Last checked at 29 Aug 2023 16:30
Publication of The Guinness Partnership Ltd.'s Financial Statements for the year ended 31st March 2023
Financial Statements are now available online: https://www.guinnesspartnership.com/about-us/company-publications/
The Guinness Partnership Group | 2023 | 2022 |
Financial Metrics |
|
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Turnover | £540.3m | £388.2m |
Surplus after tax | £46.4m | £41.4m |
Operating Surplus | £98.5m | £96.6m |
Operating margin | 18.3% | 24.9% |
Operating margin - social housing lettings | 22.1% | 24.5% |
Investment in existing homes | £177.5m | £143.1m |
EBITDA-MRI interest cover | 107.8% | 98.1% |
EBITDA interest cover | 238% | 193% |
Total Reserves | £1,047m | £958m |
Gearing (net debt as % of housing properties at cost) | 38.2% | 40.8% |
Other Metrics | ||
Homes managed | 64,709 | 64,326 |
Homes under construction | 4,113 | 3,319 |
New homes completed | 814 | 410 |
The Group generated an overall surplus of £46.4m for the year ended 31 March 2023, an increase of £5m compared to the prior year. Group turnover has increased to £540.3m (2022: £388.2m) and the overall surplus represents a net margin of 8.6% (2022:10.7%).
The surplus generated by core social housing operations has decreased by £3.2m to £79.1m (2022: £82.3m). A surplus of £16.0m (2022: £0.1m) was generated from sales of 299 new homes on the open market, and a surplus of £2.3m (2022: £2.1m) from the sale of the first tranche of 261 shared ownership homes. A further £10.8m (2022: £18.6m) was generated from the sale of our existing homes. Property sales typically generate a lower margin than social housing activities, so the increased sales activity this year, whilst profitable, has reduced the overall margin reported by the Group compared to the prior year to 18.2% (2022: 24.9%).
The underlying Group operating margin excluding surplus from the disposal of housing properties, first tranche sales and outright sales has declined compared to the prior year to 18.1% (2022: 21.2%) due to inflationary cost pressures, increased demand for responsive repairs and impairment charges of £4.9m.
The overall reported surplus has benefited from a one-off fair value credit of £12.4m against finance costs, arising from the redemption and repayment of financial liabilities (loans and interest rate swaps) during the year.
The Group operating margin reflects impairment charges of £4.9m recognised against development schemes where forecast costs to complete the schemes have increased. The overall surplus reflects a further impairment of Guinness Developments Limited's £10m investment in Ilke Homes, a manufacturer of modular homes who ceased trading subsequent to year end.
The Group margin also reflects losses incurred by Guinness Care and Support in the first eight months of the year before its assets and liabilities were transferred to TGPL in December 2023. These losses primarily related to domiciliary care services (and associated overheads) which we exited from in August 2022.
The core business remains the letting of social housing, with 66.1% of the Group's turnover being generated from this activity (2022: 86.7%). Our social housing lettings business delivered an operating surplus of £79.1m and an associated operating margin of 22.1% (2022: £82.3m, 24.5%) for the year. Whilst turnover has increased by £20.8m due to an increase in the number of properties under management and a rent increase of 4.1% being applied to general needs tenancies, we have faced significant cost pressures. These pressures have arisen due to inflation and due to increased demand for responsive repairs. During the year we increased our levels of financial and other support to customers and maintained our arrears at 3.81% (2022: 3.67%) despite challenging economic circumstances.
Turnover of £126.3m (2022: £0.4m) and profits of £16.0m (2022: £0.1m) were generated from homes developed for outright sale. This represents a significant year on year increase and reflects the bulk sale of 204 homes in one block at Leaside Lock (East London) to a private rental investor. This has reduced exposure to future sales risk and increased the share of income generated from outright sales to 23% (2022: 0.1%). We expect the volume of outright sales to fall in 2023/24.
During the year we took advantage of higher interest rates to exit some suboptimal loan and interest rate swap agreements. This resulted in redemption costs totalling £5.1m but also a one-off fair value credit on derecognition of financial instruments of £17.5m, a net credit of £12.4m.
We invested £73.8m (2022: £60.9m) in capital improvements to our existing homes and £247.6m in developing new affordable housing. Depreciation charges for the year totalled £62.5m. Total investment in existing homes including capital and revenue expenditure was £177.5m.
Group EBITDA-MRI as a percentage of interest payable was 107.8% (2022: 98.1%). TGPL has delivered EBITDA-MRI interest cover of 118.7% (2022: 110.3%). This demonstrates that the core social housing business continues to perform strongly and cover the investment needed to keep our homes in good condition and fund our plans to build new homes.
All information has been extracted from the 2022/23 year-end financial statements.