ao link
Twitter
Facebook
Linked In
Twitter
Facebook
Linked In

You are viewing 1 of your 1 free articles

Optivo’s surplus slides 79% amid valuation changes and rising costs

London housing association Optivo’s surplus fell by 79% in 2019/20 amid rising fire safety costs and valuation changes.

Linked InTwitterFacebookeCard
Optivo’s surplus fell by 79% in 2019/20 amid rising fire safety costs and valuation changes (picture: Getty)
Optivo’s surplus fell by 79% in 2019/20 amid rising fire safety costs and valuation changes (picture: Getty)
Sharelines

London housing association Optivo’s surplus fell by 79% in 2019/20 amid rising fire safety costs and valuation changes #UKhousing

The 45,000-home landlord’s audited results show that it made an £18m net surplus in the last financial year, down from £87.6m in 2018/19.

Much of the decrease in earnings was driven by movements in the fair value of Optivo’s financial instruments, which fell by £22.8m, and its investment properties, which fell by £5m having increased by £28.6m in the previous year.

Optivo said the COVID-19 pandemic has reduced the fair value of its student accommodation by £6.1m.

However, the association’s £46m surplus before fair value movements was still 24.6% lower than 2018/19’s return of £61m.

Its operating costs increased by £20m (9.8%) to £224m, while the cost of sales rose an additional £5.8m (30.2%) to £24.9m.


READ MORE

G15 landlord publishes ‘ESG Report for Investors’G15 landlord publishes ‘ESG Report for Investors’
Optivo ends last care contract to exit sectorOptivo ends last care contract to exit sector
South East social landlord records rise in surplus as turnover from social housing lettings fallsSouth East social landlord records rise in surplus as turnover from social housing lettings falls
UK’s largest social landlord records surplus increase of 9% amid rising operating costsUK’s largest social landlord records surplus increase of 9% amid rising operating costs

Rising fire safety bills and higher routine maintenance costs contributed to the increased operating costs, Optivo said, with service charge costs also growing £5m (22%) to outstrip income by £2m “mainly due to additional fire safety spend and fees yet to be recovered”.

Voids were also at a “much higher volume” in 2019/20 compared with the previous year, leading to a £3m increase in void loss, it added.

Bringing its repairs service in London fully in house “did not deliver savings as quickly as we planned” and will be a focus in 2020/21, Optivo admitted.

Overall per-unit costs were £4,425, up 4.2% from £4,246 in 2018/19.

The association’s operating surplus for 2019/20 was £90m, a 12.6% drop from the £103m achieved the year before. The operating margin was 23% – meaning Optivo missed its 28% target.

Turnover was £322m, a 2.5% rise from the £314m recorded for 2018/19. Of this, 92% was generated from social housing activities in 2019/20, compared with 94% the previous year.

Optivo uses a net promoter score to measure resident satisfaction. It achieved a score of 56 in 2019/20, four points below target, but it said it was considered “excellent” by independent customer satisfaction experts.

The association started 1,500 homes in 2019/20 – matching its target exactly and up from 1,003 in 2018/19 – and completed 838, all for affordable housing tenures.

Linked InTwitterFacebookeCard
Add New Comment
You must be logged in to comment.