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Corporate Plan Financial Plan Context 28 March 2013

Corporate Plan Financial Plan Context 28 March 2013. BACKGROUND. 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

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Corporate Plan Financial Plan Context 28 March 2013

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  1. Corporate Plan Financial Plan Context 28 March 2013

  2. BACKGROUND • 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

  3. GROUPPOSITION • 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. • APHhas 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

  4. ASSUMPTIONS • 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.

  5. INCOME

  6. MAIN BUDGET EFFECTS • 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.

  7. EXPENDITURE

  8. EXPENDITURE

  9. MAIN BUDGET EFFECTS • 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 £ 24,000 Pension Deficit £ 1,500 Total Salaries and on Costs have risen by 1.3750% from £1,161,677 to £1,177,645 Additionally the contingency for Overtime, unknown maternity cases and bonuses is retained at £50,000 (2012/13 spend fully committed).

  10. 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.

  11. CAPITAL EXPENDITURE

  12. FINANCE PLAN 2013 - 2016 • 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.

  13. CONCLUSIONS • 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.

  14. 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 .

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