Why we are engaging with Eildon Housing Association Ltd (Eildon)
We are engaging with Eildon about its financial management and development plans.
Eildon is one of the larger developers of new affordable housing in Scotland. It has plans to grow through a considerable programme of new homes for social rent, and will receive significant public subsidy to help achieve this. The number of affordable homes provided by Eildon will increase by around half over the next five years.
Eildon has told us it needs to obtain new private finance during 2022/23 to support its development plans.
We will review Eildon’s treasury management policy and practices to gain assurance about its approach to treasury management.
What Eildon must do
- send us by 30 April 2022
- an update on the borrowing requirement for 2022/23;
- its latest projected monthly cash flows for the 12 months to 31 March 2023;
- send us by 30 June 2022:
- its approved business plan and updated risk register;
- 30 year financial projections consisting of statement of comprehensive income, statement of financial position and statement of cash flow complete with assumptions and explanatory narrative;
- a comparison of projected financial loan covenants against current covenant requirements;
- financial sensitivity analysis which considers the key risks, the mitigation strategies for these risks and a comparison of the resulting covenant calculations with the actual current covenant requirements;
- the report to the Board in respect of the approved 30 year projections, sensitivity analysis and covenant compliance; and
- evidence of how it demonstrates affordability for its tenants;
- provide us with the information we require in relation to its treasury management policy and practices;
- send us an update on its development programme by 31 October 2022. This will include details of the scale and tenure mix, timescales for delivery and any material delays or changes to the programme; and
- tell us if there are any material adverse changes to its development plans which might affect its financial position or reputation, in line with our notifiable events guidance.
What we will do
- review the cash flow projections and liaise as necessary;
- review the information Eildon provides about its treasury management strategy policy and practices;
- meet with Eildon to discuss its treasury management strategy policy and practices and decide whether we require any additional assurance;
- review the business plan and financial projections;
- meet with Eildon’s senior staff to discuss the business plan, the financial information and any risks to the organisation;
- review the development update and liaise as necessary; and
- update our published engagement plan in light of any material change to our planned engagement with Eildon.
Eildon must provide us with the following annual regulatory returns and alert us to notifiable events as appropriate:
- Annual Assurance Statement;
- audited financial statements and external auditor’s management letter;
- loan portfolio return;
- five year financial projections; and
- Annual Return on the Charter.
It should also notify us of any material changes to its Annual Assurance Statement, and any tenant and resident safety matter which has been reported to or is being investigated by the Health and Safety Executive or reports from regulatory or statutory authorities or insurance providers, relating to safety concerns.