Network Homes unveils £52 million surplus for 2016/17
Network Homes will report a net surplus for 2016/17 of £51.8M. Turnover was £223m, with an operating margin of 31%. Reserves increased by £60M to over £327M and Network now has a development pipeline of 3,200 homes.
The surplus is lower than our exceptional result for 2015/16, largely due to a significant reduction in the sales programme, absorbing the first year of the 1% rent cut, and making substantial investments in improving the business. However, it still represents the second largest surplus in our history and is line with expectations. The surplus will be fully reinvested in the provision of new affordable homes, maintaining existing homes, and better quality services for customers.
In 2016/17, we completed 468 homes and started 1,235 new homes. During the year we invested £152M (2015/16: £77M) in new development activity and existing homes. This included a substantial purchase of land for development of over 500 homes in the heart of the Southall Housing Zone and close to the new Southall Crossrail station, as well as investment in our first Build to Rent scheme of 270 homes, which will complete in 2017/18.
In 2016/17 we absorbed the cost of the first year of the government’s 1% rent cut with no impact on our development programme and invested substantially in improving our business and customer service. Overall resident satisfaction rose from 80% to 85% and is above the g15 average. Sickness and staff turnover both fell to below g15 average levels, indicating the strong engagement of our staff in supporting our social and corporate objectives.
Our Financial Statements for 2016/17 (2015/16 figures in brackets) show:
- Turnover of £223.5M (£311M)
- Operating margin of 31.1% (39.2%)
- A small improvement in social housing lettings operating margin to 25.5% (25.3%)
- An operating surplus of £69.5M (£122M), with a net surplus of £51.8M (£103.0M, after stripping out a one off 2015/16 FRS102 Accounting Standard beneficial adjustment of £52M)
- EBITDA MRI Interest Cover of 203% (356%)
- Gearing of 49% (49%)
- Housing assets of £1.5BN (£1.4BN)
- Increase in reserves of £60M to £327.2M
- Current borrowings of £745M (£711M)
- 3,200 homes in the development pipeline
Helen Evans, Network Homes’ Chief Executive, said “This year we have made important investments in our business and in our future development programme, while absorbing the impacts of the 1% rent cut. The Network Homes Board is committed to ‘sweating our assets’ within our resources so we maximise our contribution to tackling the housing crisis. We believe good homes make everything possible for our customers.
“In July 2017 we signed a Strategic Partner agreement with the Greater London Authority, which will maintain our momentum around providing new affordable homes. Network Homes is the smallest association to sign a Strategic Partner agreement, and it is testament to our record on new homes delivery and our strong relationship of trust with the GLA. Our ability to build at volume and willingness to invest surpluses directly back into new affordable homes was a crucial factor in being able to boost our bid to the GLA to achieve Strategic Partner status.
“Since the amalgamation of our social housing business into a single entity in April 2016 we have seen strong progress in how our key stakeholders perceive us. Our latest perceptions survey this year showed a real connection with the new Network Homes brand. 82% of key stakeholders would now recommend us as a development partner and 73% would recommend us as a housing service provider. Positive perceptions of every aspect of our business have risen in the last 18 months.”