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Association reports £800k deficit
Incommunities made a deficit of £800,000 last year due largely to the costs of voluntary severance payments made to 92 staff.
The Bradford-based landlord, in its financial statements for 2015/16, reported a deficit of £800,000, compared with a surplus of £2.2m the previous year.
The accounts said performance has been adversely affected by a staff restructuring exercise to help the landlord cope with the four-year 1% annual social rent cut. The landlord paid £2.6m in voluntary severance to 92 members of staff. Incommunities estimated that if inflation is 2%, the rent cut will cost it £28m by 2020.
The statement said that although George Osborne’s rent cut announcement in the summer of 2015 was unexpected, Incommunities had modelled “adverse scenarios” and identified possible cost reductions.
It said: “This placed Incommunities in a strong position to activate certain plans, including those for restructuring its services. The subsequent implementation of these plans has included full employee consultations. As a result, a management savings plan was fully implemented for the start of the new financial year, commencing on 1 April 2016.”
The 21,000-home landlord’s results were also affected by a £900,000 impairment charge on properties and £900,000 in costs to acquire 1,100-home association Sadeh Lok.
Incommunities’ turnover increased by 5.4% to £103.2m, largely as a result of the Sadeh Lok acquisition in April 2015.
Incommunities is planning to simplify its structure by axing five subsidiaries. By 31 March it will dissolve development companies Lumia Homes and Incommunities Commercial, and three dormant subsidiaries of Sadeh Lok, leaving the group with six subsidiaries overall.
The landlord delivered 44 new homes in the year, most of which were through the Affordable Homes Programme 2011/15. It invested £21.8m in the year in refurbishing existing stock and developing new homes.
Incommunities is the latest housing association to report a deficit in part caused by exit payments to large numbers of staff.
Inside Housing last week reported that Sunderland-based Gentoo made compensation payments totalling £11.3m last year as it axed half of its executive team and 330 staff. Gentoo recorded a deficit of £8.8m.
An Inside Housing survey last year found 58.9% of 129 housing association chief executives said their organisations were likely to consider redundancies to cope with the rent cut.
UPDATE: at 11.14am 18.10.16
This article has been updated from an earlier version
