BYKER COMMUNITY TRUST LIMITED

(A Co-operative and Community Benefit Society)

FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2015

Financial Conduct Authority Registration No 31376R Homes and Communities Agency Registration No 4714

BYKER COMMUNITY TRUST LIMITED CONTENTS

Page No. Trust Details 1

Board Report 2 - 5

Operating and Financial Review 6 - 23

Report of the Independent Auditors 24

Income & Expenditure Account 25

Statement of Total Recognised Surpluses and Deficits 26

Balance Sheet 27

Cash Flow Statement 28

Notes to the Financial Statements 29 - 47

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BYKER COMMUNITY TRUST LIMITED

TRUST DETAILS Board of Management Jim Coulter

Chair

Annette Patten Vice Chair Gordon Bell Mark Ford Claire Green Nick Kemp Ken Milor Alison Smith Elaine Snaith Amanda Senior

Appointed 17/09/14

Herby Warren Nigel Emmerson

Appointed 17/09/14 Co-optee

John Coates Retired 17/09/14 Steven Savage Retired 17/09/14 Peter Roberts

Co-optee Retired 07/08/14

Executive Officers Jill Haley

Chief Executive

Michelle Bell David Jones

Head of Property Investment, Development and Asset Management Head of Engagement and Community Development

Philip Ambrose

Financial Controller and Company Secretary

Bankers Lloyds Bank 102 Grey Street Newcastle upon Tyne Funders

NE1 6AG Yorkshire Building Society Yorkshire House Yorkshire Drive Bradford BD5 8LJ

Auditors

Beever and Struthers Chartered Accountants

St. George’s House 215-219 Chester Road Manchester M15 4JE Registered office 23 Raby Cross Byker Newcastle upon Tyne NE6 2FF Registration Numbers 4714 - Homes and Communities Agency 31376R – Co-operative and Community Benefit Societies Act 2014

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BYKER COMMUNITY TRUST LIMITED

BOARD REPORT FOR THE YEAR ENDED 31 MARCH 2015 Principal activities The provision of social housing. Names of directors Jim Coulter Chair Annette Patten Vice Chair Gordon Bell Mark Ford Claire Green Nick Kemp Ken Milor Alison Smith Elaine Snaith Amanda Senior Appointed 17/09/14 Herby Warren Appointed 17/09/14 John Coates Retired 17/09/14 Steven Savage Retired 17/09/14 Review of business Details of Byker Community Trust’s (BCT’s) performance for the year and future plans are set out in the Operating and Financial Review commencing on page 6. Post balance sheet events An initial assessment has been carried out of the business plan impact of the rent reductions announced in the 08/07/15 emergency budget. This has a significant adverse impact on the financial position of BCT the key points of which are: • Over the 4 year rent reduction period the total shortfall in rent income is £2m. This is a 7% shortfall

against the business plan target. • At the end of this 4 year period the shortfall in rent income is running at 12% per year and this

continues into the future at the 12% level. • Over the 9 year period the total rent shortfall is £6.9m which is 10% below the business plan target. This is a serious challenge which BCT Board will consider in detail over the coming months and develop an appropriate mitigation strategy to ensure the continued financial viability of BCT. Future developments BCT have a substantial £24.5m 5 year capital investment programme underway which includes upgrades to the housing stock and estate environment and infrastructure.

Further capital investment is planned in future years.

A key aim of BCT is to engage with the local community and work in partnership with other agencies to address social regeneration with a particular focus on developing new training and employment opportunities, and a locality first procurement strategy. A bespoke community engagement and involvement strategy is in place to ensure the local community are at the heart of shaping BCT social regeneration initiatives.

Land and buildings The balance sheet total for land and buildings at 31 March 2015 is £7.915m. This represents part of the housing stock transferred with a loan repayment liability (£786k) and the value of capital works completed and in progress at 31 March 2015 (£8.376m), together with properties acquired (£172k) less depreciation (£103k) and capital grants received (£1.316m). This is in line with the accounting policy of disclosing fixed assets at historic cost. The housing stock was transferred to BCT on 5 July 2012 at nil cost.

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BYKER COMMUNITY TRUST LIMITED BOARD REPORT FOR THE YEAR ENDED 31 MARCH 2015 The housing stock has been independently valued on the existing use as social housing basis at 31 March 2015 as £17m.

Director’s share interests All Board members are non-executive directors of BCT. Each non-executive director has a shareholding in BCT of 1 share.

Political and charitable gifts

None.

Policy on payment of creditors

BCT policy is to pay creditors, upon satisfactory delivery of the goods and services, within the creditors’ stated payment terms and taking advantage of any early settlement discounts where appropriate.

Governance and regulatory compliance

BCT governance arrangements comply with governance good practice and regulatory standards. BCT comply with the National Housing Federation (NHF) 2015 Code of Governance and the Homes and Communities Agency (HCA) Governance and Financial Viability Code of Practice. In all material respects, the Byker Community Trust complies with the (HCAs Regulatory Framework and Standards. This is evidenced by the current G1 governance grading from the HCA. Responsibilities of the board The Board is responsible for directing the affairs of BCT in accordance with its objects and rules and ensure that its functions are properly performed. Its main responsibilities are:

• Set and ensure compliance with the values, vision, mission and strategic objectives of BCT, ensuring its long term success.

• Appoint, and if necessary, dismiss the chief executive and approve his or her salary, benefits and terms of employment.

• Satisfy itself as to the integrity of financial information, approving each year’s budget and business plan and annual accounts prior to publication.

• Establish, oversee and review annually a framework of delegation and systems of internal control. • Establish and oversee a risk management framework in order to safeguard the assets of BCT. • Take appropriate advice. • Ensure at all times that BCT takes account of any obligation imposed upon it by the regulator in exercise of its

powers. • Satisfy itself that BCT’s affairs are conducted in accordance with generally accepted standards of performance

and propriety. • Establish and operate a performance appraisal system for the Board, the Chair and individual Board

Members.

Amounts transferred to designated reserves

Loan repayment reserve £1,992,690

Sinking fund £48,857

The Board Members who held office at the date of approval of this Board Report confirm that, so far as they are each aware, there is no relevant audit information of which BCT’s auditors are unaware; and each Board Member has taken all the steps that they ought to have taken as a Board Member to make themselves aware of any relevant audit information and to establish that BCT’s auditors are aware of that information.

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BYKER COMMUNITY TRUST LIMITED BOARD REPORT FOR THE YEAR ENDED 31 MARCH 2015 Statement of the board’s responsibilities in respect of the accounts The Co-operative and Community Benefit Societies Act and registered social housing legislation require the Board to prepare financial statements for each financial year which give a true and fair view of the state of affairs of BCT and of its income and expenditure for that period. In preparing these financial statements, the Board is required to: • Select suitable accounting policies and then apply them consistently;

• make judgements and estimates that are reasonable and prudent;

• state whether applicable accounting standards have been followed, subject to any material departures

disclosed and explained in the financial statements; and

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that BCT

will continue in business.

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BYKER COMMUNITY TRUST LIMITED BOARD REPORT FOR THE YEAR ENDED 31 MARCH 2015 The Board is responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of BCT and enable it to ensure that the financial statements comply with the Co-operative and Community Benefit Societies Act 2014, the Housing and Regeneration Act 2008 and the Accounting Direction for Private Registered Providers of Social Housing 2012. It has general responsibility for taking reasonable steps to safeguard the assets of BCT and to prevent and detect fraud and other irregularities. Statement on BCT’s system of internal control The Board has overall responsibility for establishing and maintaining the whole system of internal control and reviewing its effectiveness. The Board recognises that no system of internal control can provide absolute assurance against material misstatement or loss or eliminate all risk of failure to achieve business objectives. The system of internal control is designed to manage key risks and to provide reasonable assurance that planned business objectives and outcomes are achieved. It also exists to give reasonable assurance about the preparation and reliability of financial and operational information and the safeguarding of BCT’s assets and interests. In meeting its responsibilities, the Board has adopted a risk-based approach to internal controls which are embedded within the normal management and governance process. This approach includes the regular evaluation of the nature and extent of risks to which BCT is exposed and is consistent with Turnbull principles as incorporated in the former Housing Corporation circular 07/07: internal controls assurance. The process adopted by the Board in reviewing the effectiveness of the system of internal control, together with some of the key elements of the control framework includes:

• Identification and evaluation of key risks Management responsibility has been clearly defined for the identification, evaluation and control of significant risks. There is a formal and ongoing process of management review in each area of BCT’s activities. The executive team regularly considers and receives reports on significant risks facing BCT and the Chief Executive is responsible for reporting to the Board any significant changes affecting key risks.

• Overall control procedures The Board retains responsibility for a defined range of

issues covering strategic, operational, and financial and compliance issues including treasury strategy and new investment projects.

By order of the Board: Chair: Date:

Policies and procedures cover issues such as delegated authority, segregation of duties, accounting, treasury management, health and safety, data and asset protection and fraud prevention and detection.

• Information and financial reporting systems Financial reporting procedures include detailed budgets for the year ahead, detailed management accounts produced monthly and forecasts for the remainder of the financial year and for subsequent years. These are reviewed in detail by the executive directors and are considered and approved by the Board. The Board also regularly reviews key performance indicators to assess progress towards the achievement of key business objectives, targets and outcomes.

• Monitoring and corrective action A process of regular management reporting on control issues provides assurance to senior management and to the Board. This includes a rigorous procedure for ensuring that corrective action is taken in relation to any significant control issues, particularly those that may have a material impact on the financial statements and delivery of our services. The internal control framework and the risk management process are subject to review by Internal Audit who advise the senior management team and report to the Finance and Audit Committee. The Board confirms that there is an ongoing process for identifying and managing significant risks faced by BCT. This process has been in place throughout the year under review, up to the date of the annual report and accounts, and is regularly reviewed by the Board.

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BYKER COMMUNITY TRUST LIMITED OPERATING AND FINANCIAL REVIEW FOR THE YEAR ENDED 31 MARCH 2015 The Board of BCT is pleased to present its report and audited financial statements for the year ended 31 March 2015. BCT is incorporated under the Co-operative and Community Benefit Societies Act 2014, it has charitable status and is registered with the Homes and Communities Agency as a Registered Provider of Social Housing as defined by the Housing Act 1996. Activities BCT was formed due to a large scale voluntary transfer, where 1,803 homes were transferred from Newcastle City Council on 5 July 2012. BCT exists for the benefit of the community. BCT’s principal activity is to provide social housing. Board Members and Executive Team The present Board Members and Executive Team of the Association are set out on page 1. The Executive Team consists of the Chief Executive, Head of Investment, Development and Asset Management, Head of Engagement and Community Development, and Financial Controller & Company Secretary. They hold no interest in BCT’s shares and act as executives within the authority delegated by the Board. Insurance policies indemnify Board Members and officers against liability when acting for BCT. Our vision, mission, values and key objectives Vision BCT’s vision for 2015 to 2020 is an independent BCT where: • We have delivered on the major stock transfer promises. • We ensure tenants have a key voice and role in decision making. • We maximise access for local people into employment, training, health and educational opportunities. Mission • We work for people who have a voice and influence in our business. • We celebrate our diverse neighbourhood. • We provide quality homes, environment and services. Values We will do our best for Byker by being: • Ambitious for people and the community. • Energetic in our work with and for our diverse neighbourhoods. • Innovative in providing excellent services. • Open and transparent in the conduct of our business. • Unrelenting in our focus on positive change.

Key objectives 1. Fulfilling the stock transfer promises:

• Completing and developing the Investment Plan. • Engaging, empowering and supporting residents. • Contributing to economic health of the neighbourhood.

2. Completing the journey to independence: • Being a first class strategic partner. • Growing our commissioning skills.

3. Underpinning Value for Money and the financial security of the BCT: • Securing outcomes which balance efficiency, economy and effectiveness in all we do. • Maintaining a clear approach to risk identification and management. • Ensuring we continue to have a sustainable business plan.

4. Delivering excellence: • Focusing on excellent customer service. • Continuing to aim for first class governance. • Ensuring staff are proud of their work for Byker through support for training, development and remuneration

policies. The Corporate Plan 2015-2020 sets out the key actions that BCT are carrying out during that 5 year period to ensure that services continue to improve. To implement the Corporate Plan a SMART Action Plan exists to manage and control the time scaled delivery of all the specific actions.

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BYKER COMMUNITY TRUST LIMITED OPERATING AND FINANCIAL REVIEW FOR THE YEAR ENDED 31 MARCH 2015 Key activities and achievements against the Corporate Plan Action Plan during 2014/15 include: Delivering on the Community Engagement and Involvement Strategy • Tenant Scrutiny Committee set up October 2014. • STAR survey completed July 2014 and forms basis for development of local offers. • Tenant Communications Group set up May 2014. Now influencing content of BCT Newsletters and

Community Fund Day. • Mystery Shopping exercise carried out October 2014 to assess quality of service delivery. • Community Fun Day held July 2014 – over 1,000 people attended. • Ongoing support to Tenant & Resident Associations including promoting them in the Annual Report to

Tenants. • Tenant voting event held February 2015 to determine allocation of BCT Byker Community Activities Fund.

£23k allocated to 12 projects. • Year 2 participatory budget scheme held and £145k allocated to 12 projects.

Delivering on the Equality and Diversity (E&D) Strategy • Mapping exercise conducted to identify E&D groups and contacts for these. • E&D engagement event held February 2015. • E&D specialist hired to assist with development of the BCT E&D Advisory Group. • Supported the local Youth and Play Forum to develop a Youth Forum/Panel for Byker. • Year 2 participatory budget scheme held and £145k allocated to 12 projects, which engage with a range

of hard to reach groups. • Job Vacancy Board established at BCT base in September 2014. • Portable Hearing Loop and Customer Service Toolkit installed at BCT base in October 2014.

Creating employment and training opportunities for Byker Estate residents • Capital Investment Strategic Brief setting out BCT expectations on suppliers and delivery partners for

social investment contributions. • Employment outputs in 2014/15:

o Safeguarded apprentices 13 o Progression into employment under 6 months duration 8 o Progression into employment 6 months and over duration 5 o Local jobs safeguarded 1

• Arrangements established with partners to develop and promote training and other opportunities focussed on ensuring residents are work ready.

• Community training opportunities are through BCT Newsletters, BCT website, BCT social media channels, BCT Jobs Board.

• Construction related work experience opportunities created for school leavers. • Details of delivery on employment and training opportunities are included in the table in section 5.

Maximising incomes • BCT fund a full-time dedicated Welfare Benefits Case Worker with a remit to engage with and support

tenants and residents. During 2013/14 57 residents have been supported and £148k has been achieved in unclaimed benefits, grants and appeals. In 2015/16 the remit of this worker is expanded to cover targeting and maximising employment and training opportunities and support.

• As part of improving levels of digital inclusion, BCT have: o Commenced installation of a broadband infrastructure as an additional element of the early years

investment programme. 644 properties will benefit from potential free broadband and telephone line rental.

o Worked with partner agencies around potential development of a WiFi infrastructure covering the rest of the Estate.

• BCT staff have undertaken 3 sponsored activities to raise money for Newcastle East Foodbank. • Additionally BCT staff, Board Members and partner agencies have made charitable donations of food and

hygiene products to the Newcastle East Foodbank. • BCT achieved 131kg food donation to Newcastle East Foodbank through an exercise it organised at CIH

North East annual conference. • Mapping exercise completed to produce a directory of local businesses and agencies BCT can partner

with around income maximisation.

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BYKER COMMUNITY TRUST LIMITED OPERATING AND FINANCIAL REVIEW FOR THE YEAR ENDED 31 MARCH 2015 Key activities and achievements against the Corporate Plan Action Plan during 2014/15 include: Improving the Environment • Installation of a Poly Tunnel within the Byker Garden in August 2014 as part of supporting community

food growing initiatives. • Worked with a partner agency to identify suitable premises in the Byker Estate for a clothing/foodbank

facility. • Investigating feasibility of establishing a community shop on the Byker Estate as a potential social

enterprise. • Newly designed and constructed bin stores being installed providing improved communal bins and waste

recycling facilities for Byker wall residents. • Investigating options for a new waste collection infrastructure and recycling facilities on the Byker Estate. • Developing energy efficiency measures across the Byker Estate:

o Enhanced insulation measures included in Byker Wall refurbishment (doors, windows and external fabric).

o Installation of improved heating controls in houses. o Major Upgrading of the District Heating System Infrastructure. o Working with delivery partners trying to secure an additional eco funded biomass boiler

installation. o Installation of photo voltaic panels on Byker Wall roof as part of the Byker Wall upgrade scheme.

Organisational Improvements • BCT progress in achieving high standards of governance was recognised by the G1 regulatory judgment

rating by The Homes and Communities Agency (HCA) in October 2014. • Board effectiveness survey carried out and findings considered by Board in September 2014. • Annual Board Member appraisals carried out to feed in to the Board Training and Skills Assessment

Matrix which informs decisions on Board training requirements and skills capacity of the Board. • Development of Tenant Scrutiny Panel achieved in partnership with Tenant Participation Advisory

Service. • Specific training provided to Tenant Board Members to support their role as Board Members in January

2015 • Development of new Corporate Plan to run from April 2015. • Introduction of Performance Improvement Action Plan in May 2014 to facilitate tighter performance

management and this has underpinned improved KPI performance in 2014/15. • Development of fresh Housing Management Key Performance Indicators (KPIs) for 2015/16 covering:

o Business critical indicators. o Service standards. o Customer satisfaction levels.

• BCT joined Housemark in October 2014 to facilitate benchmarking of performance and learning from examples of best practice.

• Customer Communications Group established in May 2014 and now influence all BCT communications. • Communications Action Plan put in place June 2014.

Capital Investment Programme • Progression of Byker Wall refurbishment scheme. • Progression of Concierge System Renewal including new broadband infrastructure. Discussions to be

held with broadband providers to facilitate affordable broadband for tenants and residents. • Commencement on site of Chirton House, a new development of 16 apartments for older people. • Extended loan facility secured in January 2015 giving access to £26m over a 10 year period. • Development of a 10 year investment programme as the first stage in developing a comprehensive asset

management strategy. • Feasibility study undertaken into development of automated vacuum waste collection system. Grant

funding opportunities being explored in respect of this. • Business cases under development with a view to securing transfer of 2 sites on the Byker Estate from

Newcastle City Council to BCT. • Progression of HCA grant funded feasibility study covering refurbishment and conversion option appraisal

of non-residential buildings (Hobby Rooms). • Planning work carried out for expansion of BCT office base to increase capacity and achieve a shop

frontage presence at the Raby Cross Centre.

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BYKER COMMUNITY TRUST LIMITED OPERATING AND FINANCIAL REVIEW FOR THE YEAR ENDED 31 MARCH 2015 2014/15 Self-Assessment of Performance Against the Value for Money (VFM) Standard Introduction This self-assessment included within BCT’s Operating and Financial Review is a summary of the overall VFM Self- Assessment. The full self-assessment can be viewed on the BCT website www.bykercommunitytrust.org (from the Board menu follow the link to Board papers). Byker Community Trust (BCT) is committed to delivering value for money in the interests of its residents and the wider community because we want to minimise the financial pressures on households adversely affected by the economic pressures they face. We believe it is important therefore to establish a culture of continuous improvement, engagement with residents about their view of local priorities and to work with contractors and partners to deliver this vision. That is the context in which we work to implement the regulatory requirements of the Homes and Communities Agency (HCA). This self-assessment has been carried out to assess BCT performance against the HCA VFM Standard with which all Registered Providers are required to comply. To date, BCT have achieved significant one-off (£18.719m) and annually recurring (£521k) financial gains through various actions. These are detailed in section 4c of this self-assessment. These efficiency gains have been used to reduce BCT’s borrowing and running costs, and cashable savings have been invested in additional capital expenditure. In 2014-15 BCT intensified its VFM approach. First, BCT renegotiated the current financial facility to ensure it delivers lower costs as we roll forward the estate renewal investment programme. Second, BCT commenced the renegotiation of the transfer agreed housing management contract to ensure greater influence of tenant and resident requirements for the quality of service delivery. Engagement and communications with tenants is a key part of the BCT approach to VFM. Successful development in this area is evidenced by BCT’s 2014 Annual Report to Tenants winning the Tenant Participation Advisory Service (TPAS) Regional Award for Excellence. The BCT Communications Group, comprising of BCT tenants, was the key influence regarding production, format and content of this. The findings from the self-assessment are structured within this report as follows: 1. A summary table illustrating current BCT arrangements to meet the requirements of the standard, sources of

evidence that demonstrate BCT performance, and development areas identified for BCT to work on to enable BCT to improve its performance against the VFM Standard.

2. A position update summarising progress against the development areas arising from the 2012/13 self-assessment.

3. A summary of VFM reviews carried out in 2014/15. 4. A summary of actual performance against 2014/15 Key Performance Indicators. 5. A summary of performance benchmarking. 6. A summary of returns on assets. 7. A summary of VFM gains achieved. 8. A summary of social value gains achieved to date. 9. Future initiatives.

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BYKER COMMUNITY TRUST LIMITED OPERATING AND FINANCIAL REVIEW FOR THE YEAR ENDED 31 MARCH 2015 1. BCT Arrangements for Achieving Good VFM Performance The table below summarises the current arrangements, sources of evidence and development areas for each of the 6 elements of the VFM Standard.

Requirement

Current Arrangements

Evidence

Development Areas (see section 2)

BCT shall articulate and deliver a comprehensive and strategic approach to achieving VFM in meeting BCT objectives. BCT must maintain a robust assessment of the performance of all BCT assets and resources (including for example financial, social and environmental returns).

• BCT strategy has 5 main priorities: o Understanding our costs and how they relate to outcomes. o Understanding the returns made on BCT assets. o Strong procurement arrangements. o Efficient operation of service delivery. o Delivering effective services which achieve outcomes in line with

customer expectations. • BCT arrangements to deliver VFM include:

o Financial regulations covering procurement rules. o Treasury management strategy with twin aims of:

Minimising the costs of borrowing. Maximising investment returns.

o Conducting service reviews. o Budget setting and business planning. o Corporate plan. o Monthly management accounts. o Contractor performance reports. o Independent audit reviews assess VFM matters. o Guidelines to contractors and partners on BCT expectations for

delivery of social investment outcomes from the capital investment programme.

o Tenant Scrutiny Committee. o STAR survey. o Tenant Communications Group o Mystery shopping exercises. o Benchmarking o Horizon scanning for legislative and market changes and their

impact on BCT achievement of VFM.

• Budgets. • Business Plan. • Corporate Plan. • Financial

Regulations. • Treasury

Management Strategy.

• Monthly management accounts.

• Contractor performance reports.

• Capital Investment Strategy.

• VFM register recording efficiency savings. £18.7m one-off and £521k annually recurring savings achieved to date (see section 7).

• Benchmarking.

• Ongoing VFM reviews of individual service delivery areas.

• Further Board training on VFM.

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BYKER COMMUNITY TRUST LIMITED OPERATING AND FINANCIAL REVIEW FOR THE YEAR ENDED 31 MARCH 2015 1. BCT Arrangements for Achieving Good VFM Performance

Requirement

Current Arrangements

Evidence

Development Areas (see section 2)

BCT has a robust approach to making decisions on the use of resources to deliver BCT objectives, including an understanding of the trade-offs and opportunity costs of BCT decisions.

• Budget process linked to strategic objectives. • BCT use a business case model to make proposals to Board for

any additional expenditure. • BCT use business plan model to run different financial scenarios

and assess their impact. • Budget setting process includes discussions on resource

prioritisation, trade-offs and opportunity costs.

• Budgets. • Business Plan. • Business cases

presented to Board, its Sub Groups and Sub Committee.

BCT understands the return on its assets, and has a strategy for optimising the future returns on assets – including rigorous appraisal of all potential options for improving value for money including the potential benefits in alternative delivery models - measured against the organisation’s purpose and objectives.

• Current £26m loan facility with Yorkshire Building Society exceeds current valuation of properties (£17m). This shows BCT are maximising the use of their assets.

• Independent asset valuation at 31/03/15 has risen by £11.2m from the pre stock transfer valuation of £5.8m.

• BCT has call on specific development sites on the Byker Estate. • Current investment programme was developed from a detailed

stock condition survey produced in 2012.

• Loan agreement. • 2014/15 financial

statements. • Valuation reports.

• Development of asset management strategy including implementing a net present value (NPV) calculation methodology at individual property level to support asset management decision making.

• Formulation of business cases for specific development sites.

BCT has performance management and scrutiny functions which are effective at driving and delivering improved value for money performance.

• Contractor performance is reported quarterly to Board. • BCT Executive Team and Finance and Audit Committee review

monthly management accounts which highlight revenue and capital financial performance.

• Investment programme performance is reported monthly to Board.

• Financial performance on capital projects is reviewed at monthly site meetings.

• Tenant scrutiny and customer satisfaction arrangements (incl tenant scrutiny panels, STAR survey, mystery shoppers’ model, customer accreditation) developed supported by Tenant Participation Advisory Service (TPAS).

• In July 2014 a performance management framework was implemented in collaboration with delivery partners to cover:

o How we set targets. o How we measure, monitor, report and manage

performance.

• Contractor performance reports.

• Monthly management accounts.

• Investment programme performance reports.

• Minutes of site meetings.

• Ongoing VFM reviews of individual service delivery areas.

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BYKER COMMUNITY TRUST LIMITED OPERATING AND FINANCIAL REVIEW FOR THE YEAR ENDED 31 MARCH 2015 1. BCT Arrangements for Achieving Good VFM Performance

Requirement

Current Arrangements

Evidence

Development Areas (see section 2)

BCT understands the costs and outcomes of delivering specific Services and which underlying factors influence these costs and how they do so.

• Budgets and business plans give breakdowns into each service area and into individual capital investment projects.

• BCT Executive Team and Finance and Audit Committee monitor financial performance through review of monthly management accounts.

• Business Plan used for sensitivity modelling of different financial scenarios.

• All budgets and costings include a split of fixed and variable costs and income.

• Budgets. • Business Plan.

BCT evidences the VFM gains that have been and will be made and how these have and will be realised over time.

• A VFM Register is maintained to record full details of all efficiency savings achieved.

• VFM Register. £18.7m one-off and £521k annually recurring savings achieved to date (see section 4c).

• Social Value Gains Register (see section 5).

• Financial agreements.

• Bank statements. • Tender

evaluations. • Annual accounts.

• On-going contract discussions with delivery partners.

• Corporate Planning process to include ongoing setting of targets for VFM gains.

• Options review of future service delivery from July 2016 to conclude Autumn 2015 in line with Board’s 3 principles of improving quality and cost, demonstrating VFM and completing stock transfer promises.

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BYKER COMMUNITY TRUST LIMITED OPERATING AND FINANCIAL REVIEW FOR THE YEAR ENDED 31 MARCH 2015 2. Progress Against Development Areas BCT carried out its first VFM self-assessment in Autumn 2013, covering the period BCT commenced trading (July 2012) up to 31/03/13. As part of this a number of development areas were identified and a SMART Action Plan was produced to progress implementation of these. A number of these development areas were completed during 2013/14. The table below summarises progress made on the remaining development areas: Development Area Responsibility Timeline Progress Development of tenant scrutiny and customer satisfaction arrangements (incl tenant scrutiny panels and mystery shoppers’ model).

Head of Engagement & Community Development.

Ongoing. Tenant Scrutiny Committee established October 2014. Tenant Communications group established May 2014 and conduct consultations at BCT community events. Mystery shopping exercise carried out October 2014 to assess quality of service delivery. Tenant voting arrangements for BCT Community Activities Fund applications established February 2015.

VFM reviews of individual service delivery areas.

Chief Executive and BCT Team.

Ongoing. Please see table below summarising VfM reviews carried out in 2014/15.

Benchmarking against other Registered Providers (RPs).

Financial Controller.

Ongoing. BCT joined Housemark in October 2014. 2013/14 Benchmarking exercise completed. 2014/15 Benchmarking exercise underway.

Board and staff training on VFM.

Financial Controller.

September 2014.

Board training delivered in November 2014 focussed on a broad understanding of VFM and the BCT VFM Strategy.

Development of asset management strategy and net present value (NPV) calculation methodology.

Head of Property Investment, Development & Asset Management.

December 2014.

Independent review of BCT strategic investment plans undertaken in November 2014 with the aim of identifying any scope to strengthen the capital growth of BCT assets. The key recommendation was to undertake a detailed survey to establish a clear investment requirement that can be costed, prioritised and compared to available funding through an affordability model. This work is ongoing within BCT with investment plan development focussed on planned and cyclical R&M and future investment needs and aspirations. As part of this BCT has accessed learning from another established registered provider to inform the development of an NPV calculation methodology.

Development of business cases for specific development sites.

Head of Property Investment, Development & Asset Management.

Ongoing. Chirton House transferred to BCT from Newcastle City Council (NCC) at nil cost with £480k empty homes grant from NCC towards conversion to 16 units for older people yielding £79k/year gross rent and service charges from June 2015. Chirton Wynd shop unit and Hare & Hounds land site undergoing transfer to BCT from NCC at nil cost. Hobby Rooms feasibility study has identified scope for conversion of 9 units to residential and grant funding being investigated for this.

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BYKER COMMUNITY TRUST LIMITED OPERATING AND FINANCIAL REVIEW FOR THE YEAR ENDED 31 MARCH 2015 2. Progress Against Development Areas Development Area Responsibility Timeline Progress On-going contract discussions with YHN Commercial Committee in the light of their Business Strategy to 2016.

Chief Executive & Chair.

Mar & Apr 2014.

YHN Management Contract review. Agreement of bespoke BCT KPI targets. Joint progress meetings in place between Chair & CEO of BCT and YHN.

Assessing and managing the impact of NCC/YHN discussions on business strategy to ensure BCT’s interests are safeguarded and that we are beneficiaries by sharing in any cost saving achieved.

Chief Executive & BCT Team.

Ongoing. Meetings of BCT Chair & CEO with NCC CEO and Executive Directors. Joint progress meetings in place between Chair & CEO of BCT and YHN. This is a standing agenda item on regular contract progress meetings between BCT and YHN.

Assessment of scope for heating charges reductions to give to customers from 01/04/15.

Financial Controller.

Sep 2014. Assessment undertaken as part of 2015/16 budget preparation. Charges frozen for 4th year in succession. Over the same period the big 6 energy providers prices have increased in excess of 30%. Also 11% of charge reallocated from energy charge (not benefit eligible) to infrastructure charge (benefit eligible) providing cost reductions for households in receipt of Housing Benefit. BCT currently working with energy suppliers with the aim of installing a second biomass boiler on the Byker District Heating System, fully funded by eco grant. This will further reduce reliance on gas and secure additional renewable heat incentive (RHI) income as part of the BCT strategy to tackle fuel poverty.

3. VfM Reviews Conducted During 2014/15 Subject Findings BCT Actions Repairs & Maintenance

• Contract prices generally in line with National Housing Federation (NHF) guideline rates.

• Prices for some high frequency items higher than NHF rates.

• Overhead costs higher than expected. • Scope to move away from a responsive service

to a more planned approach based on the BCT Asset Management Strategy.

• A cost sharing group delivery arrangement should be explored to deliver savings in irrecoverable VAT.

Findings being addressed as part of the current review of future service delivery arrangements. Efficiencies have been secured from recent negotiations of schedules of rates with contractor.

Housing Management Services and Environmental and other Services Agreements

• Agreement reached to remove tenant involvement and communications from the contract with effect from July 2015 to facilitate in house delivery of a bespoke service.

Planning and resourcing a bespoke service funded from contract savings.

15

BYKER COMMUNITY TRUST LIMITED OPERATING AND FINANCIAL REVIEW FOR THE YEAR ENDED 31 MARCH 2015 4. 2014/15 Performance Against Key Performance Indicators (KPIs) These KPIs are the targets set for our Housing Management Services contractor (Your Homes Newcastle) to achieve.

KPI Target Actual Conclusion Income collection

Collect 97.8% of rent and service charges owed (excluding arrears brought forward and void rent loss) during 2014-15

97.8% 98.7% Achieved

Maintain rent and service charge arrears of £413,197 by 31/03/2015

£413,197 £426,762 Not achieved

Collect £27,887 from former tenant arrears accounts by 31/03/2015*

£27,887 £31,143 Achieved

Property lettings The void rent and service charge loss amount not to exceed 1.78% by 31/03/15

1.78% 1.05% Achieved

Reduce the average total re-let time of BCT properties to 33 days by 31/03/2015

33 days 31.5 days Achieved

Repairs Complete 99.5% of emergency repairs within target timescale during 2014-15

99.5% 99.84% Achieved

Complete 99% of urgent repairs within target timescale during 2014-15

99% 99.33% Achieved

Complete 99% of routine repairs within target timescale during 2014-15

99% 99.76% Achieved

100% of properties have a valid Gas Safety Certificate at 31/03/2015

100% 100% Achieved

94% of customers are satisfied with the Repairs and Maintenance Service during 2014-15

94% 99.81% Achieved

98% of repairs are carried out at the first visit during 2014-15

98% 100% Achieved

Customer service 95% of customers are satisfied with the external investment works carried out to their home during 2014-15

95% 90% Not achieved

95% of properties scheduled to have investment work during 2014-15 to be completed within agreed timescale

95% 100% Achieved

Properties handed back to YHN from the contractor have an average defect score of 9.5 out of 10 when first handed over during 2014/15

9.5 10 Achieved

The average number of days taken to complete an investigation of anti-social behaviour cases not to exceed 48 days by 31/03/2015

48 days 29 days Achieved

All eight neighbourhood areas of Byker to achieve at least a silver level in their 2014-15 Going for Gold estate inspection

8 5 Not achieved

* While the cash collection target for former tenant arrears (FTA) has been exceeded, this does not reflect a decrease in the overall FTA balance. The table below shows how the balance of FTA has changed during the year.

FTA Balance 01/04/2014

FTA Balance 31/03/2015

Amount Transfer to FTA

FTA Collection

FTA Increase

£246,337 £343,866 £128,672 £31,143 £97,529

16

BYKER COMMUNITY TRUST LIMITED OPERATING AND FINANCIAL REVIEW FOR THE YEAR ENDED 31 MARCH 2015 4. 2014/15 Performance Against Key Performance Indicators (KPIs) In May 2014 a performance improvement action plan was implemented which had been developed by BCT in response to concerns around performance in 2013/14. The plan includes a wide range of general actions and actions within specific performance areas all with clear target timescales and responsibility allocated to specific individuals, backed up by fortnightly progress meeting between BCT CEO and the contractors’ Service Director. The plan also comprises specific actions covering the following areas: • Arrears collection (current and former tenants). • Empty property management. • Property allocations. • Management of repairs and investment programme expenditure. This has contributed significantly to improved performance in 2014/15 with some key illustrations below: • Rent collection up 4%. • Void rent loss down 41%. • Overall satisfaction with repairs and maintenance service up 2%. Of the 16 KPIs all but 3 were achieved. Those that were not achieved are explained below: Maintain rent and service charge arrears at £413,197 • Arrears increased by £13,565 (3.3% increase). This is a substantial improvement on the performance in 2013/14

which saw arrears increase by 31%. • Improvement actions implemented by our Housing Management contractor have contributed to this improved

performance. These improvements have been implemented without increasing the contract price. These include: o Staff reorganisation to provide 3 dedicated income collection officers. o Changing the arrears escalation routes to take action more quickly. o Investigating the use of third party identity by the arrears team. o Holding Housing Benefit awareness sessions with staff. o Specialist negotiation skills training for staff. o Proactive payment culture with staff using every contact with tenants as a rent payment opportunity.

Evidence of this is the rise in payments taken over the telephone (quarter 1 35 payments totalling £3.2k, quarter 4 223 payments totalling £35.6k).

o Encouraging and supporting tenants to switch to direct debit payment method. The proportion of rent payments by direct debit increased from 20% to 29% during 2014/15.

o Introduction of Rentsense arrears software which uses a predictive method based on payment patterns to identify accounts in arrears at an early stage which allows for early intervention and support.

o Introduction of Call2Collect, an automated telephone dialling system which calls tenants in arrears with a personalised message giving them the option to transfer and speak to an officer.

95% of customers are satisfied with the external investment works carried out to their home during 2014-15 • Actual performance was 90%. • The surveying was based on the painting programme and tenants were dissatisfied that their choice of door colour

was restricted due to the requirements of the Grade 2 * listing of the Estate with English Heritage. • A review was undertaken of tenant liaison on this programme and a number of improvement measures have been

implemented aiming to improve customer satisfaction with how the investments are carried out and the communication with customers. Surveying in respect of the latest phase of the painting programme is showing a significant increase in customer satisfaction.

All eight neighbourhood areas of Byker to achieve at least a silver level in their 2014-15 Going for Gold estate inspection • Of the 3 not achieving the silver level, 2 of these were only 1 percentage point away from the target. • The findings from the inspections included removing graffiti, litter picking, tidying gardens and removing fly tipping

and these have all been fed into the estate improvement action plan.

17

BYKER COMMUNITY TRUST LIMITED OPERATING AND FINANCIAL REVIEW FOR THE YEAR ENDED 31 MARCH 2015 5. BCT Performance Benchmarking Each year the HCA produce a global accounts summary to provide a financial overview of the regulated social housing sector based on the financial accounts of all the registered housing associations.

The table below gives a summary of how BCTs 2014/15 financial performance compares to the average across the sector based on the 2014 global accounts:

Areas where BCT performance is above average

Area BCT

Figure Average Figure

Change in operating costs -9.5% +4.5% Effective interest rate 2.2% 4.7% Average weekly rent £73 £85 Growth in reserves 95% 13% Void rent loss as % of gross rent 1.1% 1.8%

Areas where BCT performance is below average

Area BCT

Figure Average Figure

Growth in turnover 4.1% 5% Operating margin 24.5% 26.5% Management costs as a % of turnover 21% 20% Maintenance costs as a % of turnover 31% 20% Routine maintenance costs per unit £1,680 £1,015 Management costs per unit £1,134 £990 Bad debts for the year 1.4% 1.0% Current tenant arrears at end of year 4.9% 4.7%

The above figures do represent an improvement in BCT financial performance in most areas. 2013/14 figures below demonstrate this:

Area

2013/14 Performance

Change in operating costs +5.8% Effective interest rate 8.9% Average weekly rent £70 Growth in reserves 136% Void rent loss as % of gross rent 2.5% Growth in turnover 3.1% Operating margin 13.2% Management costs as a % of turnover 22% Maintenance costs as a % of turnover 26% Routine maintenance costs per unit £1,347 Management costs per unit £1,133 Bad debts for the year 1.2% Current tenant arrears at end of year 5.0%

BCT joined Housemark in October 2014 to enable BCT to benchmark its performance against others and to benefit from access to a wider network of housing association’s enabling BCT, as a relatively new organisation, to learn from best practices in place within the longer established organisations.

18

BYKER COMMUNITY TRUST LIMITED OPERATING AND FINANCIAL REVIEW FOR THE YEAR ENDED 31 MARCH 2015 5. BCT Performance Benchmarking The table below gives a summary of benchmarking results against a peer group of 10 other housing associations, based on 2013/14 (the latest available benchmarking data). The table shows the ranking of BCT performance where best performance is ranked 1 and worst is ranked 11: Measure BCT Rank Write off as % of rent debit 2 of 10 Current arrears as % of rent due 6 of 10 Overall revenue cost per unit 6 of 7 Maintenance cost per unit 7 of 11 ASB closed cases successfully resolved 7 of 9 Housing management costs as % of turnover 8 of 11 Tenant satisfaction with quality of home 8 of 10 Average void relet time (days) 8 of 10 Tenant satisfaction with repairs & maintenance 9 of 11 Tenant satisfaction with views being listened to and acted on 9 of 10 Tenant satisfaction that rent provides value for money 9 of 10 Former arrears as % of rent due 9 of 10 Overall tenant satisfaction 10 of 11 Operating margin 10 of 11 Housing management cost per unit 10 of 11 Tenant satisfaction with neighbourhood 10 of 10 % rent debit lost due to void properties 10 of 10 Average cost of void repair 11 of 11 Responsive repairs & void works as % of turnover 11 of 11 Average cost of void repair & maintenance cost per unit 11 of 11 These results show BCT results are worse that the majority of the peer group on all but 1 of the 20 measures. A key point to bear in mind in this analysis is that in respect of maintenance and voids costs, under the current BCT service delivery arrangements, it is not possible to accurately split costs between direct service delivery and overheads. This is because day to day service delivery is contracted out and the pricing structure of the contracts does not separately identify overheads. Housemark measures overheads separately from direct costs. This will make BCT costs appear higher than those of its peers on those measures. BCT is currently assessing future service delivery options to be in place when the current contracts expire in July 2016. Within the overall aims of reducing costs and improving performance, a revised cost structure will be required to provide transparency of fixed and variable costs. A key focus of the review of service delivery options is to secure leaner, more versatile service with lower overheads.

The performance improvement action plan has been implemented in May 2014 to cover the areas where performance is deficient. Additionally the results of the STAR Survey carried out in July 2014 have provided BCT with a valuable baseline to track performance improvements over time. Also results from a consultation exercise conducted by BCT Communications Group at a recent BCT community event has provided useful information on tenants views of the service areas that need to be improved the most. Of 270 responses the top 3 service areas needing to be improved the most are repairs & maintenance (50% of responses), grounds maintenance (21% of responses), tenancy management (19% of responses). This research feeds into the current options review of future service delivery.

19

BYKER COMMUNITY TRUST LIMITED OPERATING AND FINANCIAL REVIEW FOR THE YEAR ENDED 31 MARCH 2015 5. BCT Performance Benchmarking Some key points relating to BCT costs structure to aid understanding of this benchmarking analysis are:

• The way BCT service delivery has been structured from the outset as being contracted out means BCT incurs significant irrecoverable VAT. This amounts to £782k each year in respect of these service delivery contracts. Other things being equal this will tend to make BCT costs higher than those who incur less irrecoverable VAT either by delivering services in house or cost sharing group arrangements.

• These BCT service delivery arrangements are in place for the first 4 years of BCT (up to July 2016). Part of the BCT current review of future service delivery arrangements is to consider ways to reduce irrecoverable VAT.

• BCT has mitigated against the irrecoverable VAT impact by developing a partial recovery special method which has been agreed with Her Majesty’s Revenue & Customs (HMRC). This has resulted in additional VAT recovery of approximately £5k per year.

• There are 2 further underlying factors which impact on BCT costs and have potential to result in relatively higher unit costs:

o The English Heritage Grade II* listing of the Byker Estate and the non-standard nature of construction and construction materials used will tend to increase repairs & maintenance costs. Our analysis to date estimates costs could be up to 40% higher than comparators as a result of this. This is based on analysis from our Housing Management and repairs & maintenance contractors.

o BCT is a relatively small RP with 1,770 social housing units let at present and therefore BCT is not well placed to achieve economies of scale.

• BCT cost control is maintained through a combination of: o Expenditure monitoring as part of the Housing Management Contract Performance Improvement Action

Plan. o Using benchmarking analysis to identify and address areas where BCT cost performance is adverse in

relation to others. 6. Return on Assets BCT is developing its understanding of the returns on its assets through the formulation of an Asset Management Strategy. Once in place this strategy will inform decisions on the investment programme and on future use of housing assets in order to maximise returns from those assets. The grade 2 * listing of the Byker Estate with English Heritage is an important influence on the ability of BCT to take a purely commercial approach when consider returns on assets. During 2014/15 BCT have progressed work to develop an Asset Management Strategy. Key elements of this development work include: • Development of a methodology for calculating the net present value (NPV) of social housing assets. This has

involved learning from best practices followed by a locally based well established stock transfer housing association. During 2015/16 NPVs will be calculated for all BCT stock.

• Development of the next wave of the BCT Investment Programme, taking account of stock transfer promises to tenants as well as making a significant movement away from a responsive repairs and maintenance approach towards a strategy focussed on planned and cyclical maintenance. This is a key part of driving down future repairs and maintenance expenditure. In developing the plan particular account is taken of:

o The need to optimise future returns on assets. o Delivery of stock transfer promises and meeting community priorities. o A clear split between essential and desirable works. o Understanding customer and community aspirations. The BCT customer STAR survey will be completed

in July and this will also feed into the Investment Plan. o The financial limits set out in the Business Plan. o Maximising savings available through the VAT Shelter.

20

BYKER COMMUNITY TRUST LIMITED OPERATING AND FINANCIAL REVIEW FOR THE YEAR ENDED 31 MARCH 2015 6. Return on Assets The table below summarises the surplus achieved as a proportion of the value of the Byker Estate Housing Stock. This gives an indication of how BCT are performing in using the Housing Stock to generate a financial surplus. This shows a pattern of year on year performance improvement.

Year Surplus Asset Value Return % 2014/15 £2.195 million £17 million 12.9% 2013/14 £1.335 million £12 million 11.1% 2012/13 £0.979 million £9.5 million 10.3%

BCT are discussing with our lender the impact of the July 2015 budget and particularly their view of the impact of the rent reduction policy on stock valuation. The table below summarises the cumulative increase in the value of the Byker Housing Stock set against the cumulative level of investment made in the Housing Stock.

Investment Increase in Value Added Value Added Value % £9.3 million £11.2 million £1.9 million 20%

21

BYKER COMMUNITY TRUST LIMITED OPERATING AND FINANCIAL REVIEW FOR THE YEAR ENDED 31 MARCH 2015 7. VFM Gains Achieved The table below quantifies VFM gains. Gains are a mixture of both one-off and recurring. Recurring savings as a percentage of annual turnover is 5.4% (2013/14 equivalent 5.3%). The rules which govern BCT ensure that all these gains are reinvested in the Byker Estate for the benefit of its residents. All these gains create potential for either increased investment capacity, enhanced service delivery, more scope to freeze or reduce charges to customers or minimise increases in charges. Alternatively a combination of these can be delivered with the help of these efficiency savings.

Estimated Estimated On Stream

One Off Saving Annual Saving

Year Description £000s £000s

2012/13 Savings on years 1 to 15 capital investment programme via VAT Shelter arrangement 6,472

2012/13 Fixing of interest rates for current loan facility secured savings against original estimate of loan interest 706

2012/13 Interest earnings in excess of budget 12

2012/13 Renegotiation of Street Wardens contract 60

2012/13 Securing Community Covenant grant funding for Avondale House Refurbishment 250

2012/13 Tender saving against budget on Avondale House contract 134

2012/13 Revenue expenditure outturn under budget 733

2012/13 VAT savings years 1 to 5 through agreement of partial recovery special method calculation 68

2012/13 Securing NCC grant funding towards Stilt Block improvement works 33

2012/13 Access to Newcastle City Council negotiated discount rates for communal electricity supplies 2

2012/13 Access to Newcastle City Council negotiated discount rates for gas supplies 21

2013/14 YHN contract prices frozen at 2012/13 rates 90

2013/14 NCC contract prices frozen at 2012/13 rates 8

2013/14 Tender saving against budget on Modern Homes Omit contract 10

2013/14 Tender saving against budget on Byker Wall contract 227

2013/14 Additional revenue income streams through installation of Biomass boiler 199

2013/14 Negotiation of reduction in employers pension contributions (from 27.5% to 16.2%) 27

2013/14 Interest earnings in excess of budget 44

2013/14 Securing YHN funding contribution towards Byker Wall upgrade 65

2013/14 Securing YHN contribution towards Stilt Block improvement works 25

2013/14 Securing reduction on investment programme fees against budget 482

2013/14 Securing 12% reduction on asbestos removal monitoring fees against original price quoted 19

2013/14 Securing reduction in Concierge Upgrade contract against original price quoted 400

22

BYKER COMMUNITY TRUST LIMITED OPERATING AND FINANCIAL REVIEW FOR THE YEAR ENDED 31 MARCH 2015 7. VFM Gains Achieved

Estimated Estimated On Stream

One Off Saving Annual Saving

Year Description £000s £000s

2013/14 Securing nil fee on Concierge Upgrade contract 32

2013/14 Securing VAT reduction through transfer of employees from YHN to BCT 60

2013/14 Accessing HMRC Small Employers Allowance Scheme 2

2014/15 Securing lower interest rate than budgeted for prudential borrowing for District Heating Upgrade 885

2014/15 Securing NCC grant funding towards Chirton House redevelopment 480

2014/15 Securing further reduction in employers pension contributions (from 16.2% to 14.9%) 3

2014/15 Securing free banking services 1

2014/15 Securing HCA grant funding towards Hobby Rooms feasibility study 25

2014/15 Increasing interest earnings from automatic sweep of current account balance to deposit account 2

2014/15 Negotiated reduction in arrangement fee for extended loan facility 50

2015/16 Effect of lower rent increases than originally planned from 2015/16 as per new rent setting rules 160 2

2015/16 Net saving on Housing Management Contract for final year of current contract 6

2015/16 Saving on finance charges through securing reduction in margin from 2.75% to 1.9% on extended loan facility 3,561

2015/16 Fixing of interest rates for current loan facility secured savings against original estimate of loan interest 3,877

2015/16 No cost of living rise allocated to BCT staff 8

Total 18,719 521

23

BYKER COMMUNITY TRUST LIMITED OPERATING AND FINANCIAL REVIEW FOR THE YEAR ENDED 31 MARCH 2015 8. Social Value Gains Achieved to Date A key objective of BCT is to achieve new training and employment opportunities for tenants and residents on the Byker Estate. BCT work closely with delivery partners to maximise their social investment into the estate. The table below summaries what has been achieved to date.

Description Quantity Employment: • New apprenticeship opportunities created. • New jobs created. • Apprenticeships safeguarded. • Local jobs safeguarded. • Individuals progressing into employment opportunities of up to 6 months duration. • Individuals progressing into employment opportunities of over 6 months duration.

22 5

28 5

14 10

Training: • Attendees on health & safety training for construction trades. • Construction Skills Certification Skills (CSCS) cards issued. • Certified short courses delivered on construction trades. • Construction skills research visit by secondary school age children. • Participants in running of a 12 week return to work training programme for young people. • School leavers participating in construction skills work experience programme. • Primary school children participating in health & safety information sessions. • Number of school health & safety information sessions delivered. • School & college workshops delivered covering District Heating System Upgrade. • School children participating in work experience programme.

171 123 72 15 12 9

320 144 40 12

Employment and training support: • Individuals worked with and registered by Newcastle Futures organisation. • Individuals supported into employment or training.

148 55

Welfare advice and support: • Number of residents supported. • Additional income secured for residents from unclaimed benefits, grants and appeals.

370

£247,829

9. Future Initiatives From 2015-16 BCT will continue its value for money approach with a focus on the following key areas:

• Development of the Asset Management Strategy. • An NPV calculation exercise covering the BCT housing assets. • Development of the next wave of the Investment Programme. • Determination of future service delivery arrangements on expiry of the current contracts in July 2016. BCT’s

objectives in undertaking its review of arrangements are to: o Secure BCT’s control over the standards of service to be delivered, with focus on improvement in

quality and cost. o Be able to demonstrate value for money, including excellence in service to customers. o Complete the delivery of stock transfer promises to tenants.

In order to achieve these objectives there are a number of options under consideration: o An extension of the current contract as permitted under the current Agreement for either one or two

further two year terms. o Transfer services to be delivered ‘in house’. o Seeking competitive tenders for services consistent with OJEU requirements. o Managing services via a ‘cost sharing group’, an arrangement where services can be delivered

between organisations qualifying under HMRC regulations without the need to tender and without incurring VAT. Such services need to be delivered at cost.

o A combination or cocktail of all of the above options.

24

REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF BYKER COMMUNITY TRUST LIMITED We have audited the financial statements which comprise the income and expenditure account, the statement of total recognised surpluses and deficits, the balance sheet, the 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 Trust’s members, as a body, in accordance with Section 87 of the Co-operative and Community Benefit Societies Act 2014. Our audit work has been undertaken so that we might state to the Trust’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 permitted by law, we do not accept or assume responsibility to anyone other than the Trust and the Trust’s members as a body, for our audit work, for this report, or for the opinions we have formed. Respective Responsibilities of the Board and the Auditor As explained more fully in the Statement of Board’s Responsibilities set out on pages 3 - 4, the Board is responsible for the preparation of the financial statements which 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 Financial Reporting Council’s (FRC’s) Ethical Standards for Auditors. Scope of the audit of the financial 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 Trust’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Board; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Board Report 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 financial statements In our opinion the financial statements:

• give a true and fair view of the state of the Trust’s affairs as at 31 March 2015 and of its income and expenditure for the year then ended;

• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

• have been properly prepared in accordance with the Co-operative and Community Benefit Societies Act 2014, the Housing and Regeneration Act 2008 and the Accounting Requirements for Private Registered Providers of Social Housing 2012.

Matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Co-operative and Community Benefit Societies Act 2014 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; • 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.

Beever and Struthers Chartered Accountants and Statutory Auditors St George’s House 215 – 219 Chester Road Manchester M15 4JE Date:

25

BYKER COMMUNITY TRUST LIMITED INCOME AND EXPENDITURE ACCOUNT FOR THE YEAR ENDED 31 MARCH 2015 Notes 2015 2014

£ £ Turnover 2 9,605,897 9,224,096 Operating costs 2 (7,252,265) (8,015,728) Operating surplus 2,353,632 1,208,368 Surplus on sale of fixed assets 5 - 155,515 Interest receivable and similar income 43,500 46,260 Interest payable and similar charges 4 (202,585) (75,615) Surplus on ordinary activities for the year 6 2,194,547 1,334,528 All amounts relate to continuing activities. The above surpluses are the historical cost surpluses.

The notes on pages 29 to 47 form an integral part of these accounts.

26

BYKER COMMUNITY TRUST LIMITED STATEMENT OF TOTAL RECOGNISED SURPLUSES AND DEFICITS FOR THE YEAR ENDED 31 MARCH 2015 Notes 2015 2014

£ £ Surplus for the year 2,194,547 1,334,528 Actuarial loss 22 (153,000) - Total surpluses since last annual report 13 2,041,547 1,334,528

The notes on pages 29 to 47 form an integral part of these accounts.

27

BYKER COMMUNITY TRUST LIMITED BALANCE SHEET AS AT 31 MARCH 2015 Notes 2015 2014 £ £ Fixed assets Housing properties at cost less depreciation 7 9,230,940 2,266,632 Less: Social Housing and other Grants 7 (1,516,257) (1,266,257) 7,714,683 1,000,375 Current assets Debtors: Amounts falling due within one year 8 1,224,966 748,955 Cash at bank and short term deposits 9 12,690,628 5,889,637 13,915,594 6,638,592 Less Creditors Amounts falling due within one year 10 12,520,903 4,474,146 Net current assets 1,394,691 2,164,446 Total assets less current liabilities 9,109,374 3,164,821 Creditors Amounts falling due after more than one year 11 4,600,989 850,989 Pension Liability 22 153,000 - Capital and reserves Non equity share capital 12 29 23 Designated reserves 13 4,355,356 2,313,809 Revenue reserves 13 - -

9,109,374 3,164,821

The financial statements on pages 25 to 47 were approved and authorised for issue by the Board on ....………................ and were signed on its behalf by: Board Member: Board Member: Secretary:

The notes on pages 29 to 47 form an integral part of these accounts.

28

BYKER COMMUNITY TRUST LIMITED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2015 Notes 2015 2014

£ £ Net cash flow from operating activities

10,173,241

453,417

Returns on investments and servicing of finance

17

(159,085)

(29,355)

Capital Expenditure Acquisition and construction of housing

(7,013,165)

(1,136,099)

Social Housing and other grants received

50,000 1,266,257

Sales of housing properties

-

155,515

Net cash inflow (outflow) before use of liquid resources and financing

3,050,991

709,735

Financing 17 3,750,000 236,386 Increase in cash 17

6,800,991

946,121

Reconciliation of operating surpluses to net cash inflow from operating activities

Operating surplus 2,353,632 1,208,368 Depreciation and impairment charge 48,857 32,331 Change in debtors (596,010) (234,972) Change in creditors 8,366,756 (552,333) Shares issued 6 23 Net cash inflow from operating activities 10,173,241 453,417 Reconciliation of net cash flow to movement in net debt Increase in cash in the year 6,800,991 946,121 Cash used to increase liquid resources - - Change in loans (3,756,142) (237,585) Change in net debt 3,044,849 708,536 Net debt at the start of the year 5,032,909 4,324,373 Net debt at the end of the year 8,077,758 5,032,909

The notes on pages 29 to 47 form an integral part of these accounts.

29

BYKER COMMUNITY TRUST LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2015 1. PRINCIPAL ACCOUNTING POLICIES

BCT is incorporated under the Co-operative and Community Benefit Societies Act 2014 and is registered with the Homes and Communities Agency as a Registered Provider of social housing. Basis of accounting

The financial statements have been prepared in accordance with applicable United Kingdom Accounting Standards and Statements of Recommended Practice of the United Kingdom. The accounts comply with the Co-operative and Community Benefit Societies Act 2014, the Housing and Regeneration Act 2008, the Accounting Direction for Private Registered Providers of Social Housing 2012 and the Statement of Recommended Practice: accounting by Registered Social Housing Providers Update 2010 published by the National Housing Federation. The accounts are prepared on the historical cost basis of accounting.

Turnover

Turnover represents rental income receivable, revenue grants from local authorities and the Homes and Communities Agency, and other income. Fixed Assets and depreciation Tangible fixed assets are stated at cost, less accumulated depreciation and capital grants. Housing properties under construction are stated at cost and are not depreciated. These are reclassified as housing properties on practical completion of construction. Freehold land is not depreciated. Where a housing property comprises two or more major components with substantially different useful economic lives (UELs), each component is accounted for separately and depreciated over its individual useful economic life. Expenditure relating to subsequent replacement or renewal of components is capitalised as incurred. BCT depreciates freehold housing properties by component on a straight-line basis over the estimated useful economic lives of the component categories.

30

BYKER COMMUNITY TRUST LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2015 1. PRINCIPAL ACCOUNTING POLICIES

Useful economic lives for identified components are as follows:

Years

• Bathroom • Boiler

25 20

• Electricals 25 • External doors • Fabric • Flooring • Kitchen

30 30 10 20

• Roof • Solar panels • Windows • Windows and external doors • Avondale House environmental • Avondale House windows and doors • Avondale House – digital TV • Avondale House – roof • Fencing – timber • Doors • Central heating • Door entry/alarms • Passenger lift • Level access shower • Bedroom shower • Stairlift • Mechanicals

40 25 10 30 20 20 10 30 10 20 20 20 20 10 10 10 30

BCT depreciates housing properties held on long leases in the same manner as freehold properties, except where the unexpired lease term is shorter than the longest component life envisaged, in which case the unexpired term of the lease is adopted as the useful economic life of the relevant component category. Depreciation is charged on other tangible fixed assets on a straight-line basis over the expected economic useful lives which are as follows:

Years

• Plant & machinery 20 • Furniture and equipment 10 • Office equipment 5

As part of the Housing Stock transfer, Newcastle City Council (NCC) has made a commitment to BCT to have the properties refurbished and modernised and brought into a good state of repair. Immediately prior to transfer, NCC contracted with BCT to carry out the refurbishment works on its behalf. NCC’s obligation to carry out the works is in effect matched by BCT’s obligations to bring the properties into a good state of repair. These works are deemed to increase the net rental income stream and are capitalised.

31

BYKER COMMUNITY TRUST LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2015 1. PRINCIPAL ACCOUNTING POLICIES Social Housing and Other Grants

Where developments have been financed wholly or partly by social housing and other grants, the cost of those developments has been reduced by the amount of the grant received. When Social Housing Grant (SHG) in respect of housing properties in the course of construction exceeds the total cost to date of those housing properties, the excess is shown as a current liability. SHG received for items of cost written off in the Income and Expenditure Account are matched against those costs as part of turnover. SHG can be recycled by BCT under certain conditions, if a property is sold, or if another relevant event takes place. In these cases, the SHG can be used for projects approved by the Homes and Communities Agency. However, SHG may have to be repaid if certain conditions are not met. In certain circumstances, SHG may be repayable, and, in that event, is a subordinated unsecured repayable debt. BCT did not receive any SHG in 2014/15.

Leasing and hire purchase Where assets are financed by hire purchase contracts and leasing agreements that give rights approximating to ownership, they are treated as if they had been purchased outright. They are depreciated over the shorter of the lease term and their economic useful lives. The corresponding leasing commitments are shown as obligations to the lessor in creditors. The finance element of the rental is charged to the profit and loss account so as to produce a constant periodic rate of charge on the net obligation outstanding in each period. Rentals paid under operating leases are charged to the Income and Expenditure account as incurred. Retirement benefits The Trust is a member of the Local Government Pension Scheme. Contributions to this scheme are calculated as a percentage of pensionable salaries of employees, determined in accordance with actuarial advice. The Trust fully recognises in the accounts the deficit on the Local Government Pension Scheme, the estimated costs of providing the benefits and related finance costs. The interest cost and expected return on assets are included within other finance costs. Actuarial gains and losses arising from revaluations are recognised in the Statement of Total Recognised Surpluses and Deficits. A pension scheme liability is recognised to the extent that the company has a legal or constructive obligation to settle the liability.

Impairment Reviews for impairment of housing properties are carried out on an annual basis and any impairment in an income generating unit is recognised by a charge to the income and expenditure account. Impairment is recognised where the carrying value of an income generating unit exceeds the higher of its net realisable value or its value in use. An income generating unit could be a single property, but it is normally a group of properties whose income and expenditure can be separately identified. Impairment reviews are carried out on assets whose useful economic lives are expected to exceed 50 years in accordance with Financial Reporting Standard 11. Designated reserves BCT designates those reserves which have been set aside for uses which prevent them, in the judgement of the Board, from being regarded as part of the free reserves of BCT.

32

BYKER COMMUNITY TRUST LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2015 1. PRINCIPAL ACCOUNTING POLICIES

Recycling of Capital Grant Where Social Housing Grant is recycled, as described above, the SHG is credited to a fund which appears as a creditor until spent. Disposal Proceeds Fund (DPF) Receipts from the sale of SHG funded properties less the net book value of the property and the costs of disposal are credited to the DPF, this creditor is carried forward until it is used to fund the acquisition of new social housing. Taxation No corporation tax is payable in the surpluses of charitable activities of BCT as it has charitable status. BCT has not carried out any non-charitable activities which may attract taxation charges. Value Added Tax BCT charges VAT on some of its income and is able to recover part of the VAT it incurs on expenditure. All amounts disclosed in the accounts are inclusive of VAT to the extent that it is suffered by the Group and not recoverable. Service charges BCT operates both fixed and variable service charges on a scheme by scheme basis in full consultation with residents. Where periodic expenditure is required a provision may be built up over the years, in consultation with the residents. Until these costs are incurred this liability is held in the balance sheet within long term creditors. Property managed by agents Where BCT carries the majority of the financial risk on property managed by agents, all the income and expenditure arising from the property is included in the Income and Expenditure Account. Where the agency carries the majority of the financial risk, the Income and Expenditure Account includes only that income and expenditure which relates solely to BCT. In both cases, the assets and associated liabilities are included in BCT’s balance sheet. Loan interest costs The full costs of deferred interest rate and indexation loans are shown in the Income and Expenditure Account.

33

BYKER COMMUNITY TRUST LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2015 2. TURNOVER, COST OF SALES, OPERATING COSTS AND OPERATING SURPLUS ______________2015____ Turnover Operating Operating £ costs £ surplus £ SOCIAL HOUSING LETTINGS (Note 3) 9,605,897 (7,252,265) 2,353,632 TOTAL 9,605,897 (7,252,265) 2,353,632 ______________2014____ Turnover Operating Operating £ costs £ surplus £ SOCIAL HOUSING LETTINGS 9,224,096 (8,015,728) 1,208,368 TOTAL 9,224,096 (8,015,728) 1,208,368

34

BYKER COMMUNITY TRUST LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2015 3. INCOME AND EXPENDITURE FROM SOCIAL HOUSING LETTINGS

General Housing

Total 2015

Total 2014

£ £ £ INCOME Rent receivable net of identifiable service charge

6,774,927 6,774,927 6,417,720

Service charge income 2,803,335 2,803,335 2,770,791 Rents receivable 9,578,262 9,578,262 9,188,511

Other income from social housing lettings 27,635 27,635 35,585 TOTAL INCOME 9,605,897 9,605,897 9,224,096

EXPENDITURE

Management (2,008,137) (2,008,137) (1,689,754) Services (2,974,103) (2,974,103) (3,290,246) Routine maintenance (1,651,185) (1,651,185) (2,384,590) Planned maintenance (393,426) (393,426) (364,901) Rent losses from bad debts (138,404) (138,404) (107,754) Depreciation of Housing Properties (48,857) (48,857) (32,331) Other Costs e.g.: Community budget (38,153) (38,153) (146,152)

Operation costs on social housing lettings (7,252,265) (7,252,265) (8,015,728)

OPERATING SURPLUS (DEFICIT) ON

2,353,632

2,353,632 1,208,368

Void losses 101,756 101,756 230,395

35

BYKER COMMUNITY TRUST LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2015 4. INTEREST PAYABLE AND SIMILAR CHARGES

2015

2014

£ £ On loans repayable within five years On loans wholly or partly repayable in more than five years 100,826 38,831 Costs associated with financing 101,759 36,784 Less: Interest capitalised - - Total 202,585 75,615 5. RIGHT TO BUY SALES Right

to Buy Sales

£

Total 2015

£

Total 2014

£

Proceeds of sales - - 155,515 Less: Costs of sales - - - Surplus - - 155,515 6. SURPLUS ON ORDINARY ACTIVITIES 2015 2014 £ £ Is stated after charging:- Auditors remuneration (excluding VAT) In their capacity as auditors 8,082 7,979 In respect of other services - - Depreciation of housing properties 48,857 32,331 Surplus on sale of fixed assets - 155,515

36

BYKER COMMUNITY TRUST LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2015 7. TANGIBLE FIXED ASSETS

Housing Properties For Letting Completed

Housing Properties for

letting Under

Construction

Total COST £ £ £

At start of the year 2,152,572 168,201 2,320,773 Additions to new properties Capitalisation of components

72,618 -

6,940,547 -

7,013,165 -

Disposals - - - Transfers 277,892 (277,892) -

At end of the year 2,503,082 6,830,856 9,333,938

DEPRECIATION AND IMPAIRMENT At start of the year 54,141 - 54,141 Charge for year 48,857 - 48,857 Disposals - - - At end of the year 102,998 - 102,998

Net book value at end of the year 2,400,084 6,830,856 9,230,940 Net book value at start of the year 2,098,431 168,201 2,266,632

37

BYKER COMMUNITY TRUST LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2015 7. TANGIBLE FIXED ASSETS (CONTINUED)

Housing

Properties For Lettings Completed

Housing

Properties Under

Construction

Total CAPITAL GRANTS £ £ £

At start of the year 1,266,257 - 1,266,257 Additions - 250,000 250,000 Transfers 250,000 (250,000) -

At end of the year 1,516,257 - 1,516,257

Total grants at end of year 1,516,257 - 1,516,257 Total grants at start of year 1,266,257 - 1,266,257 Housing Properties comprise:

2015

2014 £ £ Freeholds 7,714,683 1,000,375

38

BYKER COMMUNITY TRUST LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2015 8. DEBTORS 2015 2014 £ £ AMOUNTS FALLING DUE WITHIN ONE YEAR Rent arrears (see note a below) 1,189,560 1,038,714 Less: provision for bad debts (506,781) (419,286) Other debtors 425,115 20,767 Prepayment and accrued income 22,572 14,260 Note a) Rent arrears fluctuate over a 4 weekly timescale in line

with receipt of Housing Benefit. Measuring rent arrears at the nearest Housing Benefit receipt week (week ending 06/04/15) gives a total arrears figure of £859,534.

1,130,466 654,455

2015 £

2014 £

AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR Other debtors (see note b below)

Note b) This represents a bond on deposit with Newcastle City Council against any liabilities that may arise for them relating to their role as pensions guarantor for BCT

94,500

1,224,966

94,500

748,955

9. CASH AT BANK AND SHORT TERM DEPOSITS

2015 £

2014 £

Cash at bank 12,690,628 5,889,637 12,690,628 5,889,637 10. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR 2015 2014 £ £ Rents paid in advance 119,609 64,086 Trade creditors 11,207,867 3,727,975 Grants received in advance 1,181,546 676,346 Loan repayments in one year or less 11,881 5,739 12,520,903 4,474,146

39

BYKER COMMUNITY TRUST LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2015 11. CREDITORS: AMOUNTS FALLING DUE AFTER MORE

THAN ONE YEAR 2015 2014

£ £ Loans repayable by instalments:- In one year or more but less than two years 12,439 12,136 In two years or more and less than five years 40,938 39,939 In five years or more 547,612 548,914 Loans not repayable by instalments:- In one year or more but less than two years In two years or more and less than five years - 250,000 In five years or more 4,000,000 - 4,600,989 850,989

These loans are secured by specific charges on BCT’s housing properties and floating charges on all of BCT’s assets and are repayable at varying rates of interest.

The interest rate profile of BCT at 31 March 2015 was:

Total

£

Variable Rate

£

Fixed rate

£ Instalment loans 600,989 - 600,989 Non-instalments loans 4,000,000 - 4,000,000 4,600,989 - 4,600,989 At 31 March 2015 BCT has the following borrowing facilities: £

Undrawn committed facilities

4,805,273

Undrawn facilities 17,194,727 22,000,000

40

BYKER COMMUNITY TRUST LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2015 12. NON-EQUITY SHARE CAPITAL

2015 2014

£ £ Allotted Issued and Fully Paid At the start of the year 23 - Issued during the year Redeemed during the year

8 (2)

23 -

At the end of the year 29 23 The shares do not have a right to any dividend or distribution in a winding-up, and are not redeemable.

Each share has full voting rights.

13. RESERVES

Designated Reserve

Revenue

Total £ £ £ At the start of the year 2,313,809 - 2,313,809 Surplus for the year - 2,041,547 2,041,547 Transfer for the year 2,041,547 (2,041,547) - At end of the year 4,355,356 - 4,355,356

Although under its rules BCT does not trade for profit, its financial affairs are planned so that each year income exceeds expenditure. An annual surplus is vital to enable BCT to meet its commitments to providers of loan finance, continue to raise further loan finance and have reserves to provide for unexpected situations.

The Board regularly reviews BCT’s finances to determine the minimum amount of reserves required for

day-to-day management and to provide for the future. Any amounts over and above this minimum are invested in the provision of social housing.

41

BYKER COMMUNITY TRUST LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2015 14. CAPITAL COMMITMENTS BCT received the transfer of 1,803 properties from Newcastle City Council on 5 July 2012. As part of

the transfer, the Council has made a commitment to BCT to have the properties refurbished and modernised and brought into a good state of repair. Immediately prior to transfer, the Council contracted with BCT to carry out the refurbishment works on its behalf. The Council’s obligation to carry out the works is in effect matched by BCT’s obligations to bring the properties into a good state of repair. As a specific right of set off exists, a net basis has been adopted in respect of these obligations and neither the assets or liabilities have been recognised. At 31 March 2015 the gross values of the balances that have been offset are £75,208,857 with VAT arising on the works totalling £12,247,993.

Capital expenditure (included in the £75m figure above) that has been contracted for but has not been provided for in the financial statements: £4,805,273.

Capital expenditure (included in the £75m figure above) that has been authorised by the committee of management but has not yet been contracted for: £6,384,114.

BCT expects these commitments to be financed with: Capital grants and contributions £7,853 Loan facilities £11,181,534

42

BYKER COMMUNITY TRUST LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2015 15. DIRECTORS’ EMOLUMENTS 2015 2014 £ £ The aggregate emoluments paid to or receivable by non-

executive Directors and former Directors 5,000 4,861

The aggregate emoluments paid to or receivable by

executive Directors and former Directors - -

The emoluments paid to the highest paid Director excluding

pension contributions

5,000

4,861

The aggregate amount of any compensation paid to

Directors or former Directors during the period of account

355

1,164 The aggregate amount of Directors or past Directors’

pensions, excluding amounts payable under a properly funded pension scheme

-

-

The aggregate amount of any consideration payable to or

receivable by third parties for making available the services of a Director

-

-

Directors are defined as the members of the Board. 16. EMPLOYEE INFORMATION

These figures reflect that staff became BCT employees on 01/02/14. Previously they were employed by another organisation and seconded to BCT.

2015 2014 The average number of persons employed during the year

expressed in full time equivalents (35 hours per week) was:

Office staff 6 6 6 6 Staff costs (for the above persons) £ £ Wages and salaries 242,252 39,210 Social Security costs 21,132 3,395 Other pension costs 36,620 5,489 300,004 48,094 Aggregate number of full time equivalent staff whose remuneration exceeded £60,000 in the period:

£60,000 - £70,000 - - £70,000 - £80,000 1 - £80,000 - £90,000 - -

BCT employed its own staff from 1 February 2014. Previously the staff team was employed by Your Homes Newcastle (YHN) and seconded to BCT.

43

BYKER COMMUNITY TRUST LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2015 17. CASH FLOW STATEMENT NOTES 2015 2014 £ £ Returns on investments and servicing of finance Interest received 43,500 46,260 Interest paid (202,585) (75,615) (159,085) (29,355) Financing Issue of ordinary shares - - Loans received 3,750,000 250,000 Loans repaid - (13,616) 3,750,000 236,386

At the start of the year

Cashflows At the end of the year

Analysis of net debt £ £ £ Cash in hand and at bank 5,889,637 6,800,991 12,690,628 Debt due within 1 year (5,739) (6,142) (11,881) Debt due after 1 year (850,989) (3,750,000) (4,600,989) TOTAL 5,032,909 3,044,849 8,077,758 At the start of

the year Cashflows At the end of

the year Reconciliation of cash movements Short term cash deposits 5,889,637 6,800,991 12,690,628 TOTAL 5,889,637 6,800,991 12,690,628

18. TAXATION STATUS BCT has charitable status.

44

BYKER COMMUNITY TRUST LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2015 19. UNITS/BEDSPACES 2015 2015 2014 Social rent Affordable rent Total Social Housing Accommodation Under management at end of year General needs housing 1,707 - 1,707 Supported housing and housing for older

people 63 - 63

1,770 - 1,770 20. ACCOMMODATION MANAGED BY AGENTS BCT owns property managed by other bodies. 2015 2014 No. of units and type of accommodation: Supported housing and housing for older

people 43 43

43 43 These properties are as follows:

Properties leased to Richmond Fellowship 10 Properties licences to AF&V Launchpad Limited 33

21. RELATED PARTIES The following are related parties:

• The Board has tenant members who hold tenancy agreements on normal terms and cannot use their position to their advantage;

• The Board has members representing Newcastle City Council. This organisation delivers housing and estate management services to BCT.

22. PENSIONS Tyne and Wear Pension Fund (TWPF)

The TWPF is a multi-employer scheme with more than one participating employer, which is administered by South Tyneside Council under the regulations governing the Local Government Pension Scheme (LGPS), a defined benefit scheme. Triennial actuarial valuations of the pension scheme are performed by an independent, professionally qualified actuary using the projected unit method. The most recent formal actuarial valuation was completed as at 1 April 2014 and rolled forward to 31 March 2015 by a qualified independent actuary. Date of the last full actuarial valuation of the employer's LGPS funded benefits 1 April 2014 Expected employer contributions next year (£M) 0.038 Duration of liabilities 25.9 years

45

BYKER COMMUNITY TRUST LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2015 22. PENSIONS (CONTINUED) Tyne and Wear Pension Fund (TWPF)

The main actuarial assumptions used in this valuation were: % pa 31 March 2015

Discount rate for liabilities 3.3% Pension increases 1.9% Pension accounts revaluation rate 1.9% Salary increases 3.4%

The main mortality assumptions used in this valuation were:

Assumed life expectancy at age 65 31 March 2015 Males Member aged 65 at accounting date 23.1 Member aged 45 at accounting date 25.1 Females Member aged 65 at accounting date 24.7 Member aged 45 at accounting date 27.0

Contributions

The employers’ contributions to the TWPF by the Company for the year ended 31 March 2015 were £37,000 (2014 Nil).

Asset Allocation

The fair value of assets in the TWPF related to the Company and the expected rates of return were:

Value at

Value at

31 March 15 1 April 14 % % Equities (UK and overseas)

66.4%

66.8%

Bonds 15.4% 15.0% Property 9.5% 8.5% Cash 2.4% 2.9% Other 6.3% 6.8% 100.0% 100.0%

Fair Value on Assets

2015 £ ’000 Fair value of the above assets related to the Trust 606 Value placed on liabilities related to the Trust (759) Net pension liability related to the Trust (153)

46

BYKER COMMUNITY TRUST LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2015 22. PENSIONS (CONTINUED)

Analysis of the amount charged to operating result

2015

£ ’000 Current service cost 38 Other costs / (income) (9) Total operating charge 29

Analysis of the amount charged to other finance income

2015 £ ’000 Expected return on pension scheme assets 34 Interest on pension scheme liabilities (25) Net charge 9

Analysis of amount recognised in statement of total recognised surpluses and deficits (STRSD)

2015

£ ’000 Total actuarial losses (153) Actuarial deficit recognised in STRSD (153)

Changes to the fair value of assets 2015 £ ’000 Opening fair value of assets* - Movement in year: Expected return on assets 34 Contributions by the employer 37 Contributions by participants 19 Actuarial loss 516 Closing fair value of assets 606

47

BYKER COMMUNITY TRUST LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2015 22. PENSIONS (CONTINUED)

Changes to the present value of the defined obligation 2015

£ ’000 Opening defined benefit obligation* - Movement in year:

Current service cost 38 Contributions paid 19 Interest cost 25 Actuarial loss 677

Company share of scheme liabilities at end of year 759

*Opening position adjusted in actuarial loss for the year.

History of experience gains and losses under FRS 17

2015 Difference between expected and actual return on share of scheme assets:

Amount (£’000) 32 Percentage of share of scheme assets at end of period

5.3%

Experience gains and losses on share of scheme liabilities:

Amount (£’000) 0* Percentage of present value of share of scheme liabilities

0.0%

*This item consists of gains / (losses) in respect of liability experience only and excludes any change in liabilities in respect of changes to the actuarial assumptions used.