Treasurer’s Report

Ken Belfrage

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The 2012-2013 year was one of both growth and consolidation for Haven.

There was significant growth in the size and scope of homelessness programs and affordable housing operations and consolidation of our property development activities with the completion of our Nation Building Stimulus capital works program.

The net result for the year was a surplus of $2.6 million, which was lower than the previous year due to reduced capital grants. The trading result was, however, 6% better than budget.

In terms of operating revenues, there has been strong growth in operating grants but a sharp decline in capital grants. Rental income has grown steadily as the number of completed properties increased throughout the year. Other income has doubled compared with the previous year, reflecting profit on the sale of land at our Wattlewood development.

Operating expenses related to property costs have increased in line with additional properties now available for affordable rental whilst there has been modest growth in other expenses in line with growth in other operating activities.

In future years we expect income to be similar with some further reduction in capital grants offset by modest operating income increases.

Total assets during the year grew $10 million to $257 million.

This increase is largely reflective of $8.7 million investment in property plant and equipment resulting in the completion of more than $26 million of new affordable housing. This is a significant investment and an achievement for the communities in which we operate.

In line with expectations, we have increased our borrowings up to $52 million as at 30 June 2013, and consequently, interest expense has risen to $3.7 million.

The year was not without its financial challenges. Delivery delays put pressure both on rental revenue growth and on the cost of completing outstanding projects. There were also challenges in relation to the management of debt where associated interest charges consumed nearly 40c in every dollar of rent collected.

The current political and economic environment suggests that there will be very little new public-sector investment in affordable housing. Despite this the organisation expects to commence construction of more than 50 units of new affordable housing during 2013-14. Projects will be fully funded with no new long term debt expected to be required.

We continue to enjoy a positive relationship with our bankers and I would like to acknowledge and thank them for their flexibility and support as we expand and increase the supply of affordable housing.

Our current and future challenges include managing rental arrears and maintenance expenditure and maintaining the delicate balance with respect to rental revenue in relation to affordability for tenants and sustainability.

In line with our strategy to be an integrated provider of housing and homelessness services, we will be looking to increase operating grant revenue as opportunities arise.

Strategically, major structural reform in the provision of public and social housing in Victoria is expected to be announced before Christmas this year and we are well placed to take up any opportunities that may arise from this.

Thank you to CFO Paul Somerville and the finance team for providing the Board with comprehensive and timely financial reporting and advice.