Karbon Homes Limited Trading Statement (6570D)

TIDM46GV

RNS Number : 6570D

Karbon Homes Limited

30 June 2021

 
 Karbon Homes Group 
 30/06/2021 
 
 Karbon Homes Group trading update for the period ending 31 March 2021 
 -- Karbon Homes Group (KHG) is today issuing its consolidated trading update for the period ended 31 
  March 2021. 
 -- These figures are unaudited and for information purposes only. 
 
 Highlights for the period ending 31 March 2021 
 -- KHG own and manage 27,542 homes 
 -- Karbon Homes Limited maintained its G1/V1 status from the Regulator for Social Housing, following 
  an interim regulatory judgement in April 2021 
 -- Turnover (excl. asset sales) for the period was GBP142.4m (2020: GBP135.9m) 
 -- Operating surplus (excl. asset sales) for the period was GBP37.1m (2020: GBP34.3m) 
 -- Overall operating margin (excl. asset sales) was 26.1% (2020: 25.3%) 
 -- The surplus after tax for the period was GBP22.3m (2020: GBP22.1m) 
 -- Gearing as at 31 March 2021 was 35.9% (2020: 38.4%) 
 -- Return on capital employed for the period was 3.5% (2020: 4.0%) 
 
 
 Commenting on the results, Scott Martin, Executive Director of Resources, said: 
 '2020/21 has been a remarkable year in so many different ways, and we are proud to publish our 
  draft results for the year ended 31st March 2021. This represents the third year of our five-year 
  strategy and, like many other organisations during the pandemic, we've had to work very 
 hard to steer a path through these challenging times, keeping a focus on our strategic aims 
  of Homes, Customer and Place. 
 As an employer we did all we could to support our colleagues' health and wellbeing, and we invested 
  significantly in enabling our whole workforce to work remotely, both through technology and 
  in adjusting our working practices to keep everyone safe. 
 Our customers have had to tackle huge challenges this year, some having to face bereavement 
  and loss, some losing jobs, many moving on to Universal Credit for the first time. Our team 
  have been there to support them through it all. 
 In continuing to deliver vital services for our customers and offering increased pro-active 
  support for the most vulnerable, we have achieved our highest ever customer satisfaction score: 
  a Net Promotor Score of 55.6. 
 
 We are very pleased to have delivered 454 new affordable homes in this financial year, despite 
  lengthy shutdown periods, with more units being developed using modern methods of construction. 
 Customers moving into our new homes have also shown high levels of satisfaction with nearly 
  90% very satisfied or satisfied with the service they received during the process. 
 We also continue to invest in our existing homes. Our planned maintenance and capital investment 
  programme has seen us spend over GBP27m across our geographical footprint. 
 
 From a place point of view, we continue to invest in our communities, expanding our services 
  and focussing on those who need our help most. This can be through financial support for community 
  organisations, helping customers maximise their income and get into secure 
 paid employment or working with partners to make communities safer places to live. Some key 
  achievements in the year have been helping over 5,600 customers via our 'Money Matters' team 
  access over GBP5.4m in income and helping over 150 customers into employment or training. 
 
 Finally, our strong investment grade credit rating of A/Stable was retained in May 2021 as well 
  by our rating agency Standard & Poor's (S&P). S&P recognised the challenges facing housing associations 
  in controlling rent losses through voids and pressure on tenant arrears levels, 
 especially in parts of the UK where they think it may take longer to recover from the impacts 
  of the pandemic. They praised Karbon's focus on traditional social housing activities, cash 
  resources and our experienced management team. 
 Pleasingly, in first quarter FY22, it appears as if Karbon continues to manage these challenges 
  very well, with rent collected at 99.8% compared to a target of 99.5%, and void rent losses 
  at 1.69% compared to a target of 1.94%. 
 We look to the rest of the year with optimism as we build on these positives." 
 
 
 Unaudited Financial Metrics 
                                                                    31-Mar      31-Mar 
                                                                      2021        2020 
 
                                                                    Actual      Actual 
                                                                   GBP'000     GBP'000 
 Statement of Comprehensive Income 
 
 Turnover (excl. asset sales)                                      142,400     135,933 
 Turnover (incl. asset sales)                                      146,355     142,918 
 
 Operating surplus (excl. asset sales)                              37,140      34,356 
 Operating surplus (incl. asset sales)                              38,757      38,622 
 Surplus after tax                                                  22,096      22,105 
 
 Margins                                                                 %           % 
 
 Overall operating margin (excl. asset sales) (Note 1)               26.1%       25.3% 
 Overall operating margin (incl. asset sales) (Note 2)               26.5%       27.0% 
 
 Key Financial Ratios 
 
 EBITDA MRI interest cover (Note 3)                                 212.4%      227.3% 
 Gearing (Note 4)                                                    35.9%       38.4% 
 ROCE (Note 5)                                                        3.5%        4.0% 
 
                                                                    31-Mar      31-Mar 
                                                                      2021        2020 
 
 Liquidity 
 24 month liquidity requirement (GBP'000) (Note 6)                  82,457     102,271 
 Cash and undrawn facilities (GBP'000) (Note 7)                    282,389     186,396 
 Unencumbered stock (no of properties)                               4,736       5,111 
 Value of unencumbered stock (average of EUV and MV, GBP'000) 
  (Note 8)                                                         170,729     181,389 
 Loan security excesses (average of EUV and MV, GBP'000) 
  (Note 9)                                                         112,341     211,539 
 
 Credit Rating 
 
 S & P                                                           A/Stable - May 2021 
 
 
 Notes: 
 
 1) Operating margin excluding asset sales removes the gain or loss on disposal of housing properties. 
 2) Operating margin including asset sales includes all activity 
 3) Earnings before interest, tax, depreciation and amortisation, major repairs included is 
  defined as: (Operating surplus - Disposal of assets - Outright sales and first tranche SO surpluses 
  + Depreciation & impairment - Amortisation - Capitalised major repairs) / Interest paid 
 (reflecting the 'S&P Global methodology for rating public and non profit social housing providers', 
  published 1st June 2021) 
 4) Gearing is defined as: Group Net Debt / Group Housing assets at historic cost less depreciation 
  (RSH VFM Gearing definition). 
 Karbon have chosen to include cash held in non ring fenced investment accounts as available 
  cash, 2021: GBP83.3m (2020: GBP27.6m). Removing this would result in the gearing calculations 
  being 2021: 45% (2020: 41.6%). 
 5) Return on capital employed is defined as Operating Surplus (incl asset sales) / Total Assets 
  less current liabilities 
 6) 24 month cashflow requirements 
 7) Cash, investments and undrawn revolving credit facilities 
 8) Value of stock not held by a lender or security trustee, at average GBP36k per unit 
 9) Value of excess security held with current lenders or Prudential Trustees 
 
 
 This trading update contains certain forward looking statements about the future outlook for 
  Karbon Homes Group. These have been prepared and reviewed by Karbon only and are unaudited. 
 Forward looking statements inherently involve a number of uncertainties and assumptions. Although 
  the Directors believe that these statements are based upon reasonable assumptions on the publication 
  date, 
 any such statements should be treated with caution as future outlook may be influenced by factors 
  that could cause actual and audited outcomes and results to be materially different. 
 Additionally, the information in this statement should not be construed as solicitation/recommendation 
  to invest in Karbon's bonds 
 
 
 For further information, please contact: 
 Andrew Thompson, Assistant Director: Treasury 
 07917 642957 
 
 https://www.karbonhomes.co.uk/corporate/ 
 END

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