TIDM20SY
RNS Number : 4885Z
Optivo Finance PLC
21 May 2021
OPTIVO
2020/21 UNAUDITED PRELIMINARY RESULTS
"Results for 2020/21 underline the financial resilience of our
business model, and validate our decisions over a number of years
to focus our investments in core social housing activity. This year
we've also shown an operational resilience of which we're proud,
with arrears down and extensive mobilisation of customer facing and
social impact teams to help residents through the Covid-19
crisis.
Our operational track record, financial standing and ESG
credentials enable us to continue sourcing long-term low-cost
capital and attract strong partners to work with for investment in
safe, high-quality and energy-efficient homes that deliver a vital
counter-cyclical boost to our recovering economy.
Our priorities are clear. With requirements evolving, we're
investing more in building safety and energy efficiency programmes.
To keep our financial metrics where we want them, we're easing our
pace of development growth and weighting future projects to
affordable lettings rather than sales.
Finally, in keeping with our longstanding commitment to resident
involvement, we're embracing consumer regulation and are excited to
support the Regulator of Social Housing in delivering its widened
remit in this area."
Sarah Smith, Chief Financial Officer
21 May 2021
Investment case highlights
-- 45,000 homes
-- Moody's A3 (stable) credit rating
-- ESG transparency report published at optivoinvestors.co.uk
-- G1/V1 regulatory judgement reconfirmed after 2020 in-depth assessment
-- 2035, 2043 and 2048 secured GBP bonds listed on London Stock Exchange
Key financial indicators
Income & expenditure (GBPm) FY 2018/19 FY 2019/20 FY 2020/21
unaudited
Total turnover 314 322 331
Of which: Non-sales turnover 285 291 285
Initial sales turnover 29 31 46
Operating surplus 103 90 103
Operating margin excluding sales 29% 23% 25%
Surplus after interest 61 46 53
---------------------------------- ----------- ----------- -----------
Balance sheet (GBPm) 31.3.2019 31.3.2020 31.3.2021
unaudited
Social housing assets (historic
cost) 2,729 2,927 3,080
Investment properties (valuation) 157 147 127
Total debt 1,281 1,485 1,490
Cash & cash equivalents 81 137 87
----------------------------------- ---------- ---------- -----------
Residents' Resilience Project 2020/21
-- 134,457 proactive support calls
-- 2,288 seniors living alone contacted and supported
-- 554 residents given access to digital devices
-- 805 households given food and fuel support
-- 2,444 food parcels delivered
-- 3,493 residents given financial or employment support
-- 1,246 people helped into jobs or training
Lettings
General needs and HOPS (1) FY 2018/19 FY 2019/20 FY 2020/21
key operational indicators unaudited
Void rental losses 0.9% 1.6% 1.1%
Overall rent arrears 4.3% 4.3% 4.1%
----------------------------- ----------- ----------- -----------
Note: (1) Housing for older people
We delivered a creditable general needs and HOPS lettings
result, with both voids and arrears lower than this time last year
in spite of the pandemic disruption.
Void losses in our student accommodation portfolio were higher
however, with students vacating university halls when term-time
learning went online, and holiday lettings affected by lockdown and
travel restrictions. During the year we disposed of our direct-let
student accommodation halls in Southampton and our former office in
South London. We partly offset void losses through home working and
saving on travel expenses.
Asset management
Expenditure on homes (GBPm) FY 2018/19 FY 2019/20 FY 2020/21
unaudited
Routine maintenance 28 31 28
Planned maintenance 33 40 49
Major repairs 9 8 7
----------------------------- ----------- ----------- -----------
By focusing on essential repairs and maintenance and adopting
safe working practices we avoided falling too far behind on our
property upkeep.
Resident satisfaction FY 2018/19 FY 2019/20 FY 2020/21
Service 96% 95% 89%
Repairs 97% 98% 97%
Neighbourhoods 91% 91% 92%
----------------------- ----------- ----------- -----------
While services were affected by lockdown, the 89% service
satisfaction score is still good.
Development & sales
Investment in new homes (GBPm) FY 2018/19 FY 2019/20 FY 2020/21
unaudited
Spent during the period 245 183 208
Future spend in contract 404 512 498
-------------------------------- ----------- ----------- -----------
Number of new homes FY 2018/19 FY 2019/20 FY 2020/21
unaudited
Started in the period 1,003 1,500 1,002
Completed in the period 985 838 577
In contract at the reporting
date 2,096 2,558 2,828
Of which: Affordable rent 1,082 1,225 1,764
Shared ownership 841 917 813
Open market sales 173 416 251
Number of sites in contract 40 36 41
------------------------------ ----------- ----------- -----------
Number of new homes 31.3.2019 31.3.2020 31.3.2021
available for sale unaudited
Open market sales 0 0 7
Shared ownership first tranche 262 279 250
Of which unsold over six months 27 83 106
----------------------------------- ---------- ---------- -----------
We rephased construction timetables due to lockdown and to
accommodate safe working practices upon re-opening, and spent less
on new homes than we expected at the start of the year. Sales
performance was almost at pre-pandemic budget level and above our
post-pandemic revised forecast. We target a further 1,000 starts in
2021/22.
Financing
Funding sources (GBPm) 31.3.2019 31.3.2020 31.3.2021
unaudited
Cash and cash equivalents 81 137 87
Available bank facilities 380 405 640
Retained bonds held:
2035 - - 100
2043 - - 0 (2)
2048 100 -
-
-------------------------- ---------- ---------- -----------
Note: (2) In September 2020 we agreed to increase our 2043 bond
by GBP150 million notional. We entered into a forward purchase
agreement with investors to sell GBP100 million for delivery in
March 2022. We will retain GBP50 million for future sale. The new
bonds will be created through updates to previous bond
documentation to be published in the coming months.
Key metrics 31.3.2019 31.3.2020 31.3.2021
unaudited
Interest rate profile:
% of net debt on fixed basis 76% 85% 91%
Weighted average duration 10 years 13 years 11 years
Weighted average debt cost 4.24% 3.79% 3.64%
Derivative mark-to-market GBP148m GBP171m GBP136m
------------------------------- ----------- ----------- -----------
We took steps to increase funding headroom by issuing a new 2035
bond in April 2020. In May we accessed the Bank of England's Covid
Corporate Financing Facility (CCFF), which we've since rolled over
to March 2022. In September we tapped our existing 2043 bond by
GBP150 million selling part for settlement on a deferred basis to
refinance CCFF.
We reduced our cost of capital through liability management
steps in respect of a legacy aggregator finance arrangement.
And we improved the efficiency of our secured debt platform by
creating a new Numerical Apportionment Security Trust Deed to
support our future bond issuance.
External ratings
31.3.2019 31.3.2020 31.3.2021
Regulator of Social Housing
Governance judgement G1 G1 G1
Financial viability judgement V1 V1 V1
Moody's
Rating A2 A2 A3
Outlook (stable) (negative) (stable)
------------------------------- ------------ -------------- ------------
In October Moody's updated our credit rating from A2 (negative
outlook) to A3 (stable outlook) and again confirmed our rating
after their decision to downgrade the UK sovereign credit rating.
Moody's identify our profitable core business, market position,
strong balance sheet and unencumbered asset position, financial
policies, stress testing, grant flexibility and liquidity as credit
strengths.
In 2020 the Regulator of Social Housing successfully completed
our regulatory in-depth assessment on a virtual basis.
Investor calendar
Property security valuations for 2035 bond by 31 May 2021
Property security valuations for 2043 & 2048 bonds by 31 July 2021
Audited financial statements July 2021
ESG Transparency Report July 2021
Moody's annual review Summer / Autumn 2021
Half-year end 30 September 2021
Half-year trading update November 2021
We look forward to arranging investor meetings over the Summer
after publication of our annual financial statements.
More information
https://optivoinvestors.co.uk/
Tariq Kazi
Director of Corporate Finance
tariq.kazi@optivo.org.uk
020 8036 2293
ABOUT OPTIVO
Optivo is registered in England with limited liability under the
Co-operative and Community Benefit Societies Act 2014 (with
registered number 7561) and is a Registered Provider of Social
Housing whose activities are regulated by the Regulator of Social
Housing (with registered number 4851). As such, Optivo has
charitable status but is exempt from registration with the Charity
Commission.
Optivo Finance plc (company number 07933814) is a wholly owned
subsidiary of Optivo and is an issuer of GBP-denominated bonds
listed on the London Stock Exchange.
IMPORTANT NOTE
This update contains certain 'forward-looking' statements
reflecting, among other matters, our current views on markets,
activities and prospects. Actual outcomes may differ materially.
Such statements are a correct reflection of our views only on the
publication date and no representation or warranty is given in
relation to them, including as to their completeness or accuracy or
the basis on which they were prepared. Financial results quoted are
unaudited. No reliance should be placed on the information
contained within this update. We do not undertake to update or
revise such public statements as and when our expectations change
in response to events. This update is neither recommendation nor
advice. This is not an offer or solicitation to buy or sell any
securities.
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