Housing

Special report: pre-tax surpluses rise to almost £4bn overall

By 03/02/2021No Comments

Uncertainty was a theme throughout the narratives of housing associations’ 2019/20 financial accounts, as the sector began to prepare for the impacts of COVID-19. Chloe Stothart finds out more

Sharelines


Uncertainty was a theme throughout the narratives of housing associations’ 2019/20 financial accounts, as the sector began to prepare for the impacts of COVID-19. Chloe Stothart finds out more #UKhousing #SocialHousingFinance


Our complete analysis of the 2019/20 financial results for the HAs that hold the most units in their category across England, Scotland, Wales and Northern Ireland #UKhousing #SocialHousingFinance


Last year was tumultuous. While COVID-19 upended the world and Brexit changed Britain in numerous ways, the 2019/20 accounts for housing associations were more about bracing for the impact than feeling the effects of those two events.

The 2019/20 accounts cover only nine days of the first lockdown (and do not cover it at all for the handful of accounts with a December 2019 year end). Consequently, the numbers do not show much of the impact of COVID-19, but the pandemic still casts its shadow over the narrative part of the accounts.

Lee Cartwright, partner at Beever and Struthers, says: “The 2019/20 accounts made lots of reference to ‘uncertainty’ – and the potential impact on 2020/21 – including areas like rent arrears and voids, development costs and delivery and impairment, the sales market (prices and volumes), loan covenant performance, pension assets and liabilities, and valuation of investment properties.”



Unlike the COVID-19 pandemic, everyone knew Brexit was coming – although not what a deal might contain and when it might be done – so some businesses had already made changes in order to prepare. But again, much of the impact will be felt in 2020/21 onwards, such as labour availability and costs.

This report sets out financial results for the housing associations that hold the most units in their category across England, Scotland, Wales and Northern Ireland.

The definition of traditional and large-scale voluntary transfer (LSVT) associations in England for this report is the one used by the Regulator of Social Housing (RSH) in the 2019 global accounts. The RSH defines an association as LSVT when it obtained more than half of its units on the date of transfer from the transfer deal, otherwise it would be classed as traditional. It would also be categorised as LSVT if all its constituent entities were stock transfers.

The RSH has stopped using the mixed category, which used to be for groups containing both stock transfer and traditional entities.

In the past, Social Housing’s mixed category was for housing associations that either had a mix of LSVT and traditional associations in their group or had income from first tranche or market sales. However, this definition would now cover almost all associations in this report and so is no longer used.

All the housing associations in this report use the FRS 102 accounting standard apart from Sanctuary, which uses EU IFRS. It can produce some very different numbers, such as for interest cover and gearing, which are not quite comparable with those generated under FRS 102, so we have omitted them for Sanctuary Scotland. For Sanctuary Group, like other organisations in England, we have used the metrics it states in its accounts for the RSH’s value for money figures.

2019 data is taken from the 2019 accounts, so does not include restatements.

UK housing associations: audited accounts 2019/20 summary

Income and expenditure account Financial position statement Financial ratios
England Number of units Gross turnover, £m Operating costs, £m Operating surplus/turnover Interest payable, £m Surplus on sales, £m Pre-tax surplus, £m Pre-tax surplus/ turnover Assets total, £m Loans total, £m Per unit, £ Gearing, % EBITDA MRI interest cover
65 Traditional

1,912,675

13,722.78

10,646.41

22.42

2,125.76

726.91

2,441.28

17.79

133,011.29

57,588.05

30,109

51.7

129.2

65 LSVT

966,846

5,624.65

4,277.51

23.95

808.46

223.09

1,109.77

19.73

41,286.11

19,128.80

19,785

53.5

169.4

130 Total England

2,879,521

19,347.43

14,923.93

22.86

2,934.22

950.00

3,551.05

18.35

174,297.40

76,716.85

26,642

52.2

139.7

Income and expenditure account Financial position statement Financial ratios
Scotland Number of units Gross turnover, £m Operating costs, £m Operating surplus/turnover Interest payable, £m Surplus on sales, £m Pre-tax surplus, £m Pre-tax surplus/ turnover Assets total, £m Loans total, £m Per unit, £ Gearing, % EBITDA MRI interest cover
20 Traditional

97,562

614.55

471.71

23.24

62.27

1.30

84.08

13.68

5,751.32

1,656.83

16,982

31.5

205.3

5 LSVT

28,987

138.76

121.93

12.13

20.73

-0.51

18.07

13.02

1,040.98

379.87

13,105

48.6

74.5

1 Wheatley

61,349

357.06

271.57

23.94

71.93

0.67

244.62

68.51

2,803.45

1,498.44

24,425

63.7

134.0

26 Total Scotland

187,898

1,110.37

865.21

22.08

154.93

1.45

346.77

31.23

9,595.76

3,535.14

18,814

42.2

155.2

Income and expenditure account Financial position statement Financial ratios
Wales Number of units Gross turnover, £m Operating costs, £m Operating surplus/turnover Interest payable, £m Surplus on sales, £m Pre-tax surplus, £m Pre-tax surplus/ turnover Assets total, £m Loans total, £m Per unit, £ Gearing, % EBITDA MRI interest cover
20 Traditional

90,909

665.14

529.58

20.38

111.17

3.03

22.97

3.45

6,551.29

2,438.53

26,824

43.5

142.1

5 LSVT

45,285

241.61

201.45

16.62

22.64

12.29

-22.19

-9.18

1,359.31

433.93

9,582

51.1

208.1

25 Total Wales

136,194

906.75

731.03

19.38

133.80

15.33

0.78

0.09

7,910.59

2,872.45

21,091

44.5

153.1

Income and expenditure account Financial position statement Financial ratios
Northern Ireland Number of units Gross turnover, £m Operating costs, £m Operating surplus/turnover Interest payable, £m Surplus on sales, £m Pre-tax surplus, £m Pre-tax surplus/ turnover Assets total, £m Loans total, £m Per unit, £ Gearing, % EBITDA MRI interest cover
5

44,339

304.37

234.02

23.12

30.54

2.04

38.11

12.52

3,716.07

1,094.92

24,694

33.5

-20.3

186 UK total

3,247,952

21,668.93

16,754.18

22.68

3,253.50

979.40

3,936.71

18.17

195,519.82

84,219.36

25,930

51.0

139.5

Pre-tax surplus

The pre-tax surplus rose 15 per cent to £3.9bn for the 186 associations across the UK in this report. It grew for all categories of association apart from those in Wales, where the surplus fell 99 per cent overall. The largest rises in absolute and percentage terms were often down to mergers.

Peabody had the highest pre-tax surplus at £461m because of its merger with Town & Country in May 2019. Without the £347m gift on acquisition that came with it, the pre-tax surplus would have been £34m lower in 2020 than the year before. L&Q’s surplus, which was the second-highest figure, was also affected by the acquisition of Trafford Housing Trust.

Of the 186 associations in the report, 109 had a fall in their pre-tax surplus between 2019 and 2020, while 76 saw a rise. Nine of the 186 made a loss in 2020.

Pensions

One result of the pandemic economy that did show up in the 2019/20 accounts was the effect on pension provisions.

Under a change introduced in the 2019 accounts, associations record their contributions towards the deficit reduction plans of multi-employer pension schemes on their balance sheets. Previously, only local government pension schemes were included but from 2019 two major schemes in the sector – the Scottish Housing Associations’ Pension Scheme (SHAPS) and the Social Housing Pension Scheme (SHPS) – were also incorporated.

England: audited accounts of 65 largest traditional registered providers, 2019/20

Income and expenditure account Financial position statement Financial ratios
Housing association Number of units Gross turnover, £m Operating costs, £m Operating surplus/turnover, % Interest payable, £m Surplus on sales, £m Pre-tax surplus, £m Pre-tax surplus/ turnover, % Assets total, £m Loans total, £m Per unit, £ Gearing, % EBITDA MRI interest cover, %

A2Dominion

38,124

320.40

258.20

19.41

59.50

9.40

18.60

5.81

4,032.90

1,718.10

45,066

59.1

92.7

Accent Group

20,721

100.50

76.50

23.88

27.24

0.68

1.80

1.79

835.69

411.01

19,835

42.5

139.2

Accord

13,315

124.96

98.79

20.94

17.49

5.14

13.95

11.16

1,013.71

499.53

37,516

49.9

155.8

Anchor Hanover

53,908

522.22

460.45

11.83

27.16

-2.50

34.80

6.66

1,561.93

602.32

11,173

38.9

191.5

Bournville Village Trust†

3,951

28.71

22.56

21.43

4.46

0.55

0.85

2.97

183.70

92.55

23,423

59.0

181.0

BPHA

19,235

126.25

75.61

40.11

33.36

8.87

18.02

14.27

1,385.28

7.50

390

66.0

143.6

Broadland Housing

5,346

33.11

24.74

25.30

6.26

0.43

2.24

6.75

341.84

184.79

34,567

54.1

120.3

Catalyst

33,713

285.92

241.13

15.67

47.57

18.07

82.44

28.83

3,437.62

1,339.03

39,718

42.3

79.2

Clarion Housing Group

126,690

841.50

607.30

27.83

135.40

58.90

169.80

20.18

8,814.10

4,024.70

31,768

53.3

151.3

EMH Group

19,885

111.07

78.86

29.00

19.88

9.14

21.66

19.50

950.26

457.33

22,999

50.4

180.2

Equity Housing Group

4,842

25.63

20.89

18.49

2.36

2.75

5.15

20.08

220.60

55.31

11,422

25.0

169.0

Estuary Housing

4,617

42.17

35.26

16.38

7.40

0.15

-0.71

-1.68

442.87

208.90

45,245

53.8

122.5

Great Places Housing Group

19,376

120.90

86.38

28.55

23.58

3.94

17.21

14.23

1,236.17

543.40

28,045

46.8

150.0

Habinteg

3,420

22.54

16.91

24.98

2.55

0.65

3.75

16.61

207.16

38.00

11,111

17.7

186.0

Hastoe Group

7,669

34.07

22.63

33.59

11.17

1.03

1.48

4.33

444.12

245.46

32,007

55.0

131.0

Hexagon

3,962

37.00

31.07

16.02

4.69

1.51

0.41

1.10

522.61

210.03

53,011

41.7

140.1

Hightown Housing Association

6,818

85.54

60.01

29.84

11.75

1.89

15.75

18.41

847.99

505.51

74,143

60.7

201.5

Home Group

55,060

406.10

341.27

15.96

43.30

15.45

41.97

10.33

2,878.23

1,181.16

21,452

46.0

155.0

Housing & Care 21

21,072

192.26

160.18

16.69

26.02

0.00

17.31

9.00

1,513.91

570.19

27,059

40.0

123.0

Hyde

48,287

364.39

316.98

13.01

97.55

114.57

85.39

23.43

3,444.08

1,508.65

31,243

44.7

59.8

Irwell Valley Housing

7,664

35.54

29.11

18.08

6.13

0.54

0.96

2.69

336.23

143.77

18,758

42.0

90.0

Johnnie Johnson Housing

4,956

24.84

20.11

19.05

3.18

0.13

1.73

6.96

143.57

67.51

13,621

44.0

130.0

L&Q

105,262

915.00

732.00

20.00

119.00

64.00

413.00

45.14

13,624.00

5,528.00

52,517

51.0

119.0

Leeds Federated

4,407

27.57

20.71

24.89

2.65

1.05

5.47

19.83

223.82

55.95

12,695

24.8

331.0

LiveWest

35,483

248.55

178.96

28.00

28.51

19.87

58.81

23.66

2,339.12

900.06

25,366

41.0

251.0

Longhurst Group

23,608

153.82

115.25

25.08

28.45

3.47

13.73

8.92

1,335.11

700.37

29,667

50.2

138.2

Metropolitan Thames Valley

57,836

464.97

368.73

20.70

83.27

28.78

48.83

10.50

5,155.18

1,935.73

33,469

41.4

107.2

Midland Heart

33,489

200.93

139.70

30.47

23.17

24.83

63.85

31.78

1,726.15

529.04

15,797

28.1

268.0

Moat

20,962

141.68

103.45

26.98

20.96

11.84

26.65

18.81

1,688.72

544.81

25,991

35.0

177.0

Mosscare St Vincent’s

8,630

45.81

34.92

23.77

7.97

0.64

4.36

9.51

407.72

162.17

18,791

40.2

143.1

Muir Group

5,776

28.59

22.48

21.38

2.84

0.57

3.89

13.61

232.57

67.51

11,688

30.2

257.0

Network Homes

21,468

205.65

152.55

25.82

32.55

7.89

21.15

10.29

2,247.42

1,048.84

48,856

46.2

107.2

Newlon Housing Trust

8,042

91.00

61.69

32.21

18.97

6.98

17.34

19.06

1,223.98

578.66

71,955

48.7

118.3

North Star

3,734

20.38

14.84

27.19

3.03

0.17

2.71

13.29

211.47

92.64

24,809

43.0

194.0

Notting Hill Genesis

66,453

731.50

577.90

21.00

124.10

27.80

98.10

13.41

8,584.30

3,607.70

54,290

50.8

152.4

Nottingham Community Housing Association

9,589

77.17

60.15

22.05

10.98

5.98

13.22

17.12

656.54

294.30

30,691

43.3

186.0

Octavia Housing

5,126

58.67

49.16

16.21

7.64

2.95

8.65

14.74

595.55

222.13

43,333

37.3

163.2

One Housing

17,077

218.96

198.73

9.24

36.40

11.36

-8.60

-3.93

2,190.70

1,020.40

59,753

62.0

81.0

Optivo

45,406

321.98

249.08

22.64

47.98

17.43

18.01

5.59

3,400.47

1,485.06

32,706

46.0

150.3

Orbit

44,753

323.50

233.00

27.98

50.40

45.40

72.60

22.44

3,070.80

1,463.90

32,711

51.3

113.7

Origin Housing

6,959

55.92

43.02

23.07

12.95

1.96

1.18

2.12

943.13

380.73

54,710

46.3

100.0

Orwell Housing†

3,878

35.26

27.81

21.15

2.98

0.18

4.69

13.31

237.59

86.43

22,287

37.1

225.8

PA Housing

22,733

149.59

110.36

26.23

27.34

15.02

28.51

19.06

1,892.99

800.90

35,231

43.2

131.1

Paradigm

15,215

129.17

86.18

33.28

28.36

0.00

15.65

12.12

1,429.20

734.63

48,283

55.2

156.6

Peabody

66,364

662.00

505.00

23.72

75.00

40.00

461.00

69.64

7,470.00

2,797.00

42,146

39.0

101.0

Places for People

209,312

894.10

677.20

24.26

143.60

9.10

91.20

10.20

5,614.30

3,167.00

15,131

77.5

119.7

Platform Housing Group (Fortis Living)

45,510

257.12

160.42

37.61

49.98

10.74

57.88

22.51

2,671.01

1,167.54

25,655

43.5

203.0

Plus Dane

13,780

73.98

60.29

18.51

11.80

0.71

2.11

2.85

629.89

304.81

22,120

49.7

135.9

Radian

39,255

223.37

172.44

22.80

42.64

8.47

20.62

9.23

2,398.81

1,143.12

29,120

50.9

138.0

Regenda

12,967

70.70

60.56

14.35

8.57

4.30

0.16

0.23

548.81

264.45

20,394

40.0

98.0

Riverside

58,360

355.65

300.88

15.40

41.35

4.82

28.85

8.11

2,529.97

989.19

16,950

43.6

140.0

Salvation Army Housing Association

4,080

34.00

31.14

8.43

1.48

0.00

2.39

7.03

190.01

30.03

7,360

14.2

243.3

Sanctuary Group*

102,686

763.00

587.40

23.01

137.40

6.20

52.40

6.87

4,459.60

3,102.00

30,209

53.1

119.3

Shepherds Bush Housing Group

5,101

45.61

37.36

18.10

6.34

1.00

2.97

6.51

507.71

189.69

37,187

40.3

115.6

Southern

30,130

236.85

193.03

18.50

39.60

24.05

23.62

9.97

2,468.83

988.18

32,797

40.4

61.2

Sovereign

59,681

411.20

284.73

30.76

57.40

9.72

79.32

19.29

4,309.83

1,897.09

31,787

45.3

205.0

Stonewater

33,271

189.00

136.37

27.85

33.78

28.20

42.31

22.38

2,059.35

966.08

29,037

45.8

180.9

Swan

11,220

170.46

141.04

17.26

13.47

3.21

7.25

4.25

1,124.32

688.01

61,320

66.9

146.7

SYHA

5,799

48.21

42.32

12.23

5.34

0.77

1.37

2.84

338.40

141.99

24,485

44.0

148.0

The Guinness Partnership

64,039

359.40

272.20

24.26

62.20

11.00

38.30

10.66

3,638.30

1,374.80

21,468

39.9

130.8

Trident Group

3,634

34.20

29.20

14.62

3.03

0.11

2.13

6.23

170.66

80.90

22,262

46.8

202.3

Wandle

7,523

56.39

37.63

33.26

13.46

9.70

19.11

33.90

939.47

332.68

44,222

33.0

143.0

Westward

7,548

39.69

26.92

32.19

5.41

0.11

7.51

18.93

388.12

126.87

16,808

31.4

218.1

Yorkshire Housing

17,084

115.69

90.64

21.65

17.63

1.48

10.27

8.88

1,140.15

568.05

33,250

50.0

120.0

Your Housing Group

26,814

150.85

134.08

11.12

17.81

3.81

4.19

2.78

1,202.66

413.94

15,438

37.3

119.7

Total

1,912,675

13,722.78

10,646.41

22.42

2,125.76

726.91

2,441.28

17.79

133,011.29

57,588.05

30,109

51.7

129.2

Pension liabilities for accounting purposes are worked out in relation to discount rates on AA-rated corporate bonds on an association’s year-end date. Consequently the liabilities figure is a snapshot in time and very vulnerable to movements in corporate bonds on that date. Uncertainties about the impact of COVID-19 on the world’s economies at 31 March 2020 prompted some unusual movements in bonds and gilts, which reduced pension deficits in the accounts.

The total pension provision in the balance sheets was down 31 per cent in England, 68 per cent at the Scottish associations in the survey and five per cent for the 25 organisations looked at in Wales.

While that might sound like a good thing, it is just a temporary quirk. “Gilts and corporate bonds moved in different directions for the first time in my life, but they have moved back in line so I think accounting deficits will rise against this year,” says Ian Johnson, finance director at Metropolitan Thames Valley and chair of the
G15 finance directors’ group.

Additionally that bond market position on 31 March will have no effect on the actuarial calculation of pension deficits – on which contribution plans are based – because they are calculated differently.

Fire safety

Three years on from the Grenfell Tower fire in June 2017, spending on fire safety continues to be a major cost for some associations. It is not evenly spread, though, as those with tower blocks are most affected, such as stock transfer associations that inherited older tower blocks and city-based associations that built newer high rises.

Capital commitments

There was a rise in capital commitments where a contract had been signed but a fall in spending was authorised but not contracted, which might suggest a dip in near-term development spending.

David Eastgate, consultant director at Savills Housing Consultancy, says: “The large associations will do what they have always done, which is step back a bit now and step forward again when things pick up. The bigger drops in capital commitments are in the medium to small associations but it is down across the board.”

England: audited accounts of 65 largest LSVT registered providers, 2019/20

Income and expenditure account Financial position statement Financial ratios
Housing association Number of units Gross turnover, £m Operating costs, £m Operating surplus/turnover, % Interest payable, £m Surplus on sales, £m Pre-tax surplus, £m Pre-tax surplus/ turnover, % Assets total, £m Loans total, £m Per unit, £ Gearing, % EBITDA MRI interest cover, %

Alliance Homes

6,662

44.36

34.83

21.48

3.52

0.96

7.19

16.21

202.32

91.29

13,702

43.1

248.9

Aspire Housing

9,042

49.95

40.04

19.85

10.54

2.90

4.09

8.19

263.91

155.33

17,178

60.4

157.8

Aster Group

32,039

214.56

162.01

24.49

31.11

20.04

59.80

27.87

1,988.86

1,075.41

33,566

53.5

191.8

County Durham Housing Group (Believe)

18,386

66.11

49.80

24.68

5.93

3.26

13.81

20.90

241.91

115.00

6,255

47.8

100.0

Bernicia

14,480

75.42

57.30

24.03

6.79

0.73

11.96

15.86

531.61

141.72

9,788

24.9

228.7

Beyond Housing (Yorkshire Coast Homes)

15,077

73.65

58.28

20.87

9.23

0.95

7.16

9.72

400.03

210.00

13,929

51.2

179.0

Bolton at Home

19,140

91.27

83.20

8.84

5.32

3.82

26.64

29.19

349.97

54.54

2,850

12.5

-21.5

Bromford

44,480

270.82

191.71

29.21

42.96

17.31

48.82

18.03

2,673.21

1,238.02

27,833

40.0

163.0

Castles & Coasts

7,078

35.08

24.54

30.04

3.17

1.02

7.39

21.07

262.01

74.25

10,490

27.4

282.6

CHP

10,442

66.08

50.84

23.06

17.25

0.93

-3.76

-5.69

721.99

462.75

44,316

65.5

113.9

Citizen (WM Housing)

30,547

150.61

117.81

21.78

26.04

8.95

16.45

10.92

1,300.00

597.07

19,546

45.3

154.5

Community Gateway Association

6,625

31.26

23.12

26.04

4.07

1.29

5.38

17.22

197.70

83.48

12,600

43.4

220.0

Connexus (Shropshire Housing)

10,789

64.56

50.01

22.54

9.24

4.49

9.03

13.99

434.14

247.52

22,942

72.4

181.7

Cross Keys Homes

2,646

79.13

58.04

26.65

12.55

1.79

13.04

16.49

645.54

311.99

26,406

51.0

214.0

Curo

13,473

95.99

75.68

21.16

8.58

6.65

17.96

18.71

667.26

315.57

23,423

53.0

253.0

First Choice Homes Oldham

11,570

50.78

42.69

15.93

2.19

1.76

7.74

15.24

235.97

25.29

2,186

8.6

243.1

Flagship Homes

0

188.25

124.93

33.64

25.56

8.58

62.29

33.09

1,896.92

822.31

26,058

46.6

217.0

Freebridge Community Housing

6,824

31.35

25.51

18.64

2.18

0.65

4.34

13.85

134.21

52.50

7,693

34.2

409.7

Futures Housing Group

10,254

57.82

40.38

30.17

9.41

2.92

11.79

20.38

361.64

257.01

25,065

77.5

198.0

Gentoo

29,922

172.20

145.35

15.59

23.57

1.55

6.26

3.64

1,188.82

536.98

17,946

49.8

100.2

Golding Homes

7,912

57.30

46.36

19.10

6.42

1.37

8.98

15.67

519.65

237.66

30,038

44.4

239.0

Grand Union Housing Group

12,184

71.17

50.11

29.59

14.45

3.46

10.47

14.71

671.02

297.75

24,438

45.8

162.3

Greenfields Community Housing

8,907

48.02

31.96

33.44

6.36

-0.29

9.65

20.09

382.15

156.00

17,514

41.5

256.2

GreenSquare Group

12,255

84.94

65.22

23.22

17.51

2.29

4.92

5.79

889.88

459.95

37,532

50.0

139.0

Halton Housing Trust

7,311

40.02

32.02

20.00

6.74

1.23

2.56

6.39

214.71

138.62

18,960

78.0

120.8

Havebury Housing Partnership

6,793

42.14

29.91

29.02

8.60

0.28

3.94

9.35

379.00

202.96

29,878

54.0

159.0

Housing Plus Group

18,912

79.86

60.16

24.66

17.92

6.88

128.59

161.02

643.48

382.91

20,247

63.0

134.0

Incommunities

22,991

101.35

81.76

19.33

11.68

6.39

14.35

14.16

462.35

301.82

13,128

65.8

210.0

Jigsaw Group (Adactus Housing Group)

34,951

180.93

123.08

31.98

38.11

4.72

25.15

13.90

1,434.69

702.69

20,105

47.7

201.2

Karbon Homes

27,197

135.93

101.58

25.27

17.27

4.27

22.16

16.30

999.11

382.38

14,060

42.0

229.0

Knowsley Housing Trust

13,206

64.99

53.06

18.35

8.13

3.16

7.76

11.95

276.05

287.97

21,806

65.9

189.4

LHP

12,111

53.14

38.72

27.13

7.22

1.61

8.83

16.62

312.01

161.50

13,335

50.6

170.3

Livin

8,458

35.52

27.43

22.78

3.10

1.15

6.49

18.28

162.28

93.00

10,996

61.5

299.7

Magenta Living

12,675

65.73

65.94

-0.32

3.76

2.90

-0.13

-0.19

256.66

81.10

6,398

35.5

174.3

Magna

8,872

45.71

36.24

20.71

6.41

2.17

5.51

12.05

397.08

118.00

13,300

24.6

209.4

MHS Homes Group

9,284

67.87

42.66

37.15

11.53

0.65

11.30

16.65

628.88

291.34

31,381

47.1

228.0

One Manchester

12,244

60.27

45.98

23.70

7.95

4.27

12.67

21.03

304.02

155.94

12,736

54.3

159.6

One Vision Housing

13,407

64.16

49.61

22.68

8.51

1.39

3.30

5.14

303.52

213.48

15,923

77.6

112.3

Ongo

10,257

45.84

36.17

21.09

3.22

1.61

7.74

16.89

218.56

59.25

5,777

23.4

371.0

Onward Homes

35,094

155.76

129.08

17.13

14.67

2.45

17.16

11.02

1,194.05

301.68

8,596

23.2

210.3

Plymouth Community Homes

16,033

76.18

70.04

8.07

4.13

0.26

2.08

2.73

605.99

125.23

7,811

20.0

189.0

Poplar Harca

9,712

65.30

54.18

17.04

12.57

15.25

9.52

14.58

580.74

272.14

28,021

48.0

135.0

Progress Housing Group

10,295

79.89

62.97

21.18

7.91

0.17

9.38

11.75

548.43

236.79

23,001

44.0

259.0

Raven Housing Trust

6,982

48.48

34.59

28.65

7.90

2.02

8.50

17.54

394.96

244.61

35,034

68.9

164.0

Red Kite Community Housing

6,507

35.61

25.00

29.81

3.12

2.61

12.11

34.01

232.51

79.54

12,224

30.0

288.0

RHP

10,461

58.08

38.49

33.73

18.71

2.91

3.89

6.69

427.68

240.32

22,973

59.0

95.2

Rochdale Boroughwide Housing

12,704

58.27

46.00

21.06

3.26

4.11

13.29

22.81

194.23

42.60

3,353

9.0

332.0

Rooftop Housing Group

6,940

43.06

29.29

31.98

9.57

1.36

6.00

13.92

377.47

214.93

30,970

58.0

153.0

Salix Homes

8,663

40.19

31.39

21.90

2.11

3.66

6.69

16.66

238.82

63.33

7,310

41.0

-889.0

Saxon Weald

6,761

47.68

31.26

34.44

12.51

1.98

8.44

17.71

366.51

224.72

33,237

66.0

150.0

Selwood Housing

6,669

41.94

31.82

24.11

2.82

1.11

8.50

20.26

453.32

152.72

22,900

36.5

325.7

Settle (North Hertfordshire Homes)

12,310

64.12

44.49

30.62

10.75

0.44

14.66

22.87

465.23

265.34

21,555

58.1

182.3

Silva (Bracknell Forest Homes)

7,704

50.04

38.37

23.33

5.79

0.48

6.23

12.45

500.01

182.00

23,624

33.6

135.0

Soha Housing

7,006

54.86

35.50

35.28

10.22

1.62

10.21

18.62

600.52

239.99

34,254

39.7

193.0

The Wrekin Housing Group

13,608

92.09

67.96

26.20

69.97

3.67

41.91

45.51

726.27

523.23

38,450

71.9

157.3

Thirteen Group

34,043

185.66

150.89

18.73

10.43

2.87

19.79

10.66

1,219.71

339.30

9,967

24.0

200.6

Together Housing Group

36,528

182.67

153.48

15.98

25.46

6.30

15.71

8.60

1,197.67

599.71

16,418

54.6

129.4

Torus

39,145

195.49

143.41

26.64

11.07

5.81

48.59

24.85

1,066.59

294.87

7,533

23.9

345.0

Trent & Dove Housing

6,236

30.47

21.63

29.02

4.51

2.01

6.26

20.55

200.42

112.76

18,082

58.6

222.0

Vale of Aylesbury Housing

8,353

46.09

34.88

24.31

4.68

0.59

6.95

15.07

342.99

134.45

16,095

43.1

286.6

Vivid Housing

31,470

326.66

219.67

32.75

40.89

5.09

71.12

21.77

2,557.68

1,301.52

41,357

49.0

234.0

WDH

31,639

158.49

127.32

19.67

19.04

2.13

97.80

61.71

925.50

528.67

16,709

55.4

31.8

West Kent Housing Association

7,583

57.26

38.81

32.21

6.94

0.98

12.71

22.20

659.85

261.81

34,526

39.0

229.0

WHG

21,364

112.18

83.59

25.49

20.78

9.10

17.45

15.55

676.01

439.33

20,564

63.3

138.6

Wythenshawe Community Housing Group

13,633

63.99

59.40

7.18

4.60

4.08

3.17

4.96

379.85

114.91

8,428

29.0

180.3

Total

966,846

5,624.65

4,277.51

23.95

808.46

223.09

1,109.77

19.73

41,286.11

19,128.80

19,785

53.5

169.4

Arrears and funding

While the pandemic had little impact on many of the numbers in the accounts, they show the start of preparations made by finance directors in anticipation of the problems they might face.

Mr Johnson says: “There was a sense of not knowing what was around the corner, so people looked hard at arrears and there was a focus on cash and facilities.”

Arrears fell slightly in 2020, but debt rose eight per cent. Mr Johnson says that after a quiet period for deals at the start of lockdown, the market picked up again in the spring and summer.

“Investors saw housing as a safe haven so there was quite a lot of appetite, and HAs saw opportunities to get good deals. People were trying to make sure they are well financed,” he says.

LSVT

Gearing was slightly up overall for LSVTs in England.

Halton had the highest gearing of the LSVTs at 78 per cent but this was lower than the 80.8 per cent it had the previous year. Its debt rose £4.4m but the value of its properties rose £7.5m, driven by the development of new homes that it funded through cash, debt, grant and reinvestment of surpluses.

At the other end of the scale, First Choice Homes Oldham had the lowest LSVT gearing because its asset base had grown and debt fallen. It plans to develop more, first by using cash and later by borrowing, with gearing rising to 25 per cent by 2023/24.

Gearing for LSVTs was slightly higher than for other types of landlord because stock transfer organisations start out indebted as they borrow to improve properties as part of transfer promises. However, the debt eventually reduces and the difference in costs and gearing between transfers and traditional associations tends to disappear after about 12 years.

In its accounts Halton Housing added that its gearing would fall to 44 per cent if its properties were valued using EUV-SH rather than the much lower historic cost valuation.

Scotland: audited accounts of 26 largest RSLs, 2019/20

Income and expenditure account Financial position statement Financial ratios
Traditional Number of units Gross turnover, £m Operating costs, £m Operating surplus/turnover, % Interest payable, £m Surplus on sales, £m Pre-tax surplus, £m Pre-tax surplus/ turnover, % Assets total, £m Loans total, £m Per unit, £ Gearing, % EBITDA MRI interest cover, %

Albyn Housing Society

3,525

21.92

16.83

23.22

2.80

-0.04

2.26

10.33

289.75

83.39

23,656

30.3

170.8

Bield Housing & Care

5,381

42.85

38.13

11.02

0.40

-1.10

3.20

7.46

144.37

2.02

376

1.7

866.66

Cairn Housing Association

4,003

20.89

17.54

16.04

2.98

0.02

3.13

15.00

164.50

77.89

19,458

60.5

127.5

Caledonia Housing

5,573

31.46

25.39

19.30

3.99

-0.28

2.04

6.50

336.90

86.38

15,499

27.1

156.7

Castle Rock Edinvar

7,349

38.97

19.52

49.92

1.37

0.05

18.05

46.32

522.43

15.50

2,109

3.1

541.0

Clyde Valley Housing Association

4,150

21.55

14.92

30.77

4.25

-0.07

1.72

7.99

350.71

115.56

27,845

36.3

167.6

Govanhill Housing Association

2,854

43.46

28.69

33.99

0.55

0.00

14.28

32.85

115.22

17.20

6,027

16.2

-790.7

Grampian Housing Association

3,982

20.94

15.37

26.61

3.25

0.91

3.21

15.34

248.54

80.02

20,096

34.0

198.2

Hanover (Scotland) Housing Association

5,883

37.83

34.08

9.92

1.95

-0.16

2.14

5.66

178.09

34.95

7,837

24.6

237.8

Hillcrest Housing Association

9,015

57.06

47.22

17.23

7.47

-0.43

1.87

3.28

596.87

194.29

21,552

36.5

164.3

Home in Scotland

4,306

24.32

15.34

36.94

2.19

0.12

6.92

28.44

293.01

90.91

21,111

31.8

418.9

Kingdom Housing Association

5,031

34.39

25.33

26.34

4.50

0.27

5.32

15.48

491.07

150.04

29,822

35.3

227.7

Langstane Housing Association

3,076

15.89

12.24

22.96

1.92

0.08

1.76

11.06

155.07

45.10

14,662

30.6

226.7

Link Group

8,344

69.98

59.84

14.48

8.02

0.00

2.27

3.25

726.07

222.51

26,667

35.0

168.5

Maryhill Housing Association

3,054

13.46

11.80

12.30

0.88

0.00

1.03

7.67

67.12

11.39

3,730

19.3

100.11

North Glasgow Housing Association

5,433

24.47

23.52

3.89

0.91

0.01

0.07

0.28

118.66

26.56

4,889

27.4

91.8

Port of Leith Housing Association

2,959

22.07

17.66

20.00

1.88

1.58

2.62

11.89

221.98

55.41

18,727

28.3

308.2

Sanctuary Scotland*

6,946

35.91

17.27

51.92

9.30

0.00

9.42

26.22

340.96

245.27

35,310

0.0

0.0

Thenue Housing Association

3,124

17.10

13.59

20.49

1.70

0.32

2.11

12.35

162.21

38.45

12,308

25.3

194.4

West of Scotland Housing Association

3,574

20.03

17.44

12.94

1.96

0.03

0.64

3.21

227.79

63.99

17,903

29.0

136.6

Total traditional

97,562

614.55

471.71

23.24

62.27

1.30

84.08

13.68

5,751.32

1,656.83

16,982

31.5

205.3

Income and expenditure account Financial position statement Financial ratios
LSVT Number of units Gross turnover, £m Operating costs, £m Operating surplus/turnover, % Net interest, £m Surplus on sales, £m Pre-tax surplus, £m Pre-tax surplus/ turnover, % Assets total, £m Loans total, £m Per unit, £ Gearing, % EBITDA MRI interest cover, %

Argyll Community Housing Association

5,198

25.74

21.25

17.45

2.06

-0.16

3.13

12.15

176.61

52.05

11,912

35.1

-17.5

Dumfries and Galloway Housing Partnership

10,115

48.50

42.79

11.76

12.59

0.00

6.26

12.90

444.64

188.70

18,656

85.5

164.6

Hebridean Housing Partnership

2,233

12.64

10.00

20.92

0.34

0.42

1.91

15.08

102.64

4.91

2,198

5.3

-938.2

River Clyde Homes

5,688

28.02

28.47

-1.60

4.06

0.00

4.74

16.90

222.65

95.90

16,861

44.3

-30.7

Scottish Borders Housing Association

5,753

23.86

19.42

18.60

1.67

-0.76

2.04

8.55

94.44

38.30

6,657

51.5

30.1

Total LSVT

28,987

138.76

121.93

12.13

20.73

-0.51

18.07

13.02

1,040.98

379.87

13,105

48.6

74.5

Income and expenditure account Financial position statement Financial ratios
Wheatley Number of units Gross turnover, £m Operating costs, £m Operating surplus/turnover, % Interest payable, £m Surplus on sales, £m Pre-tax surplus, £m Pre-tax surplus/ turnover, % Assets total, £m Loans total, £m Per unit, £ Gearing, % EBITDA MRI interest cover, %
Wheatley

61,349

357.06

271.57

23.94

71.93

0.67

244.62

68.51

2,803.45

1,498.44

24,425

63.7

134.0

Total Scotland

187,898

1,110.37

865.21

22.08

154.93

1.45

346.77

31.23

9,595.76

3,535.14

18,814

42.2

155.2

Traditional

Gearing stayed steady at traditional associations. Places for People had the highest gearing at 77.5 per cent.

The group, whose activities include student housing and private rented homes, said the gearing calculation does not include its investment properties or investments in joint ventures, the surplus from which contributes to its affordable homes programme. Its gearing would be 56.8 per cent if these properties were taken into account, it said.

The associations with lowest gearing tended to be supported housing providers, both for-profit and not-for-profit. Some not-for-profit associations have low debt levels because they have done little development, while the lease-based for-profit providers have low debt levels but high long-term lease obligations (which are not included in the calculation) and low net book values because they rent rather than own their stock.

Scotland

Scotland’s largest association, Wheatley, had the biggest pre-tax surplus at £244.6m largely caused by its acquisition of Dumfries & Galloway Housing Partnership, which created a gain of £241m.

The deficit in 2019 was caused by losses on valuation of investment property, whereas those losses were offset in 2020 by the merger. The next largest was Castle Rock at £18m, up £1.4m on the previous year.

North Glasgow had the smallest pre-tax surplus of £68,000, down £284m on the previous year because of a fall in surpluses on the sale of fixed assets.

Wales

The lowest pre-tax surplus was at Newport City Homes, and was caused by loan breakage costs.

Pobl, Wales’ biggest association, had the highest pre-tax surplus of £12m – up by nearly £2m on a year earlier.

Wales: audited accounts of 25 largest RSLs

Income and expenditure account Financial position statement Financial ratios
Traditional Number of units Gross turnover, £m Operating costs, £m Operating surplus/turnover, % Interest payable, £m Surplus on sales, £m Pre-tax surplus, £m Pre-tax surplus/ turnover, % Assets total, £m Loans total, £m Per unit, £ Gearing, % EBITDA MRI interest cover, %

Ateb (Pembrokeshire HA)

2,879

25.90

18.74

27.66

3.26

0.11

5.14

19.85

245.72

88.81

30,849

40.0

209.97

Bro Myrddin Housing Association

967

5.35

4.26

20.35

0.72

0.00

0.38

7.15

64.19

19.85

20,531

34.2

226.5

Cadwyn

2,015

17.21

14.51

15.69

1.62

0.18

1.01

5.87

109.48

41.67

20,680

42.3

173.4

Cardiff Community

3,047

23.03

17.88

22.37

2.10

-0.03

3.58

15.55

206.53

63.86

20,957

36.3

347.1

Coastal Housing Group Limited

5,955

38.37

33.40

12.94

6.74

0.35

-4.25

-11.09

468.62

173.45

29,126

43.2

102.8

Cynon Taf Community Housing

1,879

11.70

9.40

19.65

1.07

0.02

1.21

10.32

104.87

30.11

16,027

30.3

214.5

Family Housing Association (Wales)

2,867

22.39

16.21

27.63

24.92

0.02

-18.71

-83.54

205.69

95.94

33,464

48.9

25.0

Grwp Cynefin

4,025

28.32

23.67

16.42

3.58

0.29

1.37

4.84

350.32

118.36

29,407

41.4

137.0

Hendre†

6,100

60.62

53.67

11.47

5.62

0.32

1.87

3.09

403.25

136.52

22,381

39.8

184.5

Linc-Cymru

4,699

40.94

35.43

13.46

5.71

0.00

2.46

6.02

398.94

168.57

35,873

51.8

103.9

Melin Homes

4,262

31.28

26.76

14.43

3.35

0.00

1.40

4.47

321.01

112.33

26,355

41.3

230.0

Merthyr Tydfil Housing Association

1,142

5.70

4.83

15.19

0.57

0.04

0.35

6.16

69.18

12.91

11,308

22.2

285.5

Mid-Wales Housing Association

1,994

11.01

8.16

25.89

2.37

0.00

0.60

5.43

146.60

63.08

31,635

51.9

118.7

North Wales

2,680

17.12

12.21

28.69

2.87

0.04

-3.69

-21.53

169.66

57.39

21,413

34.9

233.9

Pennaf Limited

6,048

46.07

35.64

22.62

7.57

0.94

3.96

8.60

441.08

204.77

33,857

50.0

137.8

Pobl Group

17,554

144.35

119.82

17.00

17.71

0.21

12.03

8.34

1,199.22

480.93

27,397

50.5

138.6

Taff Housing Association

1,492

12.25

9.56

21.97

1.60

0.00

1.24

10.11

121.49

40.66

27,254

38.7

216.7

The Cadarn Housing Group

3,142

18.77

13.63

27.38

2.70

0.00

1.68

8.97

223.14

75.53

24,038

36.4

233.5

United Welsh

6,148

37.58

25.92

31.02

8.12

-0.04

3.68

9.78

567.96

206.94

33,660

43.2

159.0

Wales & West

12,014

67.21

45.90

31.71

8.98

0.64

7.65

11.38

734.38

246.84

20,546

39.2

290.2

Total traditional

90,909

665.14

529.58

20.38

111.17

3.03

22.97

3.45

6,551.29

2,438.53

26,824

43.5

142.1

Income and expenditure account Financial position statement Financial ratios
LSVT Number of units Gross turnover, £m Operating costs, £m Operating surplus/turnover, % Interest payable, £m Surplus on sales, £m Pre-tax surplus, £m Pre-tax surplus/ turnover, % Assets total, £m Loans total, £m Per unit, £ Gearing, % EBITDA MRI interest cover, %

Bron Afon Community Housing Ltd

9,001

48.15

42.32

12.11

3.52

1.92

3.58

7.43

401.26

84.35

9,371

50.3

212.1

Cartrefi Cymunedol Gwynedd

6,332

36.41

26.61

26.91

3.36

3.04

-11.59

-31.81

188.55

95.54

15,089

57.4

476.4

Newport City Homes

9,659

49.78

44.14

11.33

4.44

2.90

-25.72

-51.67

198.25

92.17

9,543

62.5

243.9

Tai Tarian (NPT Homes)

9,483

51.12

38.88

23.95

7.59

2.38

6.60

12.90

376.40

90.42

9,535

45.7

87.88

Trivallis (RCT Homes)

10,810

56.14

49.49

11.85

3.73

2.05

4.94

8.81

194.86

71.44

6,609

41.9

165.01

Total LSVT

45,285

241.61

201.45

16.62

22.64

12.29

-22.19

-9.18

1,359.31

433.93

9,582

51.1

208.1

Income and expenditure account Financial position statement Financial ratios
Total Number of units Gross turnover, £m Operating costs, £m Operating surplus/turnover, % Interest payable, £m Surplus on sales, £m Pre-tax surplus, £m Pre-tax surplus/ turnover, % Assets total, £m Loans total, £m Per unit, £ Gearing, % EBITDA MRI interest cover, %
Total Wales

136,194

906.75

731.03

19.38

133.80

15.33

0.78

0.09

7,910.59

2,872.45

21,091

44.5

153.0

Northern Ireland

The five Northern Irish housing associations covered in this report saw a 15 per cent rise in their pre-tax surpluses.

Choice and Radius – which between them own more than half the homes of the five associations from the region covered in this report – had almost two-thirds of the pre-tax surpluses.

Future

The 2020 figures show little of the impact of COVID-19 because they barely touch the period of lockdown.

The 2021 accounts will cover the lockdown periods, but accountants and finance directors say the data is not as affected by the pandemic as might be expected.

Beever and Struthers’ Mr Cartwright says that government funding support for jobs and businesses has cushioned the blow to the 2021 finances.

“Generally everybody has said income is holding up, arrears are holding up and they are outperforming the revised budgets prepared as a result of COVID. So I think the impact will be next year rather than this year,” he says.

As the chancellor looks for ways to repair the public finances, there is concern about what this might mean for rent levels in affordable housing.

Aaron Keyte, associate director at Savills Housing Consultancy, says: “We have certainty on rents at the moment, but the rug has been pulled before so there is no guarantee the government won’t be looking at ways to reduce the housing benefit bill.”

He says the possibility of a rent freeze or even a cut is one that housing associations should stress-test.

Financially, 2020 – and even 2021 – may turn out to be the calm before the storm for housing associations.

Northern Ireland: audited accounts of five largest housing associations, 2019/20

Income and expenditure account Financial position statement Financial ratios
Housing association Number of units Gross turnover, £m Operating costs, £m Operating surplus/turnover, % Interest payable, £m Surplus on sales, £m Pre-tax surplus, £m Pre-tax surplus/ turnover, % Assets total, £m Loans total, £m Per unit, £ Gearing, % EBITDA MRI interest cover, %

Apex

6,094

54.8

45

17.8

7.57

0.44

1.0

2

733

228

37,482

32.95

166.55

Choice Housing Ireland

10,632

75.3

55

26.8

9.03

1.31

12.0

16

1,065

380

35,731

48.06

-771.15

Co-Ownership Housing

9,160

48.9

40

18.6

1.19

-0.32

7.0

15

485

156

16,976

36.20

825.13

Clanmil

5,333

37.4

25

33.1

5.59

0.78

7.0

18

544

170

31,816

33.20

271.39

Radius

13,120

87.9

69

21.5

7.17

-0.17

11.0

13

888

161

12,304

19.04

313.20

Total Northern Ireland

44,339

304.4

234

23.0

30.50

2.04

38.1

13

3,716

1,095

24,694

33.00

-20.26

Notes and definitions for tables

Total turnover = income from all activities, excluding joint ventures

Operating surplus/turnover = operating surplus (operating costs plus costs of sales/turnover) as a percentage of turnover

Pre-tax surplus/turnover = pre-tax surplus as a percentage of turnover

Total assets = fixed assets plus current assets

Debt per unit = total loans, bonds, finance leases and intercompany debt divided by units

In England, EBITDA MRI interest cover and gearing are taken from the RSH’s value for money metrics in each HA’s accounts. They have been calculated for those in England that did not state a figure and for HAs in Wales, Scotland and Northern Ireland as follows: gearing = debt/net book value of housing. HAs carrying properties at valuation will not have any amortised grant.

HAs with LSVT-type finance will usually have planned high levels of debt relative to assets including mixed groups with a significant LSVT presence

EBITDA MRI interest cover = (operating surplus – surplus on sales of fixed assets – amortised government grants – government grants taken to income) + interest receivable + total depreciation charge for period – capitalised major repairs and improvements/capitalised interest + interest payable

HAs carrying properties at valuation will not have any amortised grant

* Sanctuary was the only association to adopt EU IFRS rather than FRS 102. In England its gearing and EBITDA MRI interest cover figures are taken from its accounts. We have not calculated them for Sanctuary Scotland because it uses EU IFRS rather than FRS 102.

Source of data: Audited accounts for year ended March 2020, except () = December 2019

Source

© 2020 Skilled Careers. All Rights Reserved,

Register, apply, success. Find your next job.