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East Thames boosts surplus ahead of merger
An east London housing association has recorded its largest-ever surplus of £28m ahead of its planned merger with L&Q.
East Thames Group released its accounts this morning, which show turnover fell to £128.7m from £146.4m last year, due to a lower rate of open market sales.
The 15,000-home landlord raised £30m from sales this year, down from £49.4m, but increased its margin it makes in its sales business to 45% from 24%.
The landlord increased its operating margin – the percentage of cash left after running costs - to 27.8% from 25.6%, with the margin in its core social housing business 32.1%.
The landlord is in the latter stages of a merger with 70,000-home London giant L&Q, which is due to complete this year.
Simon Bass, finance director at East Thames, said: “Across the piece financially this was our best year ever. If you take out all the sales and just look at the underlying position, we doubled our surplus.”
East Thames turned over £91.4m from its core social housing business, with £28.5m coming from first tranche shared ownership sales and £1.5m from outright sales.
The organisation was downgraded by Moody’s last November, with the agency criticising its reliance on sales income.
Mr Bass said the organisation pursues a multi-tenure development programme, in common with many housing associations in London and would comfortably meet loan covenants without market sale.
He added: “The key thing for us is that nothing we are doing on the sales side is putting the core business at risk, and we are comfortable with the current level.”
UPDATE: The story was updated on 29.9.2016 at 5.45pm
