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London,
10
August
2015

Circle Housing announces strong and stable financial performance

Summary

Circle Housing, one of England’s largest housing associations, today publishes its financial results for the year ended 31 March 2015, and its annual report and accounts.

The 2014/15 full annual report and accounts are available online here, or by visiting www.circlegroup.co.uk.

Group financial summary

£m

2014/15

2013/14

Turnover

411.8

362.7

Cost of sales

(38.3)

(6.7)

Operating costs

(267.7)

(245.9)

Operating surplus

105.8

110.1

Operating margin

26%

30%

Surplus on sale of fixed assets

13.7

14.6

Net interest and other financial income

(76.8)

(79.6)

Surplus

45.5

44.5

Group financial highlights

  • Maintained a stable surplus of £45.5m
  • Improvement in net operating cashflow to £183.1m (2014: £162.9m)
  • Increased investment of £121.1m (2014: £97.4m) in the development of new homes, excluding grant support
  • Increased investment in repairs and maintenance of £129.6m (2014: £96.9m)
  • Turnover increased by 13.5% to £411.8m primarily due to an increase in shared ownership sales and intermediate rents
  • Gearing at 51% (2014: 50%)
  • Total value of Group’s properties on an existing use basis as social housing was £3,290.1m (2014: £3,185.5m)
  • Capital and reserves of £475.6m (2014: £441.5m)
  • Group net debt £1,818.7m (2014: £1,771.9m)

Operational highlights

Circle Housing

  • Reduced rent arrears levels to 2.6% (2014: 2.8%) despite economic challenges
  • Increased social housing activity, resulting in housing turnover of £380.7m (2014: £333.5m)
  • Completed 674 new affordable homes (2014: 381 completed)
  • Continued the £80m regeneration of Orchard Village in Rainham, London Borough of Havering, and extensive consultation around proposed regeneration in the London Borough of Merton

Centra

  • Continued to drive efficiencies in telecare, and care and support businesses with plan to return these to profitability during 2015/16
  • Acquired 19 support contracts, funded by Kent County Council, from Amicus Horizon bringing in 350 new customers
  • Began decommissioning contracts that did not meet return targets
  • Focused on integrated care to prepare for the Better Care Fund
  • Harnessed technology to offer new products and services at lower cost, including a mobile telecare solution, Vega and out-of-home support technology, the Limmex Emergency Watch

Group

  • Made good progress in implementing our repairs and maintenance improvement plan, resulting in much improved service levels for customers
  • Maintained investment in social value activities of £3.3m to deliver over 15,000 customer interventions, helping them to become more financially resilient and independent and easing pressure on public services
  • Delivered a social return on investment of £33.6m, equating to a 10x return for every pound invested using an improved methodology, which achieved the Level 1 Social Value Quality Mark, the only UK recognised Quality Standard for social value accounting
  • Strong and stable performance in a difficult economic and market environment

Sir Robin Young, Chairman of Circle Housing said: “Our vision is to provide people in need with greater opportunities for independent, affordable and secure living. We use our surplus to replace government subsidies and reinvest it in development, regeneration and supporting our customers to become more financially resilient and independent.

These results show the Group is financially secure, with a stable surplus and strong liquidity position. In spite of additional financial challenges from the introduction of Right to Buy and a 1% cut in rental income, we are in a strong position to tackle these and will take all the necessary steps to remain financially strong and secure.”