TIDM99WK
RNS Number : 9717T
Housing 21
27 July 2022
Housing 21
Trading update for the year ended 31 March 2022
Housing 21 is today issuing a trading update for the year ended
31 March 2022 which includes various financial and operational
information. The financial information is audited and provided for
information purposes only.
After the first half of 2021/22 saw a return to more normal
operating conditions, the second half of the year has been more
challenging against a backdrop of increasing inflation and rising
finance costs. We restructured some of our legacy financing during
the year, removing all RPI linked debt and derivatives, but our
results are impacted by break costs relating to these transactions.
We tapped the H21 bond for a further GBP130m in December 2021,
GBP80m of which was sold in early January. Our development
programme performed in line with expectations in our business plan
in terms of completions but First Tranche Sales lagged behind
budget and contributed to a shortfall against planned Operating
Surplus.
Highlights
-- We completed a net 657 properties in the period taking our
overall property portfolio to 22,204 owned and/or managed
properties (31 March 2021: 21,547)
-- Turnover increased 11.4% to GBP224.4 million (2021: GBP201.3 million)
-- Operating surplus(1) was down 13.6% to GBP30.9 million (2021: GBP35.8 million)
-- Gearing as at 31 March 2022 was 42.6% (31 March 2021: 34.8%)(2)
-- EBITDA-MRI interest cover(3) was 126% (2021: 185%)
-- Liquidity horizon currently extends to June 2024
Notes
1. Operating surplus includes first tranche and outright sales
of newly developed properties and other gains on property
sales.
2. Gearing calculated using the Regulator of Social Housing's
gearing metric which excludes monies held on short term deposit;
adjusting for this and the value of private finance initiative and
public private partnership assets, primarily within Oldham
Retirement Housing Partnership Limited, gearing was 31.4% (31 March
2021: 32.2%).
3. EBITDA-MRI excludes GBP14.0 million of break costs incurred
in the repayment of the legacy RPI debt. Including this, the EBITDA
MRI is 83%.
Disclaimer
These materials have been prepared by Housing 21 solely for use
in publishing and presenting its results in respect of the year
ended 31 March 2022.
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
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 have returned to normal activity,
delivering over 38,000 hours of care per week to our residents.
Void performance has improved since 31 March 2022 across both
Retirement Living and Extra Care with 284 units void at period end
(31 March 2021: 456 units). Total voids (re-let and major repairs)
were 2.2% for the year ending 31 March 2022 (31 March 2021:
2.6%).
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 and 99% of our properties achieved at least EPC C
at 31 March 2022 (31 March 2021: 91%) with only three schemes left
to complete at the year end, 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 12 months ended 31
March 2022 compared to the same period in the prior financial year
is set out below.
12 months ended 31 March 2021 2022 Change
GBPm GBPm
-------------------------------------- -------- -------- --------
Turnover 201.3 224.4 11.5%
Social housing lettings 146.1 152.4 4.2%
Shared ownership first tranche
sales 10.4 22.4 115.4%
Other social housing activities 4.9 6.0 22.4%
Care services 35.6 38.2 7.3%
Other non-social housing activities 4.2 5.5 28.6%
Operating costs and costs of
sale (165.8) (194.1) 17.1%
Gain on disposal of other housing
properties 0.3 0.6 100%
Operating surplus 35.8 30.9 (13.7)%
====================================== ======== ======== ========
Turnover increased 11.5% to GBP224.4 million (2021: GBP201.3
million) primarily reflecting increased shared ownership sales,
higher service charge income (however this is profit neutral and is
offset by higher service charge costs), higher care income from
contractual price increases and the effect of new schemes coming
onboard. From 1 April all affordable rent properties were converted
to social rent, which reduced rental income by cGBP2.8 million.
Overall costs increased ahead of turnover, by 17.1% to GBP194.1
million (2021: GBP165.8 million) driven particularly by development
cost of sales, linked to the increase in activity (shared ownership
sales of 189 units versus 79 in the prior year) and higher care
costs as we continue to pay our carers 10% above minimum wage.
Service costs have increased but are 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.
Development
In the 12 months ended 31 March 2022, development spend amounted
to GBP48.2 million.
11 schemes were completed which added 691 properties (442 rent;
249 shared ownership) to our property portfolio. We have another 12
schemes on-site, comprising 537 units (410 rent; 103 shared
ownership; and 24 outright sale). At least twenty more schemes are
expected to commence construction by 31 March 2023.
Treasury and financing
31 March 2021 31 March 2022
----------------------------------- -------------- --------------
Gross debt GBP673m GBP689m
Cash incl. short term investments GBP233m GBP225m
Net debt GBP440m GBP464m
Housing property value GBP1,262m GBP1,315m
Gearing 34.8% 42.6%
Cash and undrawn committed GBP221m GBP236.1m
facilities(1)
Liquidity horizon October 2023 June 2024
----------------------------------- -------------- --------------
Notes
(1) Cash for these purposes includes only unrestricted cash
At 31 March 2022, Housing 21 had net debt of GBP464 million (31
March 2021: GBP440 million) and gearing, as measured using the
Regulator of Social Housing's (RSH) value for money gearing metric,
of 42.6% (31 March 2021: 34.8%). However, including short term
investments and 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 31.4% (31
March 2021: 32.2%).
Our liquidity at 31 March 2022 was sufficient to meet all
forecast financing needs until June 2024, considering projected
operating cash flows, forecast investment in new and existing
properties, debt service costs and maturities and forecast grant
receipts.
During the year we have repaid early GBP49.2 million of legacy
RPI loans, incurring GBP14.0 million of break costs, and terminated
an RPI linked swap at a mark-to-market valuation of GBP13.3
million. This was funded through tapping our 2017 bond for GBP130
million, of which GBP80 million was sold in January at an all-in
rate of 2.488% with the remaining GBP50 million retained.
Standard & Poor's credit rating
On 25 July 2022, S&P affirmed the rating for Housing 21 as
'A-' with a stable outlook.
RSH
On 30(th) March 2022 the Social Housing regulator published the
latest regulatory grading for Housing 21 of G1/V1.
Outlook
The new financial year is expected to present challenges
relating to cost inflation, but the business plan has been tested
against various challenging scenarios and remains robust. Having
raised funds in early 2022 we have sufficient liquidity to last
into the next financial year, which removes financing risk from the
2022/23 financial year. In common with others in the sector we will
be developing initiatives to support our employees and our
residents through these difficult times.
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END
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