TIDM38EO
RNS Number : 8308U
Metropolitan Funding PLC
27 November 2019
Metropolitan Funding PLC
Thames Valley Housing Association (TVHA) trading update and
unaudited financial results for the six months ended 30 September
2019
TVHA, one of the UK's leading providers of affordable housing
and care and support services, announces a trading update for the
first six months of the financial year 2019/20.
Highlights
-- First anniversary of the Partnership between Thames Valley
Housing and Metropolitan Housing Trust with merger progress on
track.
-- S&P confirmed the Group rating as A- (Stable) in December 2018.
-- 450 new homes completed (2018: 181) and on track to complete
more than 950 new homes in the full year.
-- Clapham Park regeneration - planning and section 106 agreed for 2,535 new homes.
-- Revenues up 4% compared with previous year at GBP208m (2018: GBP199m).
-- Despite the more difficult housing market and increased
investment in our current stock we have achieved an operating
surplus of GBP68m (2018: GBP76m) and a total surplus of GBP30.8m
(2018: GBP43.6m).
-- GBP475m of available liquidity.
Geeta Nanda commented:
"A year on from the commencement of our partnership, we continue
to perform well against the backdrop of a challenging market, and
we remain on track with our integration plans.
"We maintain our focus on raising satisfaction levels by
providing an improved service to our customers and focusing on what
matters most to them - and we continue our investment in the safety
and quality of our properties.
"Since the fire in September at Richmond House, a block which we
own and manage in Worcester Park, we have been working on site to
provide all necessary support to residents and the emergency
services - alongside the London Borough of Sutton, volunteers from
the local community, and the original developer of Worcester Park,
St James (part of Berkeley Homes). The costs arising from the fire
are fully insured. Residents are now in temporary accommodation and
we continue to liaise closely with them and our insurer as work
turns to planning the demolition and reinstatement of the
building.
"Looking ahead to the rest of the year, we remain confident that
the organisation is well positioned and financially strong to meet
and deliver on our strategic objectives."
Results overview - Thames Valley Housing Group
Turnover from core Customer Services operations (ie excluding
home sales) was flat year on year with increased rental volumes
offsetting the 1% cut in social rents and slightly lower Care and
Support fee income. Revenues from home sales are up 20%. We sold
291 (including 281 first tranche sales) units in the first six
months of the year, compared to 165 (including 118 first tranche
sales) last year. In general, prices for homes, particularly Shared
Ownership, remain in line with our expectations, although sales
rates are slightly slower. Average sales margin was 16% (2018:
18.5%)
Operating surplus (which now includes profits from disposals) is
GBP7.8m lower than last year at GBP68.4m (2018: GBP76.2m), largely
due to additional property investment costs. Operating margin as a
result is 5.1 ppts lower at 32.9%.
Operating cashflow remains strong, with more than GBP128m (2018:
GBP120m) invested in new development projects in the period to 30
September and GBP29m (2018: GBP11.6m) spent on capitalised repairs
to the existing estate as we continue to invest in the condition of
our stock, including the rising cost of fire safety. Underlying net
interest costs (excluding mark to market movements on derivatives)
are GBP2.7m higher than last year reflecting the sale of the
retained bonds in February 2019 and the increased debt supporting
the development programme.
The organisation completed 450 homes during the first half of
2019 (2018: 433) and remains on track to deliver more than 950
(2018: 1,037) new homes for the full year.
At 30 September 2019 we had c. GBP475m of available liquidity
(being both cash and committed facilities) and total debt of
GBP1,906m (2018: GBP1,268m). Thames Valley Housing Association's
Standard & Poor's credit rating was confirmed as A- (Stable
outlook) in December 2018.
Outlook
The core housing business continues to perform well. Driven by a
number of anticipated bulk sales, total revenue is expected to be c
20% higher than last year. As we prepare for a general election and
continuing uncertainty over Brexit, the lower margins achieved in
conjunction with increased fire safety costs, have reduced
management's expectations of the final outturn. Underlying
operating surplus (which excludes one-off merger and pension costs)
will be up to 10% lower than 18/19.
In October 2019, the Group left the SHPS defined benefit scheme
as it sought to better manage its defined benefit ("DB") pension
risk, placing its DB assets and liabilities under a third-party
master trust, Enplan. The confirmation of the revised rent-setting
policy from 2020 (CPI+1%) and the reversal of the plan to cap
housing benefit at local housing allowance (LHA) levels has
provided greater certainty for the sector, albeit this is offset by
concerns over Right to Buy and Universal Credit.
The Group will report results for the year ended 31/3/20 as
Thames Valley Housing Association, trading as Metropolitan Thames
Valley in summer 2020.
Unaudited financials
Statement of comprehensive income
GBP000's 6 months ended: 30-Sep-19 30-Sep-18 YoY %
Rent and service charge
income 148,159 144,275 3%
Care and support income 7,522 8,177 -8%
Outright/first tranche
sales 40,994 34,158 20%
Fees and other income 11,311 14,114 -20%
Total turnover 207,986 200,724 4%
---------- --------------- ------
Outright/first tranche
cost of sales -34,437 -27,824 24%
Operating costs -87,936 -77,182 14%
Depreciation -17,586 -15,994 10%
Overheads -16,046 -18,953 -15%
Profits on disposals 17,095 16,135 6%
Non recurring (merger
costs) -679 -674 1%
Operating surplus 68,397 76,232 -10%
---------- --------------- ------
Net interest -37,238 -34,468 8%
Fair value movements and
other instrument revaluations -275 1,772 -116%
Profit before tax 30,884 43,536 -29%
---------- --------------- ------
Sales margin 16.0% (2018: 18.5%)
Operating margin 32.9% (2018: 38.0%)
Statement of financial position
GBP000's 6 months 30-Sep-19 30-Sep-18 YoY %
ended:
Tangible fixed
assets 4,460,734 4,310,107 3%
Homebuy and investments 266,639 265,231 1%
Current assets 366,675 458,825 -20%
Creditors - amounts
falling due within
one year -336,561 -259,214 30%
---------- ----------
Total assets
less current
liabilities 4,757,487 4,774,949 0%
---------- ---------- -----------
Creditors due
after more than
one year 2,346,079 2,346,848 0%
Provisions and
pension obligations 77,514 28,395 173%
Reserves 2,333,894 2,399,706 -3%
Total funding 4,757,487 4,774,949 0%
---------- ---------- -----------
Cashflow
GBP000's 6 months ended: 30-Sep-19 30-Sep-18
Net cashflow from operations 59,118 58,712
Sales proceeds 26,166 33,328
Dividends - -
Development expenditure -128,468 -120,062
---------- ----------
Total net cashflow from
operations -43,184 -28,022
---------- ----------
Disposal proceeds 25,377 42,990
Major repairs -29,008 -11,589
Other -7,890 -267
Net drawdown (repayment)
of debt -60,334 93,479
Net interest/fees -43,971 -39,656
Net cash movement in period -159,010 56,935
---------- ----------
Opening cash 194,477 132,271
Restricted cash 30,274 28,360
Closing cash 65,741 217,566
---------- ----------
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
1) Operating margin is operating surplus/turnover
2) Thames Valley Housing Association (TVHA) is the parent of the
group trading under the brand of Metropolitan Thames Valley (MTVH).
Metropolitan Housing Trust (MHT) is a wholly owned subsidiary of
TVHA and MHT owns 100% of the shares of Metropolitan Funding
Plc.
3) Comparatives are provided on a simple aggregation basis using
the 6month data from both the legacy organisations
Disclaimer
The information in this preliminary announcement of interim
results 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, 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 announcement contains certain 'forward-looking'
statements reflecting, among other things, our current views on
markets, activities and prospects. By their nature, forward looking
statements involve a number of risks, uncertainties or assumptions
that could cause actual results to differ materially from those
expressed or implied by those statements. 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. We do not undertake to
update or revise such public statements as our expectations change
in response to events. Accordingly undue reliance should not be
placed on forward looking statements.
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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