Rent reduction may shed light on drop fall in pre-tax surplus margin.
The pre-tax profit margins of the UK’s largest housing associations fell in 2018 after several years of growth.
The pre-tax surplus of associations fell in all nations of the UK: by 27.7 per cent in Wales, 43 per cent in Scotland, 24 per cent in Northern Ireland and just under 10 per cent in England.
This meant pre-tax margins also dropped: by 3.6 points to 7.9 per cent in Wales; by 7.7 points to 8.9 per cent in Scotland; by 3.9 points to 9.9 per cent in Northern Ireland; and by 2.8 points to 18.7 per cent in England.
The margin of the 188 associations in the report fell from 18.9 per cent to 17.7 per cent between 2016/17 and 2017/18. The fall reflected a drop of nearly 12 per cent in the overall pre-tax surplus to £3.6bn in 2018 although turnover rose 3.3 per cent to £20.2bn.
Seventy-eight associations of the 132 in England analysed for this report saw a fall in their pre-tax surplus and five made a deficit.
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Income and expenditure account | Balance sheet | Financial ratios | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
England | 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 |
57 Traditional | 1,406,623 | 10,117 | (7,360) | 27% | (1,403) | 413 | 2,076 | 21% | 90,960 | 37,778 | 26,857 | 43% | 193% |
32 Mixed | 803,439 | 5,116 | (3,590) | 30% | (742) | 266 | 807 | 16% | 42,932 | 18,237 | 22,699 | 43% | 206% |
43 LSVT | 544,839 | 2,972 | (2,125) | 29% | (399) | 143 | 533 | 18% | 19,558 | 9,582 | 17,587 | 49% | 243% |
132 England total | 2,754,901 | 18,205 | (13,075) | 28% | (2,544) | 822.1 | 3,416.1 | 19% | 153,451 | 65,597 | 23,811 | 45% | 213% |
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