Annual eport R and Financial Statements

Annual Report and Financial Statements

For the year ended 31 MARCH

2018

Our vision is that It's a bold statement but one everyone across our business is passionate about

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Annual Report and Financial Statements for the year ended 31 MARCH 2018

Contents

Strategic Report

Chairmans Statement Our Business Model Group Structure Our Market Chief Executives Statement Financial Review Value for Money Metrics Risk Management Principal Risks and Uncertainties Corporate and Social Responsibility

5 8 9 10 12 22 26 30 31 35

Corporate Governance

Corporate Governance Introduction Corporate Governance Report Board of Directors Directors Remuneration Report Report of the Board Statement of Directors Responsibilities

39 40 56 62 72 73

Financial Statements

Independent Auditor's Report to the Members of

Aster Group Limited

75

Consolidated Statement of Comprehensive Income 82

Consolidated Statement of Financial Position

83

Consolidated Statement of Changes in Reserves

84

Consolidated Statement of Cash Flows

85

Notes to the Consolidated Financial Statements

86

Association's Statement of Comprehensive Income 164

Association's Statement of Changes in Reserves

164

Association's Statement of Financial Position

165

Notes to the Association's Financial Statements

166

Legal and Administrative Details

182

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We have had another successful year, building on our financial strength

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Annual Report and Financial Statements for the year ended 31 MARCH 2018

Strategic Report

Chairmans Statement

Our purpose is to provide safety and security through our reliable landlord and independent living services and we supply a wide range of options in response to the housing crisis through our Registered Providers and other member companies.

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Chairmans Statement

Strategic Report Corporate Governance Financial Statements

Whether it's through building more homes, maintaining the thousands we already own, providing a good service to our customers or making a commitment to give back to our communities through the work of our Foundation, we carefully balance a commercial approach to running our business with a social heart ? doing the right thing for our customers and each other.

We have had another successful year, building on our financial strength.

We were proud to complete the development of 939 new homes last year, a 14 per cent increase on 2017's total of 829 new homes. Of the new homes, 482 were for affordable and social rent, 357 were for shared ownership and 100 were for openmarket sale.

Aster Group's development rate ensures it remains one of the UK's leading housing associations for building new homes. Our development programme for 2017/18 has been ranked as one of the biggest in the sector by Inside Housing magazine. The publication has also placed us 9th when it comes to our development pipeline for 2018/19. This is a great result and puts us alongside housing associations such as L&Q, Sovereign, and Orbit.

We've also been placed 12th in the sector in terms of completions last year ? a huge achievement given the sector as a whole is increasing development, and larger associations are accelerating delivery. The ranking is based on the number of units to be delivered and we are building far more than many others of a similar scale. There was an investment of over ?180 million in new and existing schemes during the year 2017/18.

As part of our commitment to the development of affordable homes, we acquired ?50 million of additional funding through a loan from the European Investment Bank (EIB).

At the end of the year, we have sufficient loan facilities in place to fund our development programme until July 2019. Since year end the Group has successfully issued ?50m of bonds through a tap of its existing bond and created ?150m of retained bonds that will further enhance the Group's ability to deliver its development programme.

This year also saw the introduction of Aster 3 Limited ? a new RP within the group set up to provide additional development capacity.

Other highlights from the results for the year include headline revenue reaching ?204.7 million with operating profit before impairment, interest and taxation at ?60.9 million.

Throughout the year we spent over ?31.8 million on repairing and maintaining our stock of more than 29,000 homes. Net profit after tax was a record ?49.7 million. We reinvest our profits back into building new homes and ensuring we provide a good service to our customers. This is why we describe ourselves as a not-for-dividend business.

We continue to place the highest priority on the safety of our colleagues and customers. We are proud that 100 per cent of our homes achieve the `Decent Homes Standard' and we are committed to investing in and maintaining our homes to the highest industry regulatory standards. We also launched an internal campaign supporting a safety-first culture across the business - Safety First. Always. This campaign is built around three core themes: "See it. Report it. Escalate it".

Our vision - everyone has a home

This past year has seen us review and change how we see our role as a landlord and developer of new homes and refine our vision and purpose. This change is a direct result of the work we've done with the business to understand what an ethical approach to business means for us and the re-balance of our landlord and development focus.

To help turn our vision into a reality, we are guided by six business priorities:

1. Being a customer focussed, easily accessible, good and safe landlord

2. Having a positive impact on our customer's lives and in our local communities through the work of the Aster Foundation

3. Developing as many homes as we can across a range of tenures

4. Enabling customers to live safely and independently in their homes

5. Supporting business transformation through our culture, brand, technology and employee offer

6. Delivering our corporate strategy quicker and better through growth.

Aster Foundation

For our customers, we want to do much more through the Aster Foundation. With new funding and through partnership working with local support agencies, we're going to deliver financial and digital inclusion training and support for employability and skills development.

The Foundation will also back projects that ensure our communities are places people are proud to call home. We're excited about the potential for the Foundation to continue evolving and responding to the changing needs of our customers and communities.

All the while, we'll continue to support colleague volunteering and matchfunding to benefit local communities and charities.

The future To continue this success, we can't stand still ? we never have done. Change and growth has always been a part of who we are. Now, it is more important than ever.

The group is two years into the four year program of 1% annual rent reductions announced by the Chancellor back in July 2015. As a result the group will see the rent it is able to charge fall by 1% in 2018/19 and again in 2019/20. However in October 2017, following the Conservative Party Conference, the Department of Communities and Local Government (DCLG) revealed that from April 2020 rents could increase annually by CPI + 1% until at least 2025. This rent stability, gives us a great opportunity to make an even bigger, positive impact on thousands of lives.

We have an ambitious transformation strategy which will protect our business for the long-term. It will see us grow our business, evolve our culture and use new technology - all with the aim to create a great place for our people to work, which we know will help us continue to deliver a good service to all of our customers.

Growing our business means we have the strength and stability to continue making an impact long into the future. This ensures we can provide as many homes for as many people as possible. We'll be flexible and not pursue growth at all costs. Our plan is to do so sustainably, too, through expanding our development programme, looking for opportunities to merge where we can guarantee a strong offer for our colleagues and customers - or forming strategic partnerships - and looking for opportunities to launch new and different services such as our new Independent Living service, that help us achieve our vision.

This growth will see us extend our development ambitions eastward and north, illustrated recently by our announcement of a new joint venture with Galliford Try which will deliver 130 new homes in Horsham, West Sussex.

The last year has seen us achieve some great things ? the next 12 months is set to be even better.

Andrew Jackson Group Chairman

7 August 2018

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Annual Report and Financial Statements for the year ended 31 MARCH 2018

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Our Business Model

Everyone has a home

Revenue

Maintenance

Other activities

Development of affordable housing

Profit

(Increase in asset value)

External funding

Development of homes for open market sale

Everyone has a home

The group's activities are categorised into four areas:

1. Provision of housing through its Registered Providers - Aster Communities, Synergy Housing Limited and Aster 3 Limited;

2. Care and support services through Aster Living;

3. Property management and maintenance through Aster Property Limited;

4. Development of housing for rent and sale through Aster Homes Limited, Zebra Property Solutions Limited and joint ventures with Galliford Try Homes Limited (White Rock Land LLP and Boorley Green LLP).

The group primarily generates revenues from rent and service charges associated with the provision of housing, and from the sale of houses built for shared ownership and open market sale. Profits after financing (servicing of debt) and tax are reinvested and used to build additional homes (usually through supporting additional borrowing capacity).

The group finances additional development through traditional bank funding, capital markets (bonds) and more recently the European Investment Bank (EIB) and Affordable Housing Finance (AHF) bond, part of the Affordable Homes Guarantee Programme.

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Annual Report and Financial Statements for the year ended 31 MARCH 2018

Strategic Report Corporate Governance Financial Statements Group Structure

The structure of the group is:

Aster Group Limited

Aster Communities

Synergy Housing Limited

Aster 3 Limited

Aster Living

Aster Property Limited

Aster Homes Limited

Aster Options

Plus Limited

Aster Treasury

PLC

Silbury Housing Holdings Limited

Silbury Housing Limited

Zebra Property Solutions Limited

Aster Solar Limited

White Rock Land LLP

Boorley Green LLP

Key to entity type:

Charitable Community Benefit Society Non Charitable Company

Joint Venture

External Joint Venture

Not shown: 7 Dormant Companies information is available on request

The main activity of each of the companies in the group is:

Aster Group Limited

Aster Communities

Synergy Housing Limited

Aster 3 Limited Aster Living

Aster Property Limited Aster Homes Limited Aster Options Plus Limited Aster Treasury Plc

Silbury Housing Holdings Limited and Silbury Housing Limited Zebra Property Solutions Limited Aster Solar Limited

White Rock Land LLP and Boorley Green LLP

Acts as holding company for the group and provides support services for each of the subsidiaries.

Registered Provider, with properties primarily in Hampshire, Wiltshire, Somerset and Devon and Cornwall.

Registered Provider, with properties primarily in Dorset, Hampshire and Wiltshire.

Registered Provider.

Provision of care and support services to vulnerable people in specialist housing or their own homes.

Management and maintenance of housing stock and related areas.

Development of homes for affordable and market sale and rent.

Special purpose vehicle for cost sharing.

Special purpose vehicle for raising bond finance on behalf of other group entities.

Special purpose vehicles for the delivery of homes in Wiltshire as part of a service concession arrangement.

The development of properties for resale and rental on the open market.

Special purpose vehicle for investment in photovoltaic panels on behalf of other group entities.

Limited Liability Partnerships jointly owned by Aster Homes Limited and Galliford Try Homes Limited to develop properties.

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