Home Group’s plans for its £62m surplus
Published by Max Salsbury for 24dash.com in Housing and also in Development, Finance
By Mark Henderson, chief executive, Home Group
Anyone browsing the webpages of social housing publications recently can’t fail to have noticed one thing – it’s that time of year when associations post their annual reports.
The sector has been keen to shout about how despite tough times many providers have increased or posted record surpluses. The sums involved are not inconsiderable. In Home Group’s case we recorded a £62.1m operating surplus in the last year and that’s not untypical.
Organisations in the sector are efficient and hardworking businesses which offer value for money. They care about their social mission and proudly speak of their not-for-profit status. But the surplus figures being announced can be misleading to some, especially our customers.
They question why they’ve had a rent increase when we seemingly have tens of millions of pounds of reserves sitting in the bank, money which they can see as profit.
It’s worth remembering there’s a difference between profit and surplus. We don’t have any shareholders to satisfy. It’s especially important to remember surplus isn’t a dirty word – it’s a financial necessity.
Surplus allows us to do all of the things our customers want us to do including building new homes, maintaining and upgrading our existing properties and investing in the communities in which they live.
The idea of sitting on piles of cash which will never be used couldn’t be further from the truth. Generating surplus is vital to operating the business – there’s no contradiction between being commercial and caring.
In this financial year we’re going to invest £169.5m building 1,607 new homes. Each of these properties will not only provide a safe and secure modern home for individuals, couples and families but the majority of them will be built in areas where we’re also helping to regenerate the community. In the following four financial years we’re going to invest £819m to deliver a total of 7,000 new homes.
All of this is possible because of the surplus we generate each year which partly contributes to our Standard and Poor's A+ credit rating giving borrowers the confidence to issue low interest loans to us.
It’s these low interest loans, such as our recent deal with The Housing Finance Corporation, which allows us to build desperately needed homes.
But it’s not just building new homes where we’re using our financial muscle. Home Group is currently undertaking a stock condition survey of all of its 55,000+ properties. We’re going into every single property we own and seeing what needs to be done to take it beyond Decent Homes Standard.
This year we’ll invest £126m in repairing and maintaining our homes. Of that £73.4m will be used to make sure our homes exceed Decent Homes standard.
In practice that means we’ll renew kitchens and bathrooms more regularly than we’re required, our customers will save money in heating bills as we’ll make our homes more thermally efficient than required and we’ll make them safe and secure by ensuring each home has a security light and a shower.
Operating the business as efficiently as possible is key to continuing to deliver outrageously brilliant service for our customers and delivering value for money.
That’s why this year we’re starting a project to install a new Enterprise Resource Planning system for all our colleagues.
ERP will see around 90% of the work done within Home Group brought onto one central computer system. New computing systems may not sound exciting or life changing but ERP will cut out duplication of work and ensure the customer has a more satisfying experience.