Optivo Finance PLC Optivo Trading update for 6 months to 30 09 2018 (7838G)

TIDM20SY

RNS Number : 7838G

Optivo Finance PLC

08 November 2018

OPTIVO TRADING UPDATE

This is an unaudited trading update for Optivo for the six months ended 30 September 2018.

Highlights

Comparators in this trading update are the unaudited results for Optivo for the first half of the previous financial year ("H1 2017/18").

   --    Turnover GBP161m (H1 2017/18 GBP159m) 
   --    Operating surplus GBP59m (H1 2017/18 GBP64m) 
   --    Surplus before tax GBP38m (H1 2017/18 7 GBP44m) 
   --    Operating margin 34% (H1 2017/18 7 31%) 
   --    Net interest costs GBP21m (H1 2017/18 GBP20m)

The Regulator of Social Housing confirmed Optivo's V1/G1 rating, the highest possible, following an in-depth assessment earlier this year. Optivo was selected to join the new GBP20bn London Development Panel in August, which is being used to accelerate housebuilding on public sites. We were also named in the Budget as a strategic partner under the Affordable Homes Programme and will receive an additional GBP49.9m to build 1,000 homes outside London by March 2022. Moody's have confirmed our rating is unchanged at A2 stable.

Operations

At the end of September 2018 our strategic KPI performance were as follows:

   --    A net promoter score of 65 for resident satisfaction - 2018/19 target 56 
   --    We helped 486 people into jobs and training - 2018/19 whole year target 870 
   --    47% of residents are using our services online - 2018/19 target 45% 
   --    82% of staff feel proud to work for Optivo - 2018/19 target 75% 
   --    77% of staff say Optivo is a great employer - 2018/19 target 75%

For our core business of General Needs, Supported Housing and Housing for Older People operational income KPIs for Optivo for the year to date were as follows:

 
                                 September 2018      March 2018 
 Total rent arrears of annual    GBP10.2m, 4.86%   GBP8.2m, 3.96% 
  rent debit 
                                ----------------  --------------- 
 Rent arrears of 0 to 4 weeks    GBP3.4m, 1.62%    GBP3.5m, 1.68% 
                                ----------------  --------------- 
 Rent arrears of 5 to 6 weeks      0.9m, 0.43%     GBP0.7m, 0.32% 
                                ----------------  --------------- 
 Rent arrears of 7 to 12 weeks   GBP1.9m, 0.93%    GBP1.5m, 0.71% 
                                ----------------  --------------- 
 Rent arrears of 13 weeks or     GBP3.9m, 1.88%    GBP2.6m, 1.25% 
  more 
                                ----------------  ---------------

Universal Credit cases increased to 3,472, up 115% on September 2017. Arrears for these tenants are at 12.88%, an improvement from 13.15% when compared to September 2017. Additional staff resources are being applied to work with residents to manage the arrears position. In the half year to 30 September 2018 the average time to re-let vacant properties, excluding voids for major works, was 38.4 days. At 31 March 2018 the average for the financial year to date was 26.5 days. The increase reflects decisions to hold voids in certain sites while re-investment options appraisals are undertaken.

Out-turn for the half year ended September 2018 was in line with expectations and in accordance with Optivo's financial plan.

Investment and Sales

In the six months to 30 September we started 274 new homes and completed 259. Comparable figures for the six months to 31 March were 327 starts and 274 completions. At 30 September we were in contract to deliver 2,180 homes (March 2018: 2,054) across 50 sites, with remaining capital commitments on these sites of GBP379.7m (March 2018: GBP363m). We had 72 unsold Shared Ownership 1(st) tranche properties (March 2018: 65), and no open market sale unsold units (March 2018: 0).

Liquidity

At the end of the half year we had available undrawn facilities of GBP544m (March 2018: GBP606m) and GBP84m (March 2018: GBP82m) unencumbered cash and deposits available. Our outstanding net debt balance was GBP1,063m (March 2018: GBP1,007m).

Unaudited Financial Results

Unaudited financial results for H1 2018/19 are below, together with comparatives for H1 2017/18 and the full year 2017/18.

 
 Statement of Consolidated Income       H1 2018/19   H 1 2017/18   2017/18 
                                                        (GBPm)       (GBPm) 
-------------------------------------  -----------  ------------  --------- 
 Turnover                                  161           159         318 
 Cost of Sales                             (7)           (9)         (22) 
 Operating Expenditure                    (100)         (100)       (199) 
 Surplus on disposal of fixed 
  assets                                    5            14           20 
-------------------------------------  -----------  ------------  --------- 
 Operating Surplus                          59           64          117 
-------------------------------------  -----------  ------------  --------- 
 Surplus on commercial property 
  disposals                                 -             -           4 
 Interest receivable                        -             1           1 
 Interest and financing costs              (21)         (21)         (42) 
 Fair value movements - investment 
  property                                  -             -           11 
-------------------------------------  -----------  ------------  --------- 
 Surplus before taxation                    38           44           91 
-------------------------------------  -----------  ------------  --------- 
 Hedge reserve write off                    -             -         (140) 
-------------------------------------  -----------  ------------  --------- 
 Surplus / (Deficit) before taxation        38            -          (51) 
-------------------------------------  -----------  ------------  ---------

Notes:

-- The half year figures exclude movements in the fair value of investment properties, unhedged instruments and pension adjustments. These items are reviewed at year end.

Next Update

We will publish a full year financial update after 31 March 2019.

Notes

Optivo is a charitable housing association that was formed on 22 May 2017 when AmicusHorizon Ltd amalgamated with Viridian Housing. It currently manages 44,000 homes across London, the South East and the Midlands with a target to achieve 1,500 new homes starts by 2020-21.

Further information on Optivo is available on our website https://www.optivo.org.uk/investors.aspx

Contact: Tim Luckhurst, Head of Treasury on 020 8726 8713 or tim.luckhurst@optivo.org.uk

DISCLAIMER

This update contains certain "forward-looking" statements reflecting, among other things, our current views on markets, activities and prospects. Actual 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. No reliance should be placed on the information contained within this update. We do not undertake to update or revise such public statements as our expectations change in response to events. This update is neither recommendation nor advice. This is not an offer or solicitation to buy or sell any securities.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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November 08, 2018 05:55 ET (10:55 GMT)

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