Group
31 March
1 April
2012
Cashflow
2013
œ'000
f'000
;x'000
Cash at bank and in hand
Bank overdraft
4,534
3,521
8,055
Changes in cash
4,534
3,521
-
-
Loans
Finance leases
(114,970)
(12,382)
(127,352)
-
-
-
Changes in debt
(114,970)
(12,382)
(127,352)
Changes in net debt
(110,436)
(8,861)
(119,297)
-
Current asset investment
-
-
8,055
"nalysis of changes in net debt
Association
31 March
1 April
2012
Cashflow
2013
,x'000
œ'000
;x'000
Cash at bank and in hand
Bank overdraft
4,012
3,430
7,442
-
-
Changes in cash
4,012
3,430
7,442
Loans
Finance leases
(114,970)
(12,382)
(127,352)
-
-
-
Changes in debt
(114,970)
(12,382)
(127,352)
Changes in net debt
(110,958)
(8,952)
(119,910)
Current asset investment
Coastal Housing Group Limited
Report and financial statements for the year ended 31 March 2013
45
Notes to the report and financial statements
31
Capital commitments
Association
Group
2013
2012
2013
L'000
œ'000
œ'000
f'000
2012
12,960
11,599
12,960
11,599
35,337
48,297
11,082
22,681
35,337
48,297
11,082
22,681
Capital expenditure
Contracted less certified
Expenditure authorised by the board, but
not contracted
The above commitments will be financed primarily through borrowings, which are available for draw down under existing loan arrangements, with the balance funded through social housing grant.
32
Contingent assets /lial_i.._ies
The group and association had no contingent assets or contingent liabilities at 31 March 2013 (2012: nil.)
The group receives capital grant from the Welsh Government, which is used to fund the acquisition and
development of housing properties and their components. In certain circumstances upon disposal of grant
funded properties the group is required to recycle this grant by crediting the Recycled Capital Grant Fund.
33
Related parties
Related parties board members
The following Board Members were also tenants during the year:
Patricia Heywood Jones
Sandra Jones
Mike Ward
Elizabeth Finn (resigned December 2012)
These Board Members have standard tenancy agreements on normal commercial terms and receive no
advantage in being members of the Board of Management.
- des subsidiary
Rela
Pennant during the year sold properties and administered Commercial properties on behalf Coastal
Housing Association Ltd. This resulted in a payment of commission to Pennant of L19,360.