www.pwc.co.uk Northern Ireland Housing Association Consolidated Accounts October 2013 1
Background to consolidated accounts NI data from published accounts Number of Northern Ireland 1 Associations Period covered Cost of Housing Stock (NBV) Number of people employed (FTE) England,Wales and Scotland data 2 3 4 5 2016 20 Associations 2015 23 Associations 2014 26 Associations 2013 26 Associations 2016 refers to years ends from 31 December 2015 to 31 March 2016 2016-3,297m 2015 3,075m (restated) 2014-3,275m 2016 2,982 2015 2,822 2014 2,959 Sourced from published global accounts for 2015 by regulators in each jurisdiction 2
The Total Number of Units under management has increased by 13.8% from 41,948 to 47,747 over 4 years with 1,673 new units in 2016. Number of Units under management 60000 50000 40000 30000 20000 10000 8129 7673 6804 3883 6095 3757 4052 4236 35,735 34,644 33,354 31,617 Equity sharing Rented - shared Rented - self contained 0 2016 2015 2014 2013 3
Average rent comparison There is limited information disclosed in most accounts to explain rent policy but average decontrolled rent has risen to 79 which is an average increase of 3.1% with a range of 1.5% to 4.85% based upon information from 15 Associations. Average rent increase 4.85 4.85 2.95 3 3 3.26 3.29 3.3 3.3 3.5 3.95 1.5 1.6 2.1 2.1 A B C D E F G H I J K L M N O Average Rent Increase 4
Key financial highlights Income & expenditure account 2016,000 2015 (restated),000 Turnover 282,829 257,194 Operating costs 215,940 199,192 Operating surplus 66,888 58,002 Surplus on sale of assets 844 1,125 Interest receivable 828 929 Interest payable 31,782 29,879 Surplus before transfers 42,443 26,966 Turnover up by 9.97% Operating costs up 8.4% Operating surplus up 15.3% Interest paid up 6.4% Surplus up by 57.4% 5
NI Consolidated Income and Expenditure trend 2013-14 to 2015-16 The sector has grown consistently throughout the period with turnover increasing by 39.3% over the 3 financial years with 20% reflecting impact of new SORP and an increase in operating surplus of 28.2%of which 3% reflects the impact of new SORP 300,000 250,000 200,000 150,000 100,000 50,000 0 2013-14 2014-15 2015-16 Turnover Op Costs Op Surplus Int Payable Surplus (before transfers) 6
Interest payable 2012/13-2015/16 Despite the small reduction in bank base lending rate, borrowing has increased, resulting in increasing interest payable from 2012/13 to 2015/16 and a steady increase year on year. 35000 INTEREST PAYABLE Interest payable 30000 25000 20000 15000 10000 5000 0 2012/13 2013/14 2014/15 2015/16 7
Average interest rates paid The sector overall average interest rate during 2015/16 was 7.83%, with average interest rates ranging from 0% to 16.3%. Excluding loans from the Departmental the average rate was around 5% Average interest rates paid 2015/16 18 16 14 12 10 8 6 4 2 0 Lowest Average interest rates paid 2015/16 Highest 8
Gross margin has increased between 2015 and 2016 and is only below 2014 levels due to the impact of the new SORP 2016 23.7% 2015 22.6% 2014 25.9% Gross margin increases The increase in turnover was not matched by an equal increase in operating costs in 2016. This led to an improvement in gross margin during 2016 compared to 2015. Gross margin is lower than the level recorded in 2013-14 reflecting the impact of grant treatment and new accounting for co-ownership sales. 9
Analysis of resources expended Depreciation has increased as a percentage of the total expenditure and other costs have fallen but overall expenditure has remained proportional year on year. Analysis of 2016 expenditure Analysis of 2015 expenditure Other costs 40% Wages & salaries 26% Other costs 42% Wages & salaries 26% Interest payable 13% Deprecia tion 21% Interest payable 13% Depreciat ion 19% September 2015 10
Employee Costs The sector now contributes over 60m through remuneration to the local economy. Between 2015 and 2016 staff numbers have increased by 5.7% whilst average remuneration has increased by 6.6% but only 0.5% when pension costs are excluded. Pension costs as a percentage of total remuneration has risen over the 5 years from 7% to 10.4%. Analysis of salaries and wages 2012 to 2016 70,000,000 60,000,000 50,000,000 40,000,000 30,000,000 20,000,000 10,000,000 0 18,023 19,245 18,939 19,920 21,233 2012 2013 2014 2015 2016 Salaries Social Security costs Pension costs Other 11
Key financial highlights Balance sheet 2016 000 2015 (restated) 000 Gross book value 3,788,162 3,498,449 Depreciation 490,766 422,986 Net book value 3,297,395 3,075,462 Cash & Short Term Investments Total assets less current liabilities 223,540 155,124 3,449,897 3,184,333 Long term loans 714,222 691,172 NBV up by 8.3% Depreciation up by 16% NBV up 7.2% Cash & ST investments up by 44.1% Loans up 3.3% 12
NI Consolidated Balance Sheet trend 2013-14 to 2015-16 The sector s balance sheet has grown over the past 3 financial years; GBV of housing is up 23.8%, net current assets are up 29% and cash and short term investments are up 72.3%. This growth has been sustainable through the underlying strength of the balance sheet. 4000000 3500000 3000000 2500000 2000000 1500000 1000000 500000 0 Balance Sheet 000s 2013-14 2014-15 2015-16 GBV Housing Net current assets Cash and Short term investment 13
Movement in NBV of housing properties the NBV in 2016 has increased as result of additions exceeding depreciation and impairments. Value in millions 3,400 3,300 3,200 3,100 3,000 2,900 2,800 2,700 2,600 3,276 3,297 3,044 3,075 2,845 2012 2013 2014 2015 2016 Source: Consolidated Accounts 14
The cost per house has increased between 2014 and 2016 to an average of 79k per unit 80000 Average GBV per unit 79000 78000 77000 76000 75000 74,100 79338 74000 73000 72000 74100 75931 71000 2013-14 2014-15 2015-16 Average GBV per unit 15
Borrowing is becoming an increasingly important source of finance rising by over 78m from 691m in 2015 to 769m in 2016. Total Borrowing* 2015/16 2014/15 640000000 660000000 680000000 700000000 720000000 740000000 760000000 780000000 *includes overdrafts, bank loans, TFHC bonds and other loans. Total Borrowing 16
Rental debtors have increased by 14.4% while bad and doubtful debts have only increased by 5%. This is in contrast to Great Britain where the impact of Welfare Reform has seen a sharp rise in the provision for bad and doubtful debts. 2016 000 2015 000 Change % Rental debtors - technical 5,370 4,647 15.6 Rental debtors non technical 6,112 5,695 7.3 Provision for bad and doubtful debts (3,920) (3,732) 5.0 7,562 6,610 14.4 October 2016 17
Northern Ireland ratios Working capital Current assets/ Current liabilities Gearing Borrowing plus pension liability/total capital and reserves 2016 2015 1.65 1.42 % % 22.87 22.41 Return Operating Surplus/Total assets less current liabilities % % 1.94 1.82 18
How do we compare to England and Scotland and Wales Number of Units managed England 2,647,395 Scotland 285,000* Wales 157,324 N Ireland 47,747 * As at 31 March 2015 19
Key financial highlights England m Scotland m Wales m Turnover 16,268 1,374 835 Operating costs 11,672 1,131 673 Turnover up by 4.2% Operating surplus 4,596 242 162 Operating costs up 9.2% Surplus on sale of assets 638 14 10 Operating surplus up 11.3% Interest payable 2,581 141 108 Interest paid down 1.2% Surplus before transfers 3,011 120 76 Surplus up 26.6% September 2015 20
Key financial highlights England m Scotland m Wales m Gross book value 138,077 12,950 6,290 Capital grant 44,886 7,795 3,017 Depreciation 9,580 150 418 Net book value 83,611 5,005 2,855 Cost up by 5.4% Capital grant up 1.7% Depreciation up % Total assets less current liabilities 93,915-3,235 Long term loans 50,858 3,563 2,293 NBV up 6.77% Loans up 1.0% September 2015 21
Our profitability margins are strong both at operating and net profit levels compared to peers Profitability ratios Net margin 9.1 8.7 15.01 5.4 Operating margin 19.4 17.6 23.65 28.3 0 5 10 15 20 25 30 Northern Ireland Wales Scotland England 22
Income has grown as a result of FRS 102, as UK mainland results reflect 31 March 2015 year ends. Interest payable growth reflects the growing need to privately finance development. 20 18 16 14 12 10 8 6 4 2 0 4.1 4.2 6.5 10 11 Growth ratios Percentage increase year on year 18.6 England Scotland Wales Northern Ireland 8 15.3 6.6 9.3 11.3 Income Operating surplus Interest payable 6.4 23
10 9 8 7 6 5 4 3 2 1 0 Borrowing has increased across all regions, reflecting lower interest rates and an increased investment in the sector. Growth ratios Percentage increase year on year 0.3 6.5 8.6 Long term loans 3.3 England Scotland Wales Northern Ireland 24
Debt servicing ability England 23,931 Wales 14,500 N Ireland 16,276 Debt per unit Borrowing per unit reflects increased borrowing as a result of lower interest rates and increased investment in property during the year. Gearing NI gearing is similar to Wales and has increased year on year. England 98.1% Wales 63.0% N Ireland 64.4% 25
In summary Sector well positioned financially with growth in surplus in current year of 15% compared to 8% in Wales, 18% in Scotland and 11% in England. Growth has been positive and so far it appears to be sustainable can this continue into the future? The surplus for the year allows the sector to take on additional borrowing and keep building and providing much-needed new homes. The indebtedness of the sector is rising and to repay this, and to achieve more affordable borrowing, surpluses are required. 26
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