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December 2018 Special Report Preview: Special report: Pre-tax profit margins fall for the first time in years

Rent reduction may shed light on drop fall in pre-tax surplus margin.

Special_report_-_December_accounts_digest_1.jpg
Special_report_-_December_accounts_digest_1.jpg

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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UK housing associations: audited accounts 2017/18 summary

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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