TIDM46GV
RNS Number : 9578D
Karbon Homes Limited
26 June 2023
Karbon Homes Group
26.06.2023
Karbon Homes Group trading update for the period ending 31 March
2023
-- Karbon Homes Group (KHG) is today issuing its consolidated
trading update for the period ended 31 March 2023.
-- These figures are unaudited and for information purposes only.
Highlights for the period ending 31 March 2023
-- KHG own and manage 31,771 homes
-- Karbon Homes Limited maintained its G1/V1 status from the
Regulator for Social Housing on 11th January 2023, following a
stability check.
-- Turnover (excl. asset sales) for the period was GBP165.6m (2022: GBP155.2m)
-- Operating surplus (excl. asset sales) for the period was GBP43.7m (2022: GBP40.2m)
-- Overall operating margin (excl. asset sales) was 26.4% (2022: 25.9%)
-- The surplus after tax for the period was GBP30.1m (2022: GBP27.2m)
-- Gearing as at 31 March 2023 was 34.9% (2022: 34.6%)
-- Return on capital employed for the period was 3.7% (2022: 3.9%)
Commenting on the results, Andrew Thompson; Assistant Director:
Treasury said:
'We are pleased to report that Karbon Homes Group has maintained
positive performance in the financial year to 31st March 2023, and
will highlight some of our key indicators in this unaudited
release. This comes ahead of the publication of our audited
accounts and ESG reporting under the Sustainability Reporting
Standard for Social Housing, which are both due to be published in
July.
Karbon has continued to invest and push forward with a number of
new and exciting projects which will help us deliver on our
strategic aims of providing good, quality homes, delivering
excellent customer service and shaping strong, sustainable places
for our communities.
Our commitment to playing our part in tackling the UK's housing
crisis is unwavering, and we aim to build over 4,000 new homes
across the North East and Yorkshire by 2028. A key part of this
plan is our strategic partnership with Homes England. We have had
another strong year in terms of the provision of high quality
affordable new homes, delivering 529 new homes across the group in
a variety of tenures and geographies. In addition to this, we were
pleased to exceed our target for our ongoing pipeline of homes,
commencing on site this year with a further 762 homes versus our
target of 511.
The net zero carbon challenge also remains a key focus for us,
as we try to help both our existing and new customers deal with the
pressures faced by households in terms of their ongoing energy
bills. All of the new homes we have delivered this year benefit
from an EPC rating of 'B' or above, and we continue to pilot the
use of energy efficient technologies in our development schemes.
Our existing homes have also enjoyed significant investment this
year as part of our ongoing capital works programme During 2022/23
we have invested GBP30.5m in a range of capitalised repairs,
compared to GBP20.3m in the prior year; an increase of 50%. We have
been able to continue improving the energy performance of our
existing homes and strengthen our systems for tackling damp and
mould as a result of our financial strength and solid interest
cover metrics, all of which benefits our customers. We are pleased
to report that over 70% of our homes are at EPC C rating or above,
as a result of these improvements.
Our customers continue to speak very highly of Karbon too. Our
customer satisfaction scores continue to remain high, with a Net
Promoter Score of +39.8 for the year, meaning that our customers
willingness to recommend Karbon to others is at a level considered
to be 'excellent'. We have particularly seen a lot of demand for
our money, debt and benefits advice service, where we've been able
to help our customers maximise their benefit income. During
2022/23, we generated almost GBP4m of income gains for our
customers which have proved vital during the current cost of living
crisis in the UK.
In terms of our strategic aim around 'place', we've also begun
work on a number of deeper place-based interventions in areas where
we have a large concentration of homes. In Stanley, in County
Durham, we've worked closely with customers, stakeholders and
community organisations to help us understand what we can do to
develop opportunities for the economy of the town to grow and to
help residents live more prosperous lives. Following months of
research, Karbon published its Fair Foundations report in January
2023, outlining the practical ways that we hope to address the
long-standing challenges of left behind places in the UK.
Finally, during 2022/23, we were pleased to strengthen our
presence in Yorkshire following the merger of our subsidiary York
Housing Association, with Leeds and Yorkshire Housing Association,
to create a larger c 3000 home subsidiary called 54 North Homes.
The merger aims to deliver better outcomes for our customers as
well as economies of scale in our repairs and new homes development
programmes in Yorkshire.
The progress of 2022/23 has been underpinned by Karbon
maintaining the highest rating for both the governance and
viability standard (G1/V1) with the Regulator of Social Housing.
Our external ratings agency (S&P Global), also noted in their
annual review in May 2023, that they forecast that Karbon "will
maintain relatively strong financial metrics despite the challenges
affecting the social housing sector", and were complimentary of
Karbon's experienced management team who are delivering the Group's
strategy consistently with its operational capacity. We were very
pleased that this led to S&P improving the rating outlook to A
'positive' this year, which gives us a great foundation to continue
to deliver for our communities.
Unaudited Financial Metrics
31-Mar 31-Mar
2023 2022
Actual Actual
GBP'000 GBP'000
Statement of Comprehensive Income
Turnover (excl. asset sales) 165,604 155,186
Turnover (incl. asset sales) 172,476 163,186
Operating surplus (excl. asset sales) (Note 10) 43,708 40,180
Operating surplus (incl. asset sales) (Note 10) 46,981 43,989
Surplus after tax (Note 10) 30,107 27,152
Margins
Overall operating margin (excl. asset sales) (Note 1) 26.4% 25.9%
Overall operating margin (incl. asset sales) (Note 2) 27.2% 27.0%
Key Financial Ratios
EBITDA MRI interest cover (Note 3) 163.2% 184.6%
Gearing (Note 4) 34.9% 34.6%
ROCE (Note 5) 3.7% 3.9%
31-Mar 31-Mar
2023 2022
Liquidity
24 month liquidity requirement (GBP'000) (Note 6) 152,201 126,359
Cash and undrawn facilities (GBP'000) (Note 7) 235,492 247,070
Unencumbered stock (no of properties) 8,281 7,067
Value of unencumbered stock (average of EUV and MV, GBP'000)
(Note 8) 331,977 258,915
Loan security excesses (average of EUV and MV, GBP'000) (Note
9) 217,776 157,151
Credit Rating
'A'; Outlook Positive
S & P - May 2023
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, 2023: GBP38.7m (2022:
GBP92.3m). Removing this would result in the gearing calculations
being 2023: 38.2% (2022: 43.9%).
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
security trustees
10) In order to show our underlying operating margin metrics,
any negative goodwill arising on acquisitions or mergers has been
excluded from these figures, 2023: GBP53.5m (2022: GBP8.6m).
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/
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END
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