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South West provider sees surplus fall by 22% due to COVID and interest costs
South West housing provider LiveWest has seen its surplus drop by 22% after mounting COVID and fire safety costs and a one-off interest swap hit its finances, accounts for the year to to 31 march 2021 have shown.
The housing association’s recognised surplus before tax fell from £59m in 2019/20 to £46m, which LiveWest said was due to it absorbing one-off costs of restructuring interest rate swaps of £9m as well as additional fire and coronavirus-related safety expenditure.
Fire safety spending totalled £7m during the financial year, with an additional £1m of COVID-related costs.
Gross turnover dropped by £5m, from £246m in 2020 to £244m in the latest results.
Operating surplus as a percentage of turnover stood at 30%, surplus excluding property disposals stood at 25%.
Operating costs rose from £178m to £182m for the year, with the extra costs mostly attributed to a £10m rise in interest payments and other similar charges.
The provider, which manages 37,820 homes predominantly in the South West of England, generated a £6m surplus from the sale of newly built properties – down £4m from the £10m reported in 2020. LiveWest noted that it generated a total of £20.5m surplus from property sales during the year, up slightly from £19.9m in 2019/20.
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The landlord built a total of 701 new affordable homes in 2021 – 211 of those were deemed social housing, 264 affordable homes and 226 shared ownership.
Shared ownership sales stood at £3.7m, with gross open market sales standing at £3.9m. Gross profit stood at £7.7m before falling to £6.3m after allowing for additional work on a historical scheme.
LiveWest said it had invested £100m in the delivery of its affordable housing programme during the year, compared with £167m in the previous year.
The association stated in its annual report that it concentrated on emergency repairs and safety checks during the beginning of the financial year due to lockdown, with the backlog of repairs subsequently cleared as the UK relaxed its coronavirus rules.
LiveWest spent £1m on personal protective equipment for staff and approved a £600,000 increase in hardship grants during 2021, with applications rising by 700% compared to previous years.
Rent arrears rose slightly from 1.9% in 2019/20 to 2% in the latest figures.
The association’s gearing ratio fell by 1% to 40%, with average net debt per dwelling standing at £23,710.
Melvyn Garrett, deputy chief executive at LiveWest, said: “Over the past 12 months, COVID-19 has brought unprecedented challenges and we are proud of how dynamic and resourceful we have been in responding positively to a rapidly changing environment.
“Our annual accounts show that we have been able to deliver a strong financial performance, delivering 701 affordable homes for rent and shared ownership and 84 homes for sale across the South West.
“This was below our budgeted number as a result of closing some of the sites during the early part of the COVID-19 pandemic. Since summer 2020 all sites have reopened, and we saw strong demand and robust margins for our shared ownership and outright sale homes.
“With a challenging external environment, we responded with exceptional agility – providing new services and supporting the well-being of our customers by identifying their needs and helping them to access the support they required.
“LiveWest has had a very strong operational and financial performance, delivering a surplus of £46m. The decrease in surplus (£59m, 2020) was largely as a result of increased investment in personal protective equipment and building safety and a £10m charge for restructuring interest rate swaps in line with our treasury strategy to reduce future costs of borrowing.”
UPDATE: at 16:14pm, 20/08/21 This article has been updated. The original article said that LiveWest surplus had fallen by 18%. The surplus had fallen by 22%.
