RHP Group reports a surplus of £11.9m
The RHP Group is pleased to report a surplus for the year to 31 March 2016 of £11.9m on turnover of £53.5m with RHP generating £11.1m of this and our subsidiary Co-op Homes the remaining £0.8m.
In terms of day-to-day operations the Group generated an operating surplus of £21.7m which represents a margin of 41% - our operating surplus and margins have been rising year-on-year since 2012, our core operating surplus is now £6.5m higher than it was in 2012 with our operating margin up from 36%. This reflects our focus upon actively managing the costs of delivering our core services which in turn creates more capacity to support investment in building new affordable homes.
The activities which have driven this financial result haven’t changed significantly with over 90% of our turnover and 97% of our operating surplus being generated from letting social housing.
We have used our operating surplus to invest £9.6m in improving the internals and externals of our existing homes and have paid £9.2m of net interest on our £230m debt portfolio.
In terms of our overall surplus the £11.9m this has been used to support the development of new affordable homes with £9.1m invested in new homes for rent and £1.7m on building shared ownership properties during the year. We completed 58 new homes during the year with completion of 85 more new affordable homes planned for 2016/17.
At the end of the year we held £70m of cash – effectively proceeds from our bond issue last year - £55m of this will be used to support the development or acquisition of homes which will add to our portfolio with £15m being used to repay some of our loan with Dexia which is due for repayment this year. We have debt facilities of £270m plus £35m of retained bonds which we could issue to investors, and have drawn £230m of this. So coupled with our cash balances the Group is in a strong liquidity position at the current time.
David Done, Chief Executive of the RHP Group, comments:
“We are all very pleased with the financial results for the year, a clear focus upon maintaining our financial strength whist at the same time enhancing the service experience for our customers through being easy to do business with is really important to us and we are committed to using this capacity to increase the number of new affordable homes we produce.”
Like all housing providers RHP has been considering how it could maintain its financial strength and capacity for developing new homes during a period of significant change in the external operating environment. In April 2016 we introduced RHPi which is a predominantly online service offer for new customers. Key features of this new home contract include; a home let in great condition, a 5 year fixed term tenancy, access to great online services, an essentials repair service and cashback at the end of the tenancy if the customer meets the conditions of the tenancy agreement and moves on to another home.
John Newbury, the Chair of the RHP Group comments:
“This new approach will reduce our operating costs by at least 15% over the next 3 years which will enable us to invest more into the provision of new affordable housing across West and South West London. We plan to invest over £250m over the next 8 years in the provision of new affordable homes. We also plan to maximise the impact of this investment in areas of huge demand for homes by offering home types and tenures that meet a range of acute local needs. This will be important for supporting the local and regional economy in the years ahead.”