TIDM99WK
RNS Number : 8005T
Housing 21
29 November 2021
Housing 21
Trading update for the six months ended 30 September 2021
Housing 21 is today issuing a trading update for the six months
ended 30 September 2021 which includes various financial and
operational information. The financial information is unaudited and
provided for information purposes only.
Commenting on Housing 21's performance in the first half of the
current year, Andy Howarth, Chief Financial Officer, said:
"The first half of 2021/22 has seen a return to more normal
operating conditions with the effects of the Covid pandemic
moderating compared to last year. Our development programme is back
on track and performing in line with expectations. Surplus is on
budget and we expect this steady performance to continue to the end
of the year."
Highlights
-- We completed a net 404 properties in the period taking our
overall property portfolio to 21,951 owned and/or managed
properties (31 March 2021: 21,547)
-- Turnover increased 11.5% to GBP109.3 million (2020: GBP98.0 million)
-- Operating surplus(1) was down 15.7% to GBP16.6 million (2020: GBP19.7 million)
-- Gearing as at 30 September 2021 was 34.4% (31 March 2021: 34.8%)(2)
-- EBITDA-MRI interest cover(3) was 128% (2020: 222%)
-- Liquidity horizon currently extends to February 2024
Notes
1. Operating surplus includes first tranche and outright sales
of newly developed properties but excludes other gains on property
sales.
2. Gearing calculated using the Regulator of Social Housing's
gearing metric; adjusting for the value of private finance
initiative and public private partnership assets, primarily within
Oldham Retirement Housing Partnership Limited, gearing was 31.9%
(31 March 2021: 32.2%).
3. EBITDA-MRI interest cover is in respect of the 6 months ended 30 September.
Conference call for the credit community to be hosted by
Tony Tench, Deputy Chief Executive; and Andy Howarth, Chief
Financial Officer
29 November 2021, 2.00pm (UK time)
The presentation to be used during the conference call can be
accessed via
http://www.rns-pdf.londonstockexchange.com/rns/8005T_1-2021-11-28.pdf
and will also be available from 9.00am today by clicking on the
'Investors presentation' tab at
www.housing21.org.uk/corporate/investors/corporate-reports/
To join the roadshow: URL: https://dealroadshow.com
Entry code: HOUSE21
Direct link: https://dealroadshow.com/e/HOUSE21
If you are unable to join via +44 203-925-3582
the roadshow, you may dial into or +44 333-016-4329
one of the numbers opposite to Conference ID: 83933
connect to a Live Operator
-------------------------------- ------------------------------------------------
Investor enquiries Media enquiries
andy.howarth@housing21.org.uk communications@housing21.org.uk
-------------------------------- ------------------------------------------------
Disclaimer
These materials have been prepared by Housing 21 solely for use
in publishing and presenting its results in respect of the six
months ended 30 September 2021. For the purposes of this
disclaimer, "materials" shall mean the results press release and
related investor presentation slides dated 29 November 2021, the
oral presentation of the slides by Housing 21 and related
question-and-answer session and any materials distributed at, or in
connection with, that presentation.
These materials do not constitute or form part of and should not
be construed as, an offer to sell or issue, or the solicitation of
an offer to buy or acquire securities of Housing 21 in any
jurisdiction or an inducement to enter into investment activity. No
part of these materials, nor the fact of their distribution, should
form the basis of, or be relied on or in connection with, any
contract or commitment or investment decision whatsoever. Neither
should the materials be construed as legal, tax, financial,
investment or accounting advice.
These materials contain statements with respect to the financial
condition, results of operations, business and future prospects of
Housing 21 that are forward-looking statements. By their nature,
forward-looking statements involve risk and uncertainty because
they relate to events and depend on circumstances that will occur
in the future. There are a number of factors that could cause
actual results and developments to differ materially from those
expressed or implied by these forward-looking statements, including
many factors outside Housing 21's control.
Operating review
The first half of 2021/22 has seen a return to more normal
operating conditions with performance in line with budgets and
performance plans. Our care services have seen a gradual increase
in activity to over 38,000 hours of care per week delivered to our
residents, which is still c 1,000 hours less per week at this time
last year.
Void performance has improved since 31 March 2021 across both
Retirement Living and Extra Care with 415 units void at period end
(31 March 2021: 456 units) and we continue to expect total void
levels to return to pre-Covid levels by March 2022. Total voids
(re-let and major repairs) were 2.6% during the six months ended 30
September 2021.
Comparisons clearly show the impact of the Covid-19 pandemic on
performance in the prior year period, particularly on development
completions and sales, maintenance activity and care services.
We continue to be at the forefront of the housing sector for
energy efficiency with 96% of our properties achieving at least EPC
C as at 30 September 2021 (31 March 2021: 91%). We expect to reach
100% minimum EPC C performance by April 2022, significantly ahead
of the government's 2030 target. 25% of our properties are at EPC B
level and all new developments from 2020/21 onwards are expected to
achieve this higher standard.
Financial review
Turnover, costs and surpluses
A summary of financial performance for the six months ended 30
September 2021 compared to the same period in the prior financial
year is set out below.
6 months ended 30 September 2020 2021 Change
GBPm GBPm
-------------------------------------- ------- ------- --------
Turnover 98.0 109.3 11.5%
Social housing lettings 72.1 74.0 2.6%
Shared ownership first tranche
sales 3.3 10.6 221.2%
Other social housing activities 3.0 3.7 23.3%
Care services 17.6 19.2 9.1%
Other non-social housing activities 2.0 1.8 (10.0)%
Operating costs and costs of
sale (78.3) (92.7) 18.4%
Operating surplus 19.7 16.6 (15.7)%
====================================== ======= ======= ========
Turnover increased 11.5% to GBP109.3 million (2020: GBP98.0
million) primarily reflecting increased shared ownership sales,
higher care income from contractual price increases and the effect
of new schemes coming onboard.
Overall costs increased ahead of turnover, by 18.4% to GBP92.7
million (2020: GBP78.3 million) driven particularly by development
cost of sales, linked to the increase in activity (shared ownership
sales of 81 units versus 26 in the prior year) and higher care
costs. Care service costs have increased but are fully recovered
from residents via their service charge. It also reflects the
rebound to more normal levels of repairs and maintenance activities
relative to the prior year period. Depreciation has also increased
from the on-boarding of new schemes.
A number of the drivers of growth in both revenue and costs were
driven by the effects of the Covid 19 pandemic on performance
particularly in the prior year period.
Development
In the six months ended 30 September 2021, development spend
amounted to GBP34 million.
Seven schemes were completed which added 404 properties (217
rent; 187 shared ownership) to our property portfolio. A further
four schemes are expected to complete by 31 March 2022, bringing
total completions for the year to nearly 700. We have another six
schemes on-site, comprising 321 units (217 rent; 80 shared
ownership; and 24 outright sale) for completion by March 2023. At
least six more schemes are expected to commence construction by 31
March 2022.
Treasury and financing
31 March 2021 30 September 2021
------------------------------------------ -------------- ------------------
Gross debt GBP673m GBP662m
Cash GBP233m GBP208m
Net debt GBP440m GBP454m
Housing property value GBP1,262m GBP1,319m
Gearing 34.8% 34.4%
Cash and undrawn committed facilities(1) GBP221m GBP197m
Liquidity horizon October 2023 February 2024
------------------------------------------ -------------- ------------------
Notes
(1) Cash for these purposes includes only unrestricted cash
At 30 September 2021, Housing 21 had net debt of GBP454 million
(31 March 2021: GBP440 million) and gearing, as measured using the
Regulator of Social Housing's (RSH) value for money gearing metric,
of 34.4% (31 March 2021: 34.8%). However, including the value of
private finance initiative and public private partnership assets,
primarily within Oldham Retirement Housing Partnership Limited
(debt associated with these projects is included in the RSH gearing
calculation), gearing was 31.9% (31 March 2021: 32.2%).
Our liquidity at 30 September 2021 was sufficient to meet all
forecast financing needs until February 2024, taking into account
projected operating cash flows, forecast investment in new and
existing properties, debt service costs and maturities and forecast
grant receipts.
However, we continue to actively manage our treasury portfolio
and in the near future we expect to repay a high cost legacy loan
and terminate early one of a small number of derivatives held by
the organisation. These initiatives are expected to utilise
approximately GBP80 million in cash.
Standard & Poor's credit rating
On 23 July 2021, S&P published the updated rating for
Housing 21 as 'A-' with a stable outlook.
Andy Howarth, Chief Financial Officer for Housing 21
commented:
"The rating recognised the impact that the move to social rents
will have on our financial metrics, but the strength of our core
business is also recognised with a stable outlook. Our strategy is
to continue to deliver high quality housing solutions to older
people of modest means. We have excellent satisfaction scores in
all our properties and our integrated care services are rated
higher than our peers. With a high level of demand for our homes
and services we are confident that we have a robust business model
supported with a strong investment-grade rating."
Outlook
Our operating surplus was consistent with budget for the six
months ended 30 September 2021 and we expect the 2021/22 full year
operating surplus also to be consistent with budget and slightly
below the outturn for the year ended 31 March 2021 of GBP35.8
million.
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END
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