We are delighted to report a net surplus for 2015/16 of £155M.
The underlying net surplus is £103M, after stripping out the effect under the new FRS102 Accounting Standard of an adjustment resulting from the trade out of optionality on some of Network’s loans this year.
The £103M figure is more than double the net surplus for 2014/15. The surplus will be fully reinvested in the provision of new affordable homes, maintaining existing homes, and better quality services for customers.
Network’s Financial Statements for 2015/16 (2014/15 figures in brackets) show:
- A 64% increase in turnover to £311M (£189M)
- Growth in the operating margin to 39.2% (35.5%)
- An operating surplus of £122M (£67M), with a net surplus of £103.0M (£49.2M), after stripping out the one off FRS102 Accounting Standard conversion item
- Operating surplus on housing sales of £91.2M (£27.4M)
- Interest cover (excl. sales) growing 40% to 412% (294%)
- Gearing of 49% (57%)
- Housing assets of £1.4BN, including £579M of housing grant
- Current borrowings of £711M (£751M)
- 945 homes completed and handed over in the year
The increase in surplus is largely attributable to improved sales volumes and values. During the year Network sold 320 homes for shared ownership/shared equity and 239 homes for open market sale. We also brought 381 new affordable rented homes into management and completed five homes for market rent.
Gearing fell significantly, as expected, as we completed pipeline sales during 2015/16 and began to build our pipeline under the 2015-18 grant-funded programme, and overall debt per home owned fell from £40,000 per home to £36,000.
During the year Network invested £77M in new development activity and existing homes. In the last two financial years Network has invested £169M in new development activity and £58M in ensuring existing homes are maintained to a high standard.
In the past five years, Network has grown its operating surplus more than ten-fold and improved its operating margin from 22% to 39%.
Overall resident satisfaction rose slightly from 79% to 80% and satisfaction with repairs performance rose 10% in the year to 82%.
Helen Evans, Network Homes’ chief executive, said “Over the past three years we have made enormous improvements to our financial performance, while increasing resident satisfaction levels and putting in place effective governance and management structures. These excellent financial results show that Network Homes is now much stronger as an organisation than just three years ago and provide a strong platform for the future.
“Substantial surpluses are now crucial to maintaining good levels of affordable housing development. The government’s development funding model is predicated on housing associations generating additional income and receipts to cross-subsidise affordable development of all types. This, together with strong growth in house prices in our main areas of operation, means it is no surprise that surpluses have increased rapidly. Our surplus will be wholly reinvested in building new homes and maintaining existing homes and good quality services for customers.
“Network is successfully maximising its provision of new affordable housing. Pro-rata to our size, we are one of the biggest developers in the housing association sector. Maximising new affordable homes development within our resources is a key objective of the Network Homes Board."
Home ownership is a vital element of our development programme for the future. But we also want to continue building homes for rent to support people who cannot afford the market. This is a core part of our purpose as a housing association.Helen Evans, Network Homes’ chief executive