Circle posts £12.4m surplus

The group of nine housing associations reported a surplus after tax of £12.4 million in 2009/10 compared to a £15.5 million deficit in 2008/09.

The value of its fixed assets has increased by more than £170 million to £1.917 billion and group turnover has increased from £259.2 million to
£286.5 million. Excluding leasehold properties and garages, the group owns 55,558 homes, compared to 46,666 in 2008/09, largely due to two stock transfers.

Last July, Mercian Housing Association opted to join Circle Anglia, adding around 3,000 homes to the group’s portfolio while in March 2010 the group set up Merton Priory Homes to acquire Merton Council’s 8,500 homes. The moves mean Circle Anglia is now the third largest housing group in terms of stock owned in England, behind Sanctuary which has 60,776 and Guinness Trust, which has 56,082.

Calum Mercer, finance director at Circle Anglia, said the group had always used stock transfers to boost its number of homes.

Mr Mercer said: ‘It fits in very well because what we aim to do is to focus on local authority areas. When you complete a stock transfer you are one of the largest social housing providers in the area and it allows you to put real investment in and can offer more services, such as handyman services.’

The report is a contrast to some other large housing groups which have recently announced plans to rationalise their stock.

Genesis announced the sale of 800 homes in June, Servite (now Veridian) announced an 1,800-home rationalisation last October, while Home is to sell 6,000 homes - 10 per cent of its stock - in the biggest rationalisation ever seen.

Mr Mercer said: ‘With a stock transfer you actually have to go around and consult with residents and work with the local authority and persuade people it is a good idea and that it means they can get investment coming into their homes. It means you can get better procurement deals and more scope to do things, but growth is not an end in itself.’

Mr Mercer said the £27.9 million difference in deficit/surplus is largely due to a change in accounting practices that requires the value of assets to be counted in income and expenditure accounts rather than be spread over 100 years.

He said: ‘The real characteristic is that we will be delivering a surplus, but not a big surplus because we need to spend money.’

Mr Mercer said the group has the size and scale to go into other markets, and is rated, enabling it to do private placements. It issued a bond in October 2008 raising £275 million.

He said: ‘What this sector has shown is that even in the worst times it has been able to raise money, we have just under £2 billion of lending facilities overall.’