Metropolitan Housing Trust Ltd / Metropolitan Funding
PLC
Thames Valley
Housing Association (TVHA), trading as MTVH, announces unaudited
consolidated financial results for the year ended 31 March
2024
Delivering strong FY results and housing
completions
Overview and
highlights
o
Total revenue increased to £423m (FY23: £389m).
o
Underlying operating surplus improved to £126.6m (FY23:
£121.7m).
o
Underlying operating margin was 30.1% (FY23 31.4%)
o
Operating margin after deducting non-recurring and fire
safety costs, was 4% (FY23: 28%).
o
Total loss before tax for the year of £(80.2)m (2023: Surplus
before tax of £33m). As advised in January 2024, total
non-recurring/fire safety costs for the year of £110m largely
relate to fire safety provisions in respect of leaseholder
remediation in blocks over 11m (£64m, non cash) and associated
asset write-downs of decommissioned blocks (£32m,
non-cash).
o
Strong cash performance, with Cash Generated from Operations
of £268m (FY23: £268m)
o
£807m (FY23: £725m) of available liquidity with over £400m of
security ready to allocate to new funding.
o We
delivered 892 homes (FY23: 657 homes) through partnership projects
such as Clapham Park, West Hendon Waterside and Westhorpe Gardens.
We sold 287 newbuild units (FY23 231 units).
o There are
currently 5,556 new homes in our 5-year pipeline compared to 3,858
this time last year.
o
Revenue from rent and service charges £340m (FY23: £313m)
with rent arrears held at c.5.2% (March 2023: c 5.2%) despite cost
of living and inflationary pressures on our residents.
o We
invested £31m (FY23: £31m) in property improvements, and our
overall spend on fire safety was £18m (FY23: £13m). Our total spend
on the existing estate was £149m (FY23: £138m) prioritising
property compliance, condition and customer satisfaction
issues.
o We
remain committed to supporting residents during the cost of living
crisis and the Tenant Welfare Fund increased to £729k (£628k in
FY23).
o Our
financial advice services delivered £3m of value to residents in
saved costs, benefits provision, and increased income.
o
S&P Group rating of A- (Stable), the outlook improving
from Negative following the annual review in December
2023.
o
Fitch Ratings rating A (Negative outlook) in October
2023.
o
Ritterwald refreshed the 2023 Sustainable Housing
Certification, moving MTVH up to 'Frontrunner' for both Social and
Governance, and 'Ambassador' for Environmental criteria.
o Our RSH
gradings remain G1/V2.
Geeta Nanda, OBE, Chief Executive,
commented:
"The year to end-March 2024 has been one of
significant progress towards our vision to provide more people with
a decent home and the chance to live well.
I am pleased to be able to report a strong underlying
trading performance over the 12 months. Revenue increased by 9% to
£423m from £389m and underlying operating surplus, before non-
recurring and fire safety costs, improved by over 4% to £126.6m
from £121.7m.
This is an excellent performance against a backdrop
of rising inflation and interest rates over the year, which put
upward pressure on both operating and interest costs. The
performance reflects the decisions taken over recent years to lower
the risk in our development programme, and to boost overall
productivity through investment in new IT systems and the skills of
our people. This year we have also moved to protect the interests
of our leaseholders in over 11m blocks by making full financial
provision, £64m, for the estimated costs of remediating those
blocks. We have also made the decision to decommission two high
rise blocks, recognising an asset write-down of a further £32m.
Cashflow from operating activities remains strong at
£268m this year, unchanged from 2022/23. As at 31 March 2024, we
had £807m of available liquidity and over £400m of unencumbered
security in the trustee. This robust cash position supports our
strategy to continue to invest in our customer experience, our
existing properties, and the development of the new homes our
country so desperately needs.
We are maintaining our target to deliver 1,000 homes
per year and we now have 5,556 new homes in our 5-year pipeline
compared to 3,858 in 2022/23. Our housing delivery
remained strong, particularly in the second half of the year. In
the first half of the year we delivered 293 homes and forecast a
total of 815 new homes for the full year. We have exceeded that
figure substantially to deliver 892 homes as our development
partnerships moved forward successfully across our operating areas.
This means more secure, warm, and high-quality homes for our
tenants and owners, providing the foundation for them to thrive and
build stronger communities.
Listening to and collaborating with our residents is
fundamental to the decisions we take and how we direct our work.
Over the past year the financial pressure from the cost-of-living
crisis has been a common theme amongst residents. In response our
Empowering Futures team provided financial advice and support that
delivered £3m of value to residents in saved costs, benefits
provision and increased incomes, and our Tenant Welfare fund
provided £729k of direct support, a record figure. We also
updated our Value of a Social Tenancy (VOST) calculations; a
methodology that measures the value social tenancies bring compared
to other types of tenure. Our new VOST figures for 2023 show the
total value of our social tenancies is £718.9m annually generated
through savings to public services, and the value of our
construction and property maintenance activity.
I will be stepping down as CEO in September and
handing over to my successor. When we merged Metropolitan and
Thames Valley Housing in 2018 to create MTVH our vision was to
build a modern housing association of greater scale with the
ability to bring more positive impact to peoples' lives. We have
invested in making this a reality through new systems,
organisational design and the skills of our people and I am proud
to see the strong culture, colleagues, leadership team and Board
that make up MTVH today. I am confident that this team, under new
leadership, will continue to deliver on our strategy to serve
people better every day and our vision to provide decent homes and
the chance to live well."
Senior
Leadership Changes
Mark Everard who had been with MTVH for over 6
years as Executive Director of Property has announced his
retirement at the end of May 2024 and MTVH is delighted to have
appointed Suzanne Horsley as his successor.
On 14 May 2024, MTVH announced that the
replacement for its retiring CEO Geeta Nanda, is Mel
Barrett.
Trading
overview
Turnover from core social housing (ie excluding
home sales) was up 9% at £351m compared to £321m in FY23. This
reflects the 7% rent uplift under the sector rent
settlement. Our rental arrears figures were stable at 5.2%
year on year.
Turnover from sales, including First Tranche
sales was flat at £30m (2023: £30m). We sold 287 units (compared to
231 units in FY23). At year end, we had 160 unsold units, of which
112 are unsold over 90 days, with a sales value of £12.9m primarily
due to sites handing over significant numbers of units at one
time.
Operating costs for the year were £431.5m
(FY23: £300.2m) due to the inclusion of the £109.9m non-recurring
and fire safety costs. The two main elements of this charge
(Leaseholder remediation costs, £64m, and write-down of
decommissioned blocks, £32m) are non-cash adjustments and do not
adversely impact our liquidity position. Operating margin for year
is 4% (FY23 28%) as a result of the non-recurring and fire safety
costs. Stripping out the non-recurring and fire safety costs,
operating expenditure was 6% higher than last year at £319m and
underlying operating margin was 30.1% (FY23: 31.4%).
Cashflow from operating activities (ie before
investing, interest and movements in debt) was £268m, (FY23: £268m)
with total proceeds from the sale of properties in the year of
£140m (FY23: £110m). During the year, MTVH invested £246m in new
development (net of grant received) compared to £177m in
FY23.
Underlying net interest costs (excluding mark
to market movements on derivatives) are £10.6m higher than last
year as variable rates increase from historic lows. At 31 March
2024, we had £807m (FY 23: £725m) of available liquidity (both cash
and committed facilities) and total drawn debt of £1,910m (2023
£1,937m). Liquidity management remains a key focus to mitigate the
impact of a wider economic downturn. At the same time, our
relatively low gearing, at 36%, and over £400m of available
security provides further resilience to shock.
Thames Valley Housing Association's Standard
& Poor's credit rating was revised to A- (Stable outlook,
revised from Negative) in December 2023 following the annual review
process.
Fitch Ratings refreshed the organisation rating
as A (Negative) in October 2023.
Outlook
The business outlook is subject to
uncertainty/unforeseen market and business interruption as a result
of uncertainty over the direction of government policy. The
economic and geopolitical environments remain challenging, with
higher levels of inflation and interest rates, along with supply
chain and labour shortages, and continuing concerns over energy
supplies. There will be elections in the UK, USA and Europe within
the next six months and this will potentially result in changes in
policy and funding that could impact the sector.
The core housing business is expected to
perform well with revenues supported by the CPI+1 rent settlement
of 7.7%. This will boost revenues but operating margins may not
improve since operating costs are also expected to rise. Whilst
this level is above current inflation, it only partly offsets
increased costs incurred in FY24. Similarly, the sustained high
cost of debt continues to put pressure on Interest Cover ratios,
reducing the capacity to deliver on our corporate objectives. This
will impact on our capacity to build new homes. MTVH is committed
to providing increased support for those who face financial
hardship.
Fire safety and Damp and Mould works have
required increased investment in our existing homes. This is a
sector issue. The longer-term impact of remediation obligations has
also led to a reduction in our capacity to develop new homes,
particularly homes for sale (reducing future exposure to outright
sales risk) but we remain focussed on the delivery of c 1000 new
homes per year.
We are continuing with our Safer Buildings
programme driven by our desire to put customer safety first. We
have completed the review of blocks over 18m and are substantially
through our risk based review of blocks under 18m, to determine the
extent of any remediation requirements. We expect that
developers/warranty providers will pick up the costs of remediation
for newer buildings where this relates to construction defect.
Other at-risk blocks where there is no contractor to remediate,
will be either redeveloped of remediated by MTVH, having confirmed
we would not seek recovery from Leaseholders.
TVHA, trading as Metropolitan Thames Valley,
will report results for the six months ended 30 September 2024 in
winter 2024.
Consolidated Financials
Consolidated Statement of Comprehensive Income and Expenditure
for the year ended 31 March 2024 (unaudited)
Statement of Financial Position
Cashflow
Enquiries
Please contact Donald McKenzie,
Director of Corporate Finance, on 0203-535-4434/
07738-714126 or at donald.mckenzie@mtvh.co.uk
This information for investors is
also available on our website:
https://www.mtvh.co.uk/about-us/investors/
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.
Disclaimer
The information in this announcement
of unaudited consolidated interim results has been prepared by the
Thames Valley Housing Association group and is for information
purposes only.
The unaudited 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 results 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.