Wandle Housing Association 2021/22 Month 2 Management Accounts

Finance Department

July 7, 2021

[Cou

Table of Contents

Appendix 2

1. Introduction .................................................................. 2 2. Executive Summary ...................................................... 3 3. Statement of Comprehensive Income ......................... 4 4. Property Sales and Disposal ....................................... 6

5. Finance Costs & Investment Income .....…………….. 7

6. Capital Expenditure – Major Repairs ...………………..8

7. Appendices.....……………………………………………..9

1

10

Management Accounts – Exec summary for Month 2, 2021/22

Appendix 1 M2 Statement of Comprehensive Income Period ending 31 May 2021 Amounts in £'000 Category Turnover

Account Grouping Net rental & service charge income Other Income Sales - First Tranche TOTAL TURNOVER

Actual YTD

Budget YTD

Variance

Comments

7,243

7,206

675 602

581 1,375

95 Leasehold Extensions £50k & Repairs Insurance Payouts £31k (773) First tranche Sales - nets of with lower cost of sales below - giving a net favourable position (YTD) of £92k.

8,520

9,162

(642)

63,404

57,718

(436)

(1,301)

865 As per Sales - First Tranche

(7,788)

(4,034)

159 £81k additional Capitalisation. Vacant posts £78k (30) Mainly driven by higher than forecasted spend on customer communications 82 Timing differences to budget

(9,208) (1,184)

(9,188) (1,586)

(3,266)

(3,020)

(1,294) (600) (5,320)

(2,264) 0 (4,934)

(7,249)

(7,713)

(600) (8,635) (120)

306 (8,156) (327)

Cost of Sales

Cost of development sales

Operating Costs

Net staffing costs Office Costs

(1,451) (217)

(1,610) (187)

Other Admin Costs

(412)

(494)

Housing Disrepair Legal Service Charges

(325) (224) (797)

(203) (100) (844)

Repairs & Maintenance

(1,322)

(973)

Bad Debts Depreciation Non-capital Development Costs

(98) (1,317) 0

(100) (1,389) 0

37 Broadly in line with Budget

Prior Year Actual (FY)

Budget FY 21.22

(122) Timing differences to budget (124) Substantial increases on 4 specific legacy cases. 47 Fire Risk Assessments - timing related variance on Service Charges. (349) Core overspend Major Works is driving the overspend on R&M. Full details of the cause and potential mitigations will be disclosed to IMG by the Head of property. 2 72 Timing differences to budget 0

50,410

48,688

4,763 8,230

4,404 4,625

Disposals Existing Properties

Disposals - Staircasing

1,474

151

1,324

Disposals - Void sales & Right to Acquire

3,133

1,729

1,404

1,224

0

7,363

12,670

Investment Properties

Gain/(loss) on revaluation of investment properties

0

0

0

0

0

OPERATING SURPLUS

6,530

3,840

2,690

26,727

29,472

(20)

1. Introduction Recommendations

The Board is invited to note the financial performance for the 2month period ending 31 May 2021.

Timing differences to budget, settlements forecast for M3 Timing differences to budget, settlements forecast for M3

(1)

19

(1,989)

(2,318)

Other Financing activities Taxation & Other

(45) 0

187 0

SURPLUS FOR THE YEAR (excl. changes FV effective hedge)

4,496

1,729

(2)

0

Funding Costs

Interest Receivable Interest Payable

check

113

124

(14,105)

(14,606)

(232) 0

1,121

1,157

2,767

13,856

16,148

0

0

329 Immaterial Variance to Budget

9

2

2. Executive Summary 2.1

6. Capital Expenditure – Major Repairs

Total surplus for the period was £4.5m, £2.8m ahead of the budget. The additional surplus can mostly be attributed to disposals of existing properties. £1.4m for empty home sales occurring one month earlier than expectation and £1.3m for Staircasing transactions.

2.2

There were no lender covenant breaches for the period ended 31 May 2021.

2.3

Whilst the Net surplus excluding disposals is broadly in line with expectations, results include the following variances:

6.1

Capital spend on major repairs for the 2-month period ending 31 May 2021 was £0.1m.

6.2

The component budget for the year is £7.5m.

M2 Budget Surplus £1,729k Increases to Surplus: - Positive variance to net rents - Other income -

First Tranche Share ownership sales occurring earlier than expectation Disposals – Staircasing Disposals – Empty Properties Financing Costs

Offset by reductions to Surplus: Operating cost additional spends

£ £

37k 95k

£ 92k £1,324k £1,404k £ 78k £3,030k

£ 265k

M2 Surplus £4,494k 2.4

Repairs and disrepair legal fees remain a key cost to monitor.

3

8

5. Finance Costs & Investment Income

3. Statement of Comprehensive Income Summary Statement of Comprehensive Income

5.1

Net Financing costs of £2.034m are broadly in line with budget.

M2 Period ending Amounts in £ 000

31-May-21 YTD Actual

Turnover Cost of Sales Operating Costs Disposals - Existing Properties Operating Surplus Operating Margin Operating margin (excl. disposals) Funding Costs & Gift Aid Total Surplus (excl. changes FV ineffective hedge) Net Margin

YTD Budget

Variance

8,520 (436) (6,164) 4,608 6,528 76.6% 22.5%

9,162 (1,301) (5,899) 1,879 3,841 41.9% 21.4%

(642) 865 (264) 2,728 2,687 34.7% 1.1%

(2,034)

(2,112)

78

4,494 52.7%

1,729 18.9%

2,765 33.9%

See appendix 1 for detail Statement of Comprehensive Income Report

3.1

Overall turnover achieved to date is £8.5m, £0.6m behind the forecast position.

3.2

Net rents are broadly in line with expectation. The negative variance to turnover is due to lower than expected First Tranche Shared Ownership sales values, however increased margins with lower sales for the period are due to higher margin homes selling ahead of lower margin homes. Albany Apartments, which are currently being sold, will generate a higher margin than Handcroft Road and Russell Hill which will be sold later this year (due to increased building costs).

3.3

Total operating costs were £265k higher than budget. There were increased spends compared to budget for: -

7

Repairs/Service charges (mainly responsive repairs) £302k

4

FY

(3

(1

-

Disrepair Legal £124k Office Costs (additional customer communications) £ 30k Housing costs (timing differences to budget) £122k

4. Property Sales and Disposals 4.1

Net staffing costs lower than budget (due to vacant posts & additional costs capitalised for Stream) £159k Other Admin costs (timing differences to budget) £ 82k Depreciation (timing differences to budget) £ 72k

First Tranche Sales Year to date, the sale of 3 units has generated £602k proceeds and achieved a £166k surplus (margin 28%), £92k greater than forecast. Increased margins with lower sales for the period are due to higher margin homes selling ahead of lower margin homes. Albany Apartments, which are currently being sold, will generate a higher margin than Handcroft Road and Russell Hill which will be sold later this year (due to increased building costs).

4.2

Disrepair legal costs were £124k higher than forecast due to higher than anticipated values required to settle legacy cases carried forward from last year. The repairs team believe the full year budget is still sufficient for now.

Staircasing Year to date there are 11 transactions which have generated a surplus of £1.5m, £1.3m higher than the budget. Full year budget has been met and exceeded by £0.25m.

4.3

Void property disposal & Right to acquire.

-

Overspends noted above were offset by: -

-

3.4

3.5

Repairs remain a focus item. M2 cost is £349k higher than expectation. Management are aware of pressure on this area to manage the full year forecast.

3.6

Our financial covenants continue to be met and are within Golden Rule limits.

Year to date sales of 5 void properties have generated a surplus of £3.1m, £1.4m higher than the budget.

Please refer to Appendix 2 for full details of all sales activity

5

6