TIDM38EO
RNS Number : 2082A
Metropolitan Funding PLC
28 May 2019
Metropolitan Funding PLC
Thames Valley Housing Association (TVHA) unaudited results for
the year ended 31 March 2019.
The TVHA group (trading as Metropolitan Thames Valley), one of
the UK's leading providers of affordable housing and care and
support services, announces unaudited results for the year ended 31
March 2019. These results may be subject to further adjustments,
most notably in respect of pension costs and obligations.
Headlines
-- Partnership of Metropolitan Housing Trust and Thames Valley
Housing Association completed on 8 October 2018.
-- GBP255m spent on new development (2018: GBP299m) as we
continue towards our strategic goal of 2,000 units per year,
despite a tougher than expected sales market.
-- Business transformation continues with investment in customer
services, the safety and condition of our properties and long-term
resilience. Our integration plans remain on track.
-- Turnover broadly flat at GBP411m (2018: GBP414m).
-- Underlying Operating Surplus down 5.2% to GBP153m (2018:
GBP162m) due to increased investment in infrastructure and
properties. Reported Operating Surplus was GBP148m (2018:
GBP162m).
-- Underlying Total Surplus after tax was GBP89m (2018: GBP100m) after GBP83m of non-recurring, merger-related costs, incurred to deliver the partnership and to improve our financial resilience. Reported Total Surplus was GBP5.6m (2018: GBP100m).
-- 1,037 new homes completed (2018: 940 homes) of which 907 (2018: 650) were affordable.
-- Net debt GBP1,764m (2018: GBP1,597m) supporting our development strategy.
-- S&P credit rating A- (stable outlook).
Geeta Nanda, Chief Executive of Metropolitan Thames Valley,
commented:
"This was a landmark year in which we completed our partnership
transaction in October 2018 to form the new group. Together, we are
stronger and more resilient, with the capacity to do much more.
Integration plans are on track and the Board remains confident in
our ability to fulfil our strategic objectives.
"We have delivered a greater number of new homes together and
continued to invest in our properties, driving up the standards of
safety and quality in our homes. We remain committed to raising
satisfaction levels by providing an improved service to our
customers and focusing on what matters most to them.
"Housing operations continue to perform well and our sales
performance remains solid, despite challenges in the market,
particularly at higher price points.
Despite the short term impact of additional investment and
reduced sales activity, we remain confident that the business is
well positioned and financially strong to meet and deliver on the
growth objectives of the partnership over the next few years."
Results overview
Housing operations (including supported housing) performed in
line with expectations, although our increased investment in our
properties and customer service, as we focus on what really matters
to our customers, means that core Social Housing margins have been
diluted by 2 ppts to 34% during the year. Operating costs rose by
7%, or GBP15m, as we increased our investment in the safety of our
customers and the condition of our estate.
Sales margins are tracking at 15% for the year (2018: 17%) due
to more sales on recently acquired sites, with a consequent
dilutive impact on underlying operating profit margins. Underlying
operating margins (which exclude one-off costs relating to the
merger and the aborted sale of an investment) are 37% (2018:
39%).
Partnership
The completion of the Partnership has resulted in additional
non-recurring costs of GBP5.3m (2017/18: Nil) which reflect
advisory and restructuring costs, as well as directly related IT
and property costs. In addition, there have been non-recurring
funding break costs of c. GBP78m incurred through the lender
consents process which was completed successfully, with the group
benefitting from a fit-for-purpose covenant suite and more flexible
borrowings and creating more than GBP800m of new borrowing
headroom.
Liquidity remains strong at GBP549.1m (2017: GBP470.8m).
Customer Services (including Housing with Care and Support)
A key element of the strategic rationale for the merger was to
improve the lives of our customers. Our Care & Support business
is highly regarded. We won GBP1.2m of annualised new business
during the year, and the business continues to make a positive
financial contribution to the group while changing the lives of our
most vulnerable customers. Core social housing revenues are up 1%
to GBP320m with social housing margin at 34% (2018: 36%). Voids
loss was 1.2% (2018 0.8%) while social rent arrears were 4.6%
(2018:4.1%).
New homes development and sales
We delivered 1,037 (2018: 940) new units and invested GBP255m
(2018: GBP299m) in building out our contracted developments. The
future development pipeline has remained strong at 6,506 (2018:
6,533). The major regeneration of Clapham Park has moved forward
significantly after obtaining planning approval to build more than
2,500 new homes and a wide range of community facilities.
Market conditions for new home sales deteriorated during
2018/19, especially in London, and remain slow as we come into the
new financial year. Of our 431 first tranche sales (2018: 524), we
sold an average equity share of 38% (2018: 41%), equating to an
average unit market value of GBP363k (2018: GBP392k) at an average
margin of 14% (2018: 22%). We sold 60 units (2018: 80 units)
outright at an average selling price of GBP403k (2018: GBP367k) and
an average margin of 18% (2018: 10%).
Staircasing and redemption receipts totalled GBP67m with 768
transactions at a 37% average margin (2018: GBP75.7m with 834
transactions at 42% average margin).
Debt and facilities
Net debt (excluding derivative financial instruments) at 31
March 2019 is up 10% at GBP1,764m (2018: GBP1,597m) supporting our
development programme. Available liquidity (cash and committed
secured undrawn facilities) is GBP 549m (2018: GBP 471m). Gearing
ended the year at around 41% on a Historic Cost basis (2018: 39%)
and interest cover was around 1.94 times (2018: 2.3 times) on an
EBITDA MRI basis.
The Standard & Poor's credit rating for the combined entity
was confirmed in December 2018 at A- (stable outlook).
The Board expects to announce full audited results for the year
ended 31 March 2019 in July 2019.
Consolidated Statement of Comprehensive Income for the year
ended 31 March 2019 (unaudited)
2019 2018 %
-------- -------- ------
GBPm GBPm
-------- -------- ------
Revenue 411.2 414.3 (1)
-------- -------- ------
Cost of sales (71.8) (72.7) 1
------
Operating costs (227.0) (212.2) (7)
-------- -------- ------
Surplus from disposal of fixed assets
and investments 30.9 29.2 7
------------------------------------------- -------- -------- ------
Share of Surplus from Joint Ventures 9.9 3.1 219
------------------------------------------- -------- -------- ------
Underlying Operating Surplus 153.2 161.5 (5)
------------------------------------------- -------- -------- ------
Non-recurring operating costs (5.3) - -
------------------------------------------- -------- -------- ------
Operating Surplus 147.9 161.5 (12)
-------- -------- ------
Net interest payable (72.4) (66.2) (9)
-------- -------- ------
Other finance costs (77.8) 0.1 -
-------- ------
Movements in fair value of investments
and properties 7.9 3.7 109
-------- -------- ------
Taxation - 0.6 -
-------- -------- ------
Total (Loss)/Surplus 5.6 99.8 -
-------- -------- ------
Actuarial loss in respect of pension
schemes (24.4) 0.4 -
-------- -------- ------
Change in fair value of hedged financial
instruments (5.0) 2.2 -
-------- -------- ------
Total comprehensive income for the
year (23.8) 102.4 -
-------- -------- ------
Consolidated Statement of Financial Position as at 31 March
2019 (unaudited)
Housing properties 4,290.7 4,106.0 5
--------- -------- ------
Investment properties and other
fixed assets 91.3 88.3 3.4
--------- -------- ------
Investments 262.5 287.6 (9)
--------- -------- ------
Net current assets 94.6 124.0 (24)
--------- -------- ------
Total Assets less current liabilities 4,739.1 4,605.9 3
--------- -------- ------
Loans due to be repaid in more than
one year 1,932.6 1,799.7 7
--------- -------- ------
Pension liabilities 57.4 35.6 (61)
--------- -------- ------
Other long-term liabilities 419.5 409.7 2
--------- -------- ------
Capital and reserves 2,329.6 2,360.9 1
--------- -------- ------
Total non-current liabilities and
reserves 4,739.1 4,605.9 3
--------- -------- ------
Consolidated Statement of Cashflows for the year ended
31 March 2019 (unaudited)
Net cash from Operating Activities 198.5 139.0 43
-------- -------- ---
Net cash from Investing Activities (198.0) (189.3) 5
-------- -------- ---
Net cash used in Financing Activities 63.9 6.4 -
-------- -------- ---
Net movement in cash and cash equivalents 64.4 (43.9) -
-------- -------- ---
Cash and cash equivalents carried
forward 223.0 158.5 41
-------- -------- ---
Sales revenue and margins (unaudited) 2019 2018
Revenue Margin Revenue Margin
-------- ------- -------- -------
First Tranche 59.7 10% 79.4 27%
---------------------------------------- -------- ------- -------- -------
Outright Sales 24.9 18% 29.4 14%
---------------------------------------- -------- ------- -------- -------
Staircasing 43.5 36% 56.1 34%
---------------------------------------- -------- ------- -------- -------
RTB / RTA 3.2 40% 5.1 28%
---------------------------------------- -------- ------- -------- -------
Redemptions 23 38% 19.0 38%
---------------------------------------- -------- ------- -------- -------
Fixed Asset Sales 10.0 53% 10.8 13%
---------------------------------------- -------- ------- -------- -------
Outlook
Conditions remain challenging with a slow sales market, however
the Board is confident in its plans for the year ahead, in which it
aims to see growth in revenues and the restoration of total surplus
towards pre-merger levels.
Enquiries:
Please contact Donald McKenzie, Director of Corporate Finance,
on 0203-535-4434 or at donald.mckenzie@mtvh.co.uk
This information for investors is also available on our website:
https://www.metropolitan.org.uk/about-us/investing-in-metropolitan/
Notes
-- Operating margin is operating surplus divided by turnover
-- Net debt is borrowings (excluding derivatives) less cash and cash deposits
-- Gearing is net borrowings divided by net housing properties at cost
-- Interest cover is earnings before interest, tax and
depreciation/amortisation less capitalised major repairs, divided
by net interest costs
-- Prior year comparative figures are the unadjusted aggregate
of pre-partnership entity reported results
Disclaimer
The information in this Preliminary Results announcement has
been prepared by the Thames Valley Housing Association group and is
for information purposes only.
The Results announcement should not be construed as an offer or
solicitation to buy or sell any securities issued by the Parent,
the Issuer or any other member of the Group, or any interest in any
such securities, and nothing herein should be construed as a
recommendation or advice to invest in any such securities.
This unaudited preliminary announcement contains certain
'forward-looking' statements reflecting, among other things, our
current views on markets, activities and prospects. Actual and
audited 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. We do not
undertake to update or revise such public statements as our
expectations change in response to events.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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