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Orbit warns targets ‘under review’ due to pandemic threat
Orbit has warned its future targets are “under review” due to the coronavirus crisis despite a healthy bounce back in annual surplus.
The 45,000-home landlord, which operates across the Midlands, the East and South East England, reported a post-tax surplus of £72.6m in the year to the end of March 2020 – a 77% jump on the prior year. The previous year’s surplus was hit by £28m of loan costs.
In 2019/20, Orbit reported a 20% jump in the number of new homes built to 1,520, of which 35% were for affordable or social rent. Nearly a fifth of homes built, a total of 269, were for market sale – up 43% from the previous year. A total of 581 shared ownership homes were built, up from 309 the year before, representing an 88% jump.
In May, Orbit had its credit rating downgraded from A2 to A3 by ratings agency Moody’s because of its large development programme and exposure to market risk.
In its annual report the group said it remained committed to building new “environmentally conscious” homes and upgrading existing properties.
However, it warned that its “future targets are currently under review as we respond to the coronavirus pandemic”.
Writing in the annual report, chief executive Mark Hoyland said: “Recent events have brought unprecedented commercial and practical challenges for everyone.”
He added: “As Orbit’s activity levels return steadily to normal through a phased remobilisation programme, we will capitalise on the strong platform we have established by embracing new technologies, skills and partnerships.”
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Fellow landlords have been forced to scale back their development targets for the current financial year due to the impact of construction sites being closed during lockdown.
In July, Orbit revealed it had struck a “long-term” deal with modular specialist Ilke Homes.
The landlord’s turnover rose 2% in the year to £323.5m, while its operating margin hit 40% – up from 36.8% the previous year. The group said the margin increase was in part due to “cost control measures”, while its profits from the sale of housing rose 50% to £45m.
Turnover from social housing lettings edged up to £222m, representing 69% of total revenue.
Rent arrears fell from 3.8% the prior year to 2.9%, which Orbit said was due to “improved cash collection processes”. Gearing was broadly stable at 51.3%.
On fire safety, Orbit revealed that it has budgeted to spend £5m in the current financial year for work required on the 27 buildings it owns over 18 metres, in anticipation of new building safety regulations. In total, the association invested £82.2m in its stock though repairs, maintenance and compliance – up from £81m the previous year.
The group reported £1.48bn of drawn debt, £297m of undrawn facilities and £87m cash in hand.
Jonathan Wallbank, group finance director at Orbit, added: “As we respond to the challenges created by the global coronavirus pandemic, our financial strength and resilience will help us maintain stability and continue to focus on our core objectives.”
