Financially strong Metropolitan grows development pipeline in record surplus year
5 October 2016
| Corporate | News
Metropolitan has continued to build on its already strong financial position, reporting a record surplus of £77m* (2015: £60m) and an increased operating margin of 38.4%* (2015: 36.9%) for 2015/16.
The housing association’s financial strength – alongside its debut £250m bond, issued last September – has enabled it to grow its development pipeline, which is now on track to deliver new homes at a rate of 1,000 a year by 2017/18.
As well as its highest ever surplus and top-quartile operating margin, Metropolitan’s annual report for 2015/16 shows:
- An increase in turnover to £235m (2015: £230m)
- An increase in operating surplus to £90m* (2015: £85m)
- An almost doubling of available liquidity to £559m (2015: £293m)
Delivering new homes and investing in existing stock
During the year, Metropolitan invested £114m (2015: £113m) in buying land and building new homes. It delivered 371 new homes (2015: 456) and increased its development pipeline by 27% to 3,410 units by the end of the year (2015: 2,690).
The housing association also spent a record £58m (2015: £34m) in maintaining and improving its existing stock. This work included the refurbishment of hundreds of homes at Clapham Park in south London, Metropolitan’s largest regeneration project – taking the total number of refurbished homes on the estate to 740.
In-house contractor and housing management
In February Metropolitan launched its new in-house repairs service, Metworks, in the East Midlands. Its early performance has been encouraging, with a smooth handover from the previous external provider and a repairs first-time fix rate of 84% in its first calendar month of operation.
Rent arrears were reduced by £1.2m (2015: £1m) during the year. Metropolitan also recorded an improved performance in re-letting empty properties, reducing its total from 650 from 148. This was achieved through tighter internal processes and improved relationships with contractors.
Care and Support
Metropolitan’s Care and Support business continued to be self-financing during the year. Despite a challenging market of rising need and reduced levels of funding, it won £2.5m of new business in its areas of specialism: older people, mental health, and ‘short stay’ services which provide intensive support for short periods.
Metropolitan is committed to enabling its customers to live more independent lives. It measures its performance through the number of ‘independence steps’ it facilitates – these include, for example, supporting people to gain the skills necessary to get into employment or secure a better job; supporting older people to live independently in their own homes for as long as possible; or helping people on to the property ladder through shared ownership.
This year, the housing association enabled 7,282 independence steps (2015: 4,754) – including helping 428 customers into employment, 655 customers into less intensive care and support services, and 111 customers into buying their first home.
Ian Johnson, Executive Director of Finance at Metropolitan, said: “This has been another year of strong financial performance for Metropolitan. We obtained a debut credit rating, reflecting the progress we have made in improving the business; following that, we secured funding for our long-term development plans by issuing our debut public bond; and we adopted the new UK GAAP accounting standard FRS 102 to improve the quality and consistency of the presentation of our financial information.”
Forward looking statement
Brian Johnson, Chief Executive of Metropolitan, said: “This has been an excellent year for Metropolitan. We issued our first public bond and stepped up our investment plans, increasing our development pipeline with the aim of delivering more than a thousand homes every year by 2017/18.
“Surplus and margins are up on 2015 as we continue to focus on cost control, process efficiency and value for money. With our new in-house repairs contractor, Metworks, and a number of systems improvements implemented this year, we remain confident in the outlook for 2016/17 and, with more than £550m of available funds, we are well placed to deliver on our growth strategy.”
* Figures for 2015/16 exclude a one-off pension scheme adjustment of £9m.