CORPORATE FINANCE STRATEGY

APRIL 2014 - 2017

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 Stockport Homes Strategy

CORPORATE FINANCE STRATEGY 2014 - 2017

1 INTRODUCTION
1.1 The aim of this strategy is to set a framework for corporate financial
management for the business over the next three years during a period
which is set to present constant growth, change and challenge for the
organisation. Most if not all key business decisions have a financial
impact in some way. It is important that financial management and
financial governance remain robust, up-to-date, flexible, fit-for-purpose
and alive throughout the organisation during this time of significant
change.
1.2 Corporate financial management is not just the responsibility of the
Corporate Finance Team, but all staff, and Budget Managers, the
Leadership Team and the Board in particular. Everyone will have a part
to play in ensuring successful financial management during this time of
growth.
1.3 There are changes presented that do not just relate to the maturity and
growth of the organisation, but also regulatory advancements that the
organisation will have to respond to and comply with during this strategy
period. It is vital that the Corporate Finance Team keep abreast of these
changes and implement them accordingly.
1.4 This strategy and its associated action plan will ensure that Stockport
Homes will continue to have the most effective financial management
arrangements, systems, skills and focus to support the business to grow
successfully, at the same time as maximising opportunities presented by
evolving business areas, maximising structure efficiencies and
remaining compliant with the changing accounting standards.
1.5 A robust financial management service, providing accurate and timely
information for staff and customers alike, enables internal and external
stakeholders to make informed decisions which will ensure the continued
success of Stockport Homes.
1.6 The priorities in this strategy have been developed following consultation
with staff, managers, and technical partners, and are integral to the
delivery of Stockport Homes’ Vision, Mission and Aims.

2 CONTEXT
2.1 Stockport Homes has had a successful eight and a half years in
operation with the Finance Management function growing and evolving
with the organisation, with clear year-end audit reports and very few
internal audit recommendations for improvements, being testament to
the strength of the core function. The finance function is business
critical, not just because of the legal requirements that the company has
to comply with and demonstrate, but because timely and accurate
financial performance information is an enabler – it enables managers
and staff at all levels to make business decisions about how to use

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 Stockport Homes Strategy

resources. It is also an area that it is judged externally and has huge

reputational issues when it goes wrong.

2.2 The Corporate Finance function supports the whole organisation, not
just one business area, and therefore its remit is broad (see Appendix
One). Given the various facets of the business areas of the
organisation, the accounting is also complex with different politics,
policies, systems and accounting requirements in each individual area of
the business. Regardless of the individual nuances, statutory accounts
for the organisation are pulled together as one set of accounts. The
finance function need a good overview and understanding of the whole
organisation.

2.3 Stockport Homes are also responsible for the financial management of
the Council’s Housing Revenue Account and the Capital Programme.
These bring additional complexities and responsibilities. Stockport
Homes wrote the 30 year HRA Business Plan and its associated Asset
Management Strategy and the skills in-house keep this up-to-date taking
into account policy, political and fiscal changes, as well as impacts on
customers.

2.4 In addition to the above, growth in the last eight years has seen financial
appraisal models grow and evolve, to include the implementation of a
financial appraisal process for appraising new build schemes, technical
component accounting regimes put in place, accounting for shared
ownership fixed assets, and the accounting for the organisation’s asset
base generally, which has grown from zero to £8million in that time
alone.

2.5 The business and its aims are changing. Audit Commission inspection
regimes and only delivering core business activities are things of the
past. New business activities bring greater levels of understanding
required, controls, and additional volumes of works and systems
usages. It requires more than ever real time information regarding
levels of available reserves and the assessment of the best use of those
reserves when faced with competing priorities. In light of this the
Corporate Finance Team will need to continue to review its focus and
skills base with regard to the balance of delivering core accounting
requirements whilst advancing business enabling information and
advice. Cyclical and monthly pressures for producing works are core in
any finance team, i.e. monthly management accounts, the year-end
months, the budget setting months. However the time spent on
planning, advising and forecasting is also key.

2.6 The relationship with the Council is also changing. The new
Management Agreement is likely to see a closer working relationship
and that will undoubtedly translate to closer working on how to maximise
resources. This also brings added complexities and politics around
managing the finances and it is crucial that the business understands its
own position at all times in order to offer opportunities going forward.

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 Stockport Homes Strategy

2.7 The regulatory framework is changing, which will see Stockport Homes
having to prepare accounts compliant with International Accounting
Standards from 2016. This has implications such as how property
assets are valued and will need technical knowledge and training within
the team.

2.8 Finally nationally politics is changing. This strategy cannot ignore policy
impacts to customers. Whilst cash collection management and financial
services to customers is in the main dealt with outside of this strategy, ie
in the Customer Finance Team and its own Income Management
Strategy, its effects have a direct correlation in terms of resources
available in the HRA, and therefore Management Fee and the
relationship with the Council over allocating resources in the HRA. This
also makes business diversification more pertinent in terms of
maximising monies into the business and reducing shared costs. As the
HRA comes under pressure, how to use monies in the best possible way
in the HRA will also remain critical, for example the HRA headroom cap
will need reviewing and dynamic ways to fund New Build/competing
asset priorities will need to be investigated.

2.9 All of the factors highlighted above provide the context for this strategy
and highlights the need for a co-ordinated and coherent plan of direction
for corporate financial management in the organisation during 2014-17.

LINK TO VISION, MISSION AND AIMS

2.10 In April 2012 Stockport Homes launched a new vision, mission and aims,
which are highlighted below;

Vision: to deliver the best services to customers by being a great place to work
Mission: Transforming Lives
Aims:
 Exceed customer expectations and always do the right thing.
 Support customers in all aspects of their lives through effective
partnership working.
 Create greener places to live and work and continually minimise our
impact on the environment.
 Develop our thriving, safe and sustainable neighbourhoods, maximising
our contribution to meeting housing need.
 Involve customers, staff and the Board in decision making and create
opportunities for them to fulfil their potential.
 Grow by making the best use of our resources and diversifying into
businesses that complement what we already do.

This Strategy is cross-cutting, contributing to the delivery of all aims with

specific emphasis upon the aims of ‘growing by making the best use of

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 Stockport Homes Strategy

resources and diversifying into businesses that complement what we already

do.

3 STRATEGIC OBJECTIVES & OUTCOMES

3.1 This strategy identifies nine key priorities for the business over the next
three years, with 35 actions identified in the associated action plan
encompassing governance, support, and business transformation.
Taken collectively, these priorities seek to deliver the maximum potential
and value from Stockport Homes’ management of its money.

Priority One – Maximising resources and reserves

management
Implement a clear framework plan for maximising monies into the
organisation to aid achievement of its goals

High Level Action Outcome

Investigate other sources of
borrowing for the ALMO and HRA
Respond to CLG headroom cap
changes
Work with the Council to agree the
best available Management Fee
levels
Develop a reserves management
strategy
Develop return on investment
indicators for reserves usages and
investments
Develop clear forecasting for core
cost pressures, i.e. pension
increases
Develop clear reporting for new
business areas and surpluses
Review banking and treasury
management arrangements
Maximise investment opportunities
such as to increase housing stock
in Stockport through new build.
Maximise opportunities to increase
housing stock in Stockport through
new build.
Ensure that high quality service
delivery can be sustained into the
future.
Clear understating conveyed at all
times to senior management of the
organisation’s available monies to
enable decision making
Demonstration that reserves are
being utilised in an effective way
that maximises returns for the
Company.
Informed and proactive discussions
with the Council to ensure
management fee levels and
reflective of core pressures.
Clear information to support robust
decision making regarding use of
surpluses.
Ensure that cash is being managed
in the most effective way so as to
maximise returns to the Company.

Priority Two – Asset Management

Manage and maximise resources and efficiencies from the growing
asset base of the organisation and the HRA

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High Level Action
Implement budgetary framework
for Head Office build and fit-out
costs
Oversee loan drawdown and
agreement for Head Office
Head Office vat review
Ensure 30 year HRA Business
Plan is kept up-to-date
Implement component accounting
in HRA
Develop financial appraisal NPVs
for Asset Management Strategy
decisions
Review debt management
portfolio for new build and
property/other assets
Priority Three – Business Diversification
Set a clear process for bidding for new works/costing methods and
financial decision making for new business areas, as well as embed a
framework for evaluating the success of those new business
opportunities.
High Level Action
Implement process for
valuing/approving new business
options.
Stockport Homes Strategy
Outcome
Effective financial management of
the Head Office project leading to
clear and informed decision making
throughout the time period of the
project.
Ensures that cashflow is effectively
managed throughout the project
and the loan is drawn down on
most preferential terms.
The construction process/services
delivered from the site will be
carried out in the most tax
efficient/compliant way.
There will be a clear picture of on-
going asset investment
requirements against available
resources, which significantly
affects investment decisions
The depreciation charge will more
accurately reflect lifecycles of the
housing stock and the process will
be legally compliant.
There will be robust information to
estimate future income streams
against investment costs, informing
decision making about long term
viability across the housing stock
portfolio.
Clear information on levels of debt
leading to robust decision making
on overall debt levels and future
new build appraisal options.
Maximum efficiencies gained in
terms of interest levels.
Outcome
Informed decision making leads to
successful outcomes, along with
robust monitoring over time to
assess the critical success of new
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Implement organisational wide
overheads methodology to include
in new business financial
modelling.
Ensure all tax aspects of new
business ventures are considered
and implemented.
Develop financial management
reporting to ensure clear
separation of commercial/ income
generating financial information
from financial information on core
management fee funded activity.
Develop the Corporate Finance
Team further to provide an
enabling, expert advisory service.
Priority Four – Corporate Structures
High Level Action
Review structure options and
implement/set-up most efficient
option
Implement VAT structure to fit the
structure of the organisation -
partial exemption and special
method assessments
Priority Five – Strategic clarity and enablement
Ensure clear, strategic financial information enables informed, proactive
decision making.
High Level Action
Develop financial understanding of
SHL within the Contributors
Committee
Stockport Homes Strategy
business areas.
Clear, consistent approach to
applying overheads to commercial
ventures so as to allow consistent
financial performance appraisal.
Clear understanding from Budget
Managers as to why overheads are
shown.
Compliance with tax legislation and
informed decision making
regarding efficient tax structures.
Clear, more useful financial
reporting information on the whole
Company that better reflects the
growing diversity of the Company.
Leadership Team and budget
managers are better supported to
deliver services with full financial
knowledge and information.
Outcome
The company structure will support
the growth of the company and its
housing stock and minimise
associated tax liabilities.
VAT liabilities will continually
reflect the changing/growing
activity of the Company, which is a
regulatory requirement and incurs
fines if not implemented correctly.
Outcome
Political parties understand the
financial efficiency and
maximisation of resources that SHL
deliver which will add to the
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 Stockport Homes Strategy

positive relations re the ALMO

Develop ratios for return on
investments
Redesign the management
accounts report to reflect growing
diversity of business.
Continuous framework for Board
training on technical financial
issues
vehicle
Senior management can appraise
/compare performance of invested
funds.
Clear, focussed report with
emphasis on key business
indicators ensures strategic
messages are captured and not
lost in the detail.
Board can make strategic decisions
with full regard to financial
implications

Priority Six – Information and systems

Streamline financial processes/interfaces and improve clarity over the
whole business operations to aid decision making and improve the
quality and efficiency of financial information

High Level Action Outcome

Review use of systems for
financial information by new
business areas
Evolve the management accounts
pack to ensure information is kept
concise and high level to support
business decision making
Develop financial information
reporting capabilities within the
team.
Work with teams to critically
evaluate use of systems for
financial information and decision
making.
Financial processes relating to new
business areas are set up in the
most accurate and efficient way.
Clear, more useful financial
reporting information on the whole
Company that better reflects the
growing diversity of the Company.
More efficient, targeted reporting
structures.
Efficient processes resulting in
clear, reliable financial information.

Priority Seven – Regulatory compliance/financial governance

Ensure the organisation’s accounting complies with regulatory changes

High Level Action Outcome

Partial exemption and special
methods for VAT
Compliance plan for switch to
International Financial Reporting
Standards (IFRS) and FRS 102 in
2016
Future VAT liabilities will more
accurately reflect the activity of the
Company.
Financial statements are compliant
with changes in accounting
legislation with minimum additional
cost.

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 Stockport Homes Strategy

Priority Eight – Financial Management skills base

Develop the financial management skills base in the business in line
with business growth

High Level Action Outcome

Review Corporate Finance Team
skills base and match to business
requirements
Implement Leadership Forum
financial training package
Improve Repairs accounting
service provision from Corporate
Finance following higher turnover
of finance staff in this area
Review skills of team against
recognised quality accreditations,
eg accountancy bodies. Address
any areas where improvements
could be made.
Seek awards for accountancy
team
Skilled, expert team effectively
supporting senior management to
make informed and pro active
financial decisions.
Enable informed and complete
financial decision making at
strategic level.
Clear, concise and relevant
financial information to support
critical decision making. Clear view
at all times of repairs costs to the
organisation.
Skilled, expert and enabled team.
Will supplement the already
accredited status of the team via
accountancy bodies and produce
positive press

Priority Nine – Capacity building with customers

Support the financial development of customer groups through advice,

support and mentoring.

High Level Action Outcome

Develop links with customer and More effective financial

community groups to provide
support and mentoring with
financial management
Use specialist skills of the team to
link in with local schools and
provide volunteer support with
mathematics.
management by community groups
leading to stability, increased skills
and improved funding chances.
Contribution towards improved
outcomes for young people.
Young people engaged in
opportunities for careers in finance.

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 Stockport Homes Strategy

4 EQUALITY IMPACT ASSESSMENT (EIA)

4.1 The Equality Impact Relevance Screening has been completed. This
strategy has a low impact on customers and staff and therefore a full
Equality Impact Assessment is not required.

5 LINKS TO OTHER POLICIES AND STRATEGIES

5.1 This strategy links to and/or supports the following other strategies and
policies within the organisation:
 SHL 3 year Business Plan
 Risk Management Strategy
 Income Management Strategy
 Fraud Policy
 Various team specific Business Plans
 Value for Money Strategy
These strategies collectively provide the framework to support the
organisation in its management of money. It is essential that these
strategies are integrated to ensure the Stockport Homes continues to
maximise its financial management arrangements.

6 ACTION PLAN
6.1 The objectives in this strategy are linked to Stockport Homes Corporate
Aims. The high level actions in this strategy are supported by a detailed
action plan which is set out in Appendix two.

7 OWNERSHIP, MONITORING & REVIEW

7.1 The Head of Finance will monitor the delivery of the action plan.
Delivery of the strategy will be managed through the Personal
Development Review of the Corporate Finance Team Members. This
will be overseen at a strategic level by the Director of Finance.
7.2 Annual updates will be provided to the Business Development Sub-
Group of the Board.

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Stockport Homes Strategy

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