EHA Audited Financial Statements - Year Ending 31 March 2022
We're pleased to publish our Report and Financial Statements for the year ended 31 March 2022.
Overview
Our Principal Activities
Our principal activities are the development, management and maintenance of good quality social, affordable and market rent housing, and the provision of care. Care is provided to clients in a number of settings ranging from their own home through supported living schemes and warden managed accommodation, to registered homes providing 24-hour care. Our registered homes are primarily for clients with learning disabilities. We provide additional services in Southend at our Customer Office including a Housing Office alongside a Family Centre staffed by Southend Borough Council.
Our Board considers that Estuary Housing Association Limited (EHA) (us, we) is a public benefit entity. We are a Registered Society under the Co-Operative and Community Benefit Society Act 2014 and are therefore registered with the Financial Conduct Authority (FCA).
We were founded in the 1970s and registered with the Housing Corporation in 1984. Our regulator is the Regulator of Social Housing (RSH), which is an executive non-departmental public body, sponsored by the Department for Levelling Up, Housing and Communities and Local Government. We have charitable status and rules. Note 16 of the financial statements provides further information on our constituent members.
Financial Summary Year Ending March 2022
As a Group, we are reporting a turnover of £42.1m (2020/21: £39.8m), an operating surplus of £10.9m (2020/21: £6.5m), surplus for the year of £10.0m (2020/21: surplus of £0.7m) and a comprehensive gain of £12.1m (2020/21: loss of £2.4m).
Our turnover is £42.1m (2020/21: £39.8m). This is due to an increase in First Tranche Shared Ownership Sales of £2.6m from £3m in 2020/21 to £5.6m in 2021/22. The prior year, 2020/21, reflected a year where onsite developments were paused, and the property sales market was temporarily closed. It therefore reflected a year of reduced trade, compared to 2021/22 which reflected a full year of trade. Turnover from Social Housing Lettings has increased £0.7m from £28.8m in 2020/21 to £29.5m in 2021/22 due to new units being completed during the year and a rent increase of 4.1% being applied to the majority of our stock.
Our operating surplus is £10.9m (2020/21: £6.5m). Included within the operating surplus is the expense for remedial works at our high rise buildings totalling £1.1m (2020/21: £2.8m).
We achieved a surplus for the year of £10.0m (2020/21: surplus of £0.7m). Further to all notes above, included within this is a gain on the movement in fair value of investment properties of £6.4m, being £5.6m greater than the gain of £0.8m recognised in 2020/21.
Following the remeasurement of the movement in fair value of the SHPS pension obligation gain of £2.1m (2020/21 loss of £3.1m), we made a comprehensive gain of £12.1m, being £14.5m greater than the comprehensive loss of £2.4m in 2020/21.
As a result of the above remeasurement, our reserve balance has increased £12.1m from £63.2m in 2020/21 to £75.3m in 2021/22.
Group Members
Group member, Estuary Homes Design Limited, continued to deliver its development pipeline, generating a turnover of £8.1m (2020/21: £11.4m) in the year and a surplus of £0.02m (2020/21: £0.04m)
Group member, Accession Homes Limited, delivered profits before tax of £0.2m (2020/21: £0.09m) which was generated by the sale of land held within its portfolio, to a third party. Profits from this activity will be Gift Aided to Estuary Association, in order to cross-subsidise the development of further affordable housing.
The Group’s Business and Operational Overview
As a Group, we continued to face numerous challenges throughout 2021/22 given the uncertain economic climate and the continued effects of the Pandemic, as did many other Registered Providers. However, we are pleased to note that our Customers, People and Key Partners came together to help continue delivering the service provision that our customers expect, along with continuing to adapt and modernise our offering where required. The below paragraphs outline the key business and operational challenges that we faced as a Group, along with how we responded, and the impact the challenge had on the Business.
Building Remedial Works and Fire Safety
We have continued to focus on our Building Quality and Safety strategy by continuing to invest in building remedial and fire safety works during 2021/22. The safety of our customers is paramount and a top priority for the Board and Executive Team.
Building remedial and fire safety works is an area of significant importance and a risk throughout the Housing sector, however the Association has taken a proactive approach to ensuring its customers feel safe within their homes. This was achieved by focusing on remedial works at two of the Association’s high-rise buildings (18 meters+), and by proactively securing and receiving Government Grants of £4.2m from the Department of Levelling Up, Housing and Communities (DLUHC) during 2021/22.
A remedial project on these two buildings in now underway and is expected to cost £16.5m in total (2020/21: £15.8m). However, we successfully recovered £10m of this via insurance and litigation claims from 3rd parties during 2021/22.
Due to these insurance monies being recovered, it was later agreed that we would repay the Government Grant back to the DLUHC (after deducting legal costs) so it could be distributed to other Private Registered Providers who require it.
As a result, we are anticipating a net cash outflow of £6.5m (£16.5m expected costs less £10m recovered via insurance (excluding Legal and Waking Watch costs)) to complete the building remedial and fire safety costs at the two high rise buildings. Despite this, we are proud to state that it has not recharged its customers any building or fire safety costs.
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