TIDM87ZW
Flagship Finance PLC
12 November 2021
Flagship Finance Plc
Flagship Housing Group Limited (Flagship) trading update and
unaudited financial statements for the 6 months ended 30 September
2021
Flagship, the parent company of Flagship Finance Plc and a
Registered Provider owning and managing 31,984 homes in the East of
England, announces its half year trading highlights and summary
unaudited financial results for the 6 months to 30 September
2021.
Headline results and highlights
-- Flagship, own and manage 31,984 homes (31,825 at 31 March
2021) - the largest landlord in the East of England, bringing
significant regional influence
-- Flagship benefit from a G1 / V1 rating from the Regulator of
Social Housing - last IDA completed 28 October 2020
-- Flagship has maintained its credit rating of A2 (Stable) from Moody's
-- Financial performance remains robust with operating margin increasing from 30.0% to 33.8%
-- Unaudited operating profit for the period was GBP47.9m
Housing Properties (net of depreciation) have increased to
GBP1,776m from GBP1,755m
-- Flagship has published its ESG Report, running in parallel
with its Sustainable Finance Framework. Both documents are
available on our website:
https://www.flagship-group.co.uk/about-us/investors-hub/
Statement of Comprehensive Income to 30 September 2021
(unaudited)
Year Ended 6 Months Ended
30.03.2021 30.09.2021
GBP'000 GBP'000
Turnover 200,150 121,395
Operating costs (140,530) (80,861)
Gain on disposal of property, plant
and equipment 9,353 6,870
Share of operating profit in joint
ventures 480 484
------------------------------------------------ ---------------------- -------------------------
Operating profit 69,453 47,889
------------------------------------------------ ---------------------- -------------------------
Net finance expense (25,181) (15,275)
Increase / (deficit) on revaluation 1,824 -
of investment properties
Profit for the period 46,096 32,614
------------------------------------------------ ---------------------- -------------------------
Financial indicators as at 30 September 2021
Key Performance Indicators Year Ended 6 Months
31.03.2021 Ended 30.09.2021
Homes in management 31,825 31,984
Current tenant rent arrears % 3.9% 5.3%
Rent loss from voids as a % of income 1.10% 1.33%
New affordable homes delivered 460 249
First tranche shared ownership sales 139 124
Operating margin (excluding surplus on sale
of housing property, plant & equipment) 30.0% 33.8%
EBITDA MRI interest cover 243% 232%
Gearing (Debt inc Finance Lease less cash; divided
by Housing Properties NBV) 46.5% 46.0%
Half year results demonstrate strong financial performance and
commitment to sustainability
David Armstrong, Chief Financial Officer at Flagship said: The
first half of the year has seen COVID restrictions lifting and
service getting back to normal. During this period the sector has
continued to experience challenges on both labour and materials
availability that have impacted on our development and repairs
programmes. However, we still delivered 249 affordable homes (148
Sept 2020). Demand for both open market sales and shared ownership
has remained strong and sales continue to exceed appraisal
values.
At the half year point voids numbers were higher than expected
but the post lockdown recovery work has already made significant
inroads to get these back to expected levels. Arrears whilst higher
than the yearend at 5.3% has followed a similar post summer peak to
the previous year (5.1%).
Alongside our repairs work we have continued with our programme
of low carbon heating installations completing 203 replacements in
the first half of the year.
Despite the post COVID challenges I am delighted to report such
a strong set of half year results with margins improving despite
the pressure on materials prices and the catch-up of repairs work
following lockdown.
Operating Performance Review
In the 6 months to September 2021 total turnover increased by
27% to GBP121.4m. (H1 20/21: GBP95.3m)
Turnover from social lettings has increased by GBP2.3m to
GBP80.2m in the current year driven by the inflationary rent
increases and a year-on-year increase in social housing units.
Turnover from social lettings currently represents 66% of total
turnover.
The demand for outright sale homes and also 1st tranche shared
ownership homes has been very strong during the 6 months to
September 2021, with 39 outright sales and 124 1st tranche sales
completed to date. When compared to the previous year turnover from
outright sales has grown by GBP10.6m to GBP11m and 1st tranche
sales have grown by GBP9.4m to GBP14.4m.
The housing team continue to manage the backlog of voids caused
by the Covid related lockdown, year to date void loss is running at
1.3%, compared to 1.1% in 2020/21. Operating profit including
profit on asset disposals and profit from joint ventures grew by
23% to GBP47.9m. (H1 20/21: GBP39.0m) which is ahead of
expectations.
During the period of March to September 2020 the level of
maintenance spend was impacted by Covid restrictions, resulting in
a year on year increase of GBP3.7m when compared to the current
year, this has offset the increase seen in social lettings
turnover.
Operating profit from outright sales and 1st tranche sales have
increased by GBP1.6m and GBP4m respectively due to the higher sales
volumes and expected sales values being exceeded due to the
continued demand for both products.
The first 6 months of 2021/22 has also seen a higher level of
asset disposals, right to buy sales and shared ownership
Staircasing. The result of this is an increased level of profit,
increasing GBP3.3m year on year to GBP6.9m.
The Operating Margin excluding surplus on asset disposals is
currently 33.8%, which is above the 2020/21 full year and Budget
expectations.
Net Profit (after Interest and finance costs) of GBP32.6m is
GBP5.8m higher than the comparative period in the previous year and
5.3% higher than the expected Budget.
It is expected that Net Profit will finish in line with Budget
as the current upside from housing sales will be reduced in the
second half of the year.
Since the end of the last financial year we have issued a
GBP250m public bond (GBP100m retained) at a coupon of 1.875%.
Net Debt at the end of the period is GBP800m and immediately
available liquidity was GBP355m consisting of GBP102m cash/cash
equivalent, GBP162m of revolving credit facilities and GBP91m of
retained bond that has security placed against it.
EBITDA-MRI interest cover at the end of September 2021 was 232%
(243% at the end of March 2021) which is well above the tightest
financial covenant of 120% within Flagship's loan arrangements.
Gearing (debt inc finance leases less cash; divided by housing
properties net book value) at the end of September 2021 was 46.0%,
this is slightly lower than the end of the previous financial year
and is well within the target of maintaining gearing below 50%.
Development Review
Flagship is an experienced developer having delivered 1,486
affordable homes over the last three financial years and with a
strong focus on social housing tenures. Flagship completed 302 new
homes in the six months to 30 September (478 in the year ended 31
March 2021). 249 new homes are social properties and 53 properties
to be sold on the open market.
Our growth strategy delivers a balanced portfolio of residential
development and improvements to our existing housing stock. To
serve the needs of a range of tenants and private customers, we
will put our finances to good use by maintaining and improving our
stock as well as adding to our asset base. We will build the right
homes in the right places and now expect to deliver 755 homes in
the year to 31 March 2022. This is an increase of 275 new homes
when compared to the year ended 31 March 2021.
Flagship has a development plan targeting 4,000 new Affordable
Homes over the next five years and 51% of development pipeline is
already secured.
ESG
Our Environmental, Social and Governance (ESG) report gives
Flagship the opportunity to showcase
the positive impact of its work. The Group has an ambitious
programme to deliver c.4,000 affordable homes over the next five
years and it wants to build them to high environmental standards.
Flagship knows that a decent safe home has a positive impact on its
tenant's quality of life. The Group is committed to tackling the
environmental agenda and plans to retrofit c.2,000 of our existing
homes every year through a fabric-first programme, focusing on
thermal improvements, digital heating controls and installing
renewable heating technology.
Tenants are at the heart of Flagship's decision making and
through our green investment plans, it will make its homes safer
and cheaper to run, which ultimately tackles fuel poverty and
enhances quality of life for its tenants.
During the 6 months to September 2021, Flagship has installed
203 Air Source Heat Pumps in its properties.
Other
As part of our compliance programme we have undertaken a
detailed review all of our buildings above 11 metres. During this
process we identified that one of our 6 storey buildings was over
18m in height. This single block contains a total of 25 flats and
has no cladding.
.
Enquiries
All enquiries in relation to this trading update should be
directed to:
Alex Fitzgerald, Head of Treasury and Regulation
Tel: 0845 258 6175
email: Alex.Fitzgerald@flagship-group.co.uk
Disclaimer
The information in this announcement of results has been
prepared by Flagship Housing Group Limited and is for information
purposes only. The announcement should not be construed as an offer
or solicitation to buy or sell any securities issued by Flagship
Finance Plc or any other member of the Group, or any interest in
such securities, and nothing herein should be construed as a
recommendation or advice to invest in any such securities.
This 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 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. Accordingly, undue
reliance should not be placed on forward looking statements.
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END
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