Orbit sees surplus jump a third as Swan merger stays on track
Orbit has reported a 32 per cent jump in annual surplus and said its planned merger with troubled housing association Swan is on track to complete by the end of 2022.
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The 46,500-home housing association recorded a post-tax surplus of £81.4m in the year to the end of March 2022, compared to £61.9m the year before. Turnover rose five per cent to £374m.
Orbit said demand for market sale and shared ownership properties had been high thanks to a “very buoyant market”.
Orbit’s turnover from market sales rose 10 per cent to £87m, generating an operating surplus of £12m. Market sales represented more than a fifth – 22 per cent – of group turnover.
Income from shared ownership sales edged up to £41m, securing an operating surplus of £6m.
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The group’s turnover from social housing rent rose by £7m to £200m, representing 63 per cent of its income. Orbit attributed the growth to new properties and the impact of the annual rent increase.
The landlord also reported that completions in the year jumped a fifth to 1,013, but it was in comparison to a pandemic-hit year in 2020-21. It also missed its target of 1,141 handovers as it pointed to labour and materials shortages felt across the sector.
Looking ahead, the group said it plans to deliver 6,500 new homes by 2025 to meet growing demand.
Mark Hoyland, chief executive of Orbit, hailed it as a strong set of results despite the “geopolitical and macroeconomic headwinds”.
Orbit is currently in merger talks with troubled housing association Swan, with the Essex-based group expected to join as a subsidiary.
Merger talks were revealed last December, on the same day the Regulator of Social Housing published a regulatory judgement for Swan downgrading it to a non-compliant G3/V3 rating.
Mr Hoyland said that talks are progressing “positively” and that, if agreed, the merger should be completed late this year.
“We believe Swan to be a complementary fit for Orbit geographically and, should the grouping go ahead, this would create a combined housing portfolio of nearly 60,000 homes and over 125,000 customers across the UK,” he added.
“We believe this increased scale will enable us to unlock greater potential and deliver increased value for money for a larger customer base.”
Orbit saw its operating margin drop slightly by 0.2 per cent to reach 25.2 per cent and its operating margin for social housing lettings fall by 0.7 per cent to 37 per cent.
It reported drawn debt of £1.58bn and undrawn debt of £440m, with £70m cash in the bank.
Gearing was 50.9 per cent, 1.4 per cent higher than the previous year. The group said this was due to reduced cash holdings increasing its net debt position, which is only partially offset by its increasing asset base. Orbit added that it anticipates a reduction in gearing from 2023.
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