Report and Financial Statements Adactus Housing Group Limited

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Adactus Housing Group Limited 47Report and Financial statements for the year ended 31 March 2013Notes to the financial statements24 Notes to the cash flow statementa. Reconciliation of operating surplus to net cash inflow from operating activities2013 2012£000 £000Operating surplus 18,758 16,777Depreciation and amortisation 4,277 4,095Difference between pension charge and cash contribution 17 18Impairment - (345)(Increase)/decrease in properties for sale 1,769 (77)(Increase)/decrease in debtors 2,278 (1,439)Decrease in creditors (4,213) (1,870)Share of joint venture surplus (335) (366)Net cash inflow from operating activities 22,581 16,793b. Reconciliation of net cash inflow to movement in net debt2013 2012£000 £000(Deduction) / increase in cash in the year (3,996) (1,954)Change in net debt resulting from cash flows 5,645 (9,619)Change in net debt 1,649 (11,573)Net debt at beginning of year (178,595) (167,022)Net debt at end of year (176,946) (178,595)c. Analysis of changes in net debt1 April31 March2012 Cashflows 2013£000 £000 £000Cash investments 11,872 (3,996) 7,876Debt due within one year (2,816) 889 (1,927)Debt due after one year (187,651) 4,756 (182,895)(178,595) 1,649 (176,946)
Adactus Housing Group Limited 48Report and Financial statements for the year ended 31 March 2013Notes to the financial statements25 Capital commitments (Group)2013 2012£000 £000Capital expenditure that has been contracted for but has not beenprovided for in the financial statements 33,171 29,748Capital expenditure that has been authorised by the Boards of thesubsidiaries but has not been contracted for 41,405 1,197The amount contracted for as at 31 March 2013 will be funded from grants approved by the Homes andCommunities Agency and undrawn loan facilities. The Boards of the subsidiaries expect the expenditurethat they have authorised to be fully financed by the Homes and Communities Agency and from privatefinance loans.26 VAT Shelter: Stock Transfer Obligations (Group)Immediately prior to entering into a Stock Transfer Agreement between Chorley Borough Council (theCouncil) and Chorley Community Housing Limited (CCH), the Council contracted with CCH to performthe refurbishment works required to bring the CCH properties to be transferred into an agreed state. Atthe date of transfer the contract was for an estimated sum equal to the expected cost of the works i.e.£58.3million, (net of VAT).At transfer CCH contracted with the Council to acquire the benefit of the agreed refurbishment works(£58.3 million net of VAT- estimated at the date of transfer) plus the housing properties at a price equal tothe agreed value of the properties in their unenhanced condition (£2.2m). The nature of the works hasbeen specified in a development agreement and a right of set off exists between the contracts. Thesecontracts have enabled CCH to recover VAT on improvement costs that would otherwise have beenexpensed.At the time of the transfer CCH paid over a net cash amount of £2.2m to the Council, representing theacquisition of the properties in their unenhanced condition (£2.2m) plus the value of the Council’sobligation to carry out the refurbishment works (£58.3million net of VAT- estimated at the date oftransfer), less any amount due to be incurred by CCH under the development agreement in relation to theanticipated cost of the improvements (£58.3 million, net of VAT).The impact of these two transactions is that whilst the Council has a legal obligation to CCH to completethe refurbishment works, this work has been contracted back to CCH who are also legally obliged. Theunderlying substance of the transaction is therefore that CCH has acquired the properties in their existingcondition at their agreed value, and will complete certain improvements in line with guarantees to tenants.In the opinion of the Board, the commercial effect of these transactions when viewed as a whole does not,in practice, create separate assets and liabilities for reporting purposes. Therefore, in accordance with FRS25 the resulting debit and credit balances, relating to the legal obligation of the Council to complete therefurbishment works for CCH and the equal and opposite legal obligation of CCH to perform theimprovement works for the Council, have been offset and are not recorded in the balance sheet.
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Report and Financial Statements Adactus Housing Group Limited

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