TIDM38EO
RNS Number : 5405N
Metropolitan Funding PLC
21 May 2020
Metropolitan Funding PLC
Thames Valley Housing Association (TVHA) unaudited consolidated
results for the year ended 31 March 2020.
The TVHA group (trading as Metropolitan Thames Valley), one of
the UK's leading providers of affordable housing and care and
support services, announces unaudited consolidated results for the
year ended 31 March 2020. These results may be subject to further
adjustments, most notably in respect of pension costs and property
valuations.
Headlines
-- GBP465m total revenue, up around 13%.
-- 1,022 new homes completed (2019: 1,037 homes) of which 781 (2019: 907) were affordable.
-- Underlying Operating Surplus (before deducting non-recurring
integration and pension costs) down 15% to GBP130m (2019: GBP154m)
impacted by bad debt provision, asset impairment and property
improvement costs.
-- Reported Operating Surplus was GBP126m (2019: GBP149m).
-- Strong liquidity position with around GBP611m of available cash and facilities.
-- S&P credit rating A- (stable outlook).
-- Successfully exited SHPS multi-employer scheme on 4 October 2019.
-- RSH gradings confirmed as G1/V2
-- New Chair, Althea Efunshile, CBE appointed 1 March 2020, upon Paula Kahn's retirement.
Geeta Nanda, Chief Executive of Metropolitan Thames Valley,
commented:
"The last year has been another successful period for MTVH as we
deliver on our belief that everyone should have a home and the
chance to live well. As a People-Powered organisation it is so
important during these difficult times that we work with our
customers, colleagues and communities to provide much needed
support and secure homes.
"Our ambitious development programme saw over 1,000 new homes
built and further expansion of our home-building partnerships, in
addition to a new collaboration with Vistry to deliver 800 new
homes in Cambridgeshire over the next 10 years.
"We have continued to prioritise improvements and maintenance of
our existing homes, investing over GBP40m in the last year,
reflecting our commitment to ensuring that all our homes are safe,
warm and dry. We continue to assess our homes to ensure they meet
government guidance and regulations in relation to building safety,
as the safety of our residents and customers remains our number one
priority. Consistent with this, we have established a Building
Safety team which will move forward on ensuring the safety of
customers in high rise blocks and address the industry-wide issue
of building certification, in line with the latest government
guidance. This is particularly important to us following the
serious fire at Worcester Park where we acted swiftly to put the
safety of residents first and rehoused those impacted
immediately.
"Our financial position remains strong, with GBP611m of
available cash resources and sufficient security and access to
capital to meet our objectives. This strong position was reinforced
by the positive news in April that the Regulator of Social Housing
had confirmed our compliant ratings, recognising our robust
governance arrangements (G1) and stable financial position
(V2).
"Clearly, there have been challenges over the last year that
have impacted many organisations, including housing associations,
which we have needed to respond to. Most significantly, the
Covid-19 pandemic has required significant changes to how our
organisation operates and I am incredibly proud of the agility
colleagues have demonstrated in response to this unprecedented
situation. Our number one priority throughout has been the safety
and wellbeing of our customers, whom we have been able to support
by maintaining many frontline services, especially in our Care and
Support operations. With uncertainty around the Covid-19 pandemic
and its longer term economic impact for the sector as a whole, we
are working hard to assist our residents and stand ready, as a
stable and well-run organisation, to play our part with the rest of
the sector in tackling the national challenges which lie
ahead".
"I would like to take this opportunity to thank my colleagues
for all their efforts this year, which mean we are well-placed to
meet the challenges ahead and to build on our solid
foundations."
Results overview
Total Housing operations (including supported housing and market
rent) were in line with expectations, with non-sales income
representing 72% (2019: 79%) of turnover. Underlying Social Housing
operating margin was 28% (2019: 34%), diluted by end of year
provisions for bad debts. Sales revenue was GBP131m (2019: GBP85m)
with an average sales margin of 16% (2019: 12%). We built 1,022 new
homes (2019: 1,037 new homes) in the year, investing GBP281m (2019:
GBP361m) in new housing.
Underlying operating margins are 28% (2019: 36%) with the
dilution driven by higher sales volumes. Liquidity remains strong
at GBP611m (2019: GBP549m). Drawn borrowings are GBP2.0bn (2019:
GBP1.8bn).
Our partnership integration activities were completed during the
year and we continue to deliver on the integration savings in
respect of headcount and procurement. During the year the group
left the SHPS multi-employer defined benefit scheme in order to
better manage its specific pension risks. This led to the capping
and crystallising of the orphan debt obligation and a one-off S72
settlement.
Operations review - Customer Services (including Care and
Support)
Social housing letting revenue was GBP295m (2019: GBP288m), with
unit growth offsetting the final year of the -1% rent settlement.
Focussing on what matters to our customers, we invested GBP42m
(2019: GBP35m) in property improvements, while our overall spend on
fire safety was GBP16m (2019: GBP13m). Our total spend on the
existing estate was GBP129m (2019: GBP118m) prioritising property
compliance, condition and customer satisfaction issues. Social rent
arrears closed the year at 4.82% (2019: 4.55%) after including an
additional GBP3m provision for bad debts. Our average general needs
re-let time improved from around 32 days in 2019 (weighted between
MHT and TVH by unit stock) to 25 days on a combined basis in
19/20.
We won GBP2.5m in new or extended Care & Support contracts
as we continue to build on our strong reputation, with 100% of our
contracts rated by the CQC as "Good". We c ontinued to build on our
strong arrears and voids performance and invested GBP3.7m (2019
GBP2.4m) in building stronger communities.
Operations review - New homes development and sales
First tranche revenues were GBP77m (2019; GBP60m) with margins
improving as we sold out of poor-performing sites. We sold 600
First Tranche units at an average 15% margin (2019: 431 units at
10% margin). In addition we sold 111 outright sale units at an
average margin of 17% (2019: 60 units at 15%).
Our post-sales team continued to perform well through a tougher
market, staircasing 412 units at an average margin of 34% (2019:
437 units at 36%) and completing 234 Homebuy Redemptions at an
average margin of 37% (2019: 331 completions at 38%). The future
development pipeline remains strong at 6,344 units (2019: 6,506
units) as we held back on new commitments late in the year, as the
COVID19 crisis began to emerge. During the year we completed the
Clapham Park s106 agreement and the next phase is now ready to
commence construction.
Debt and facilities
Net debt (excluding derivative financial instruments) at 31
March 2020 is GBP2.0bn up from GBP1.8bn. Available liquidity (cash
and committed secured undrawn facilities) is up at GBP611m (2019:
GBP 541m). Gearing remains strong on the Historic Cost basis at 42%
(2019: 41%). Interest cover was around 1.6 times (2019: 1.9 times)
on an EBITDA MRI basis.
The Standard & Poor's credit rating was confirmed in
December 2020 at A- (stable outlook).
The Board expects to announce full audited consolidated results
for the year ended 31 March 2020 later in the Summer.
Consolidated Statement of Comprehensive Income for the year
ended 31 March 2020 (unaudited)
2020 2019 %
---- ----------- ----------- -----------
GBPm GBPm
---- ----------- ----------- -----------
Revenue 465.0 410.8 13%
---- ----------- ----------- -----------
Cost of sales -111.2 -71.8 55%
-----------
Operating costs -257.9 -226.3 14%
---- ----------- ----------- -----------
Surplus from disposal of fixed assets
and investments 28.7 31.2 -8%
--------------------------------------------------- ----------- ----------- -----------
Share of Surplus from Joint Ventures 5.7 9.9 -42%
--------------------------------------------------- ----------- ----------- -----------
Underlying Operating Surplus 130.3 153.8 -15%
--------------------------------------------------- ----------- ----------- -----------
Non-recurring operating costs -4.5 -5.3 -15%
--------------------------------------------------- ----------- ----------- -----------
Operating Surplus 125.8 148.5 -15%
---- ----------- ----------- -----------
Net interest payable -77.4 -72.2 7%
---- ----------- ----------- -----------
Other finance costs - -77.8
---- ----------- -----------
Movements in fair value of investments
and properties -0.5 7.9 -106%
----------- ----------- -----------
Taxation -0.1 -0.7
---- ----------- ----------- -----------
Total (Loss)/Surplus 47.8 5.7 839%
---- ----------- ----------- -----------
Actuarial loss in respect of pension
schemes -1.6 -47.4 -97%
---- ----------- ----------- -----------
Change in fair value of hedged financial
instruments -14.5 -5.0 290%
---- ----------- ----------- -----------
Total comprehensive income for the
year 31.7 -46.7 -168%
---- ----------- ----------- -----------
Consolidated Statement of Financial Position as at 31 March
2020 (unaudited)
Housing properties 4,420.6 4,290.7 3%
--------------- --------------- -----------
Investment properties and other
fixed assets 101.5 91.3 11%
--------------- --------------- -----------
Investments 269.6 262.5 3%
--------------- --------------- -----------
Net current assets 30.8 101.1 -70%
--------------- --------------- -----------
Total Assets less current liabilities 4,822.5 4,745.6 2%
--------------- --------------- -----------
Loans due to be repaid in more than
one year 1,896.2 1,932.6 -2%
--------------- --------------- -----------
Pension liabilities 77.3 57.4 35%
--------------- --------------- -----------
Other long-term liabilities 440.8 426.0 3%
--------------- --------------- -----------
Capital and reserves 2,408.2 2,329.6 3%
--------------- --------------- -----------
Total non-current liabilities
and reserves 4,822.5 4,745.6 2%
--------------- --------------- -----------
Consolidated Statement of Cashflows for the year ended
31 March 2020 (unaudited)
Net cash from Operating Activities 199.2 236.9 -16%
------------ ------------- ------
Net cash from Investing Activities - 260.4 - 240.1 8%
------------ ------------- ------
Net cash used in Financing Activities - 56.3 67.7 -183%
------------ ------------- ------
Net movement in cash and cash equivalents - 117.5 64.5 -282%
------------ ------------- ------
Cash and cash equivalents carried
forward 105.5 223.0 -53%
------------ ------------- ------
Sales revenue and margins 2020 2019
(unaudited)
-----------------
Revenue Margin Revenue Margin
-------- ------- -------- -------
First Tranche 76.9 15% 59.7 10%
---------------------------- -------- ------- -------- -------
Outright Sales 54.3 17% 24.9 18%
---------------------------- -------- ------- -------- -------
Staircasing 47.6 34% 43.5 36%
---------------------------- -------- ------- -------- -------
RTB / RTA 11.8 28% 3.2 40%
---------------------------- -------- ------- -------- -------
Redemptions 16.9 40% 23.0 38%
---------------------------- -------- ------- -------- -------
Fixed Asset Sales 9.3 29% 10.0 53%
---------------------------- -------- ------- -------- -------
Outlook
Since the start of the new financial year and the lockdown under
COVID19, the group has focussed on protecting is customers and
employees through safe working practices, maintaining essential
services, supporting customers in hardship and managing its cash
resources. While there has been a small increase in arrears
experience to date, it is well within our stress scenario.
Construction was suspended on most of our sites but has now been
largely restored and our major repairs programme has similarly been
suspended. We have continued to take sales reservations throughout
the lockdown period at sales rates similar to this time last year,
particularly of Shared Ownership units. While there remains a
completion risk to these reservations, there is little evidence so
far of declining sales prices or lack of mortgage availability. We
are closely monitoring the key performance metrics of the
organisation to understand the impact of the lockdown, any further
extended period of social distancing and the subsequent resumption
to regular business activity. We anticipate that we will update the
market in the early part of financial Q2, once the impact of
COVID19 is clearer.
Enquiries:
Please contact Donald McKenzie, Director of Corporate Finance,
on 0203-535-4434 or at donald.mckenzie@mtvh.co.uk
This information for investors is also available on our website:
https://www.metropolitan.org.uk/about-us/investing-in-metropolitan/
Notes
-- Operating margin is operating surplus divided by turnover
-- Net debt is borrowings (excluding derivatives) less cash and cash deposits
-- Gearing is net borrowings divided by net housing properties at cost
-- Interest cover is earnings before interest, tax and
depreciation/amortisation less capitalised major repairs, divided
by net interest costs
-- Prior year comparative figures are the unadjusted aggregate
of pre-partnership entity reported results
Disclaimer
The information in this Preliminary Results announcement has
been prepared by the Thames Valley Housing Association group and is
for information purposes only.
The Results announcement should not be construed as an offer or
solicitation to buy or sell any securities issued by the Parent,
the Issuer or any other member of the Group, or any interest in any
such securities, and nothing herein should be construed as a
recommendation or advice to invest in any such securities.
This unaudited preliminary announcement contains certain
'forward-looking' statements reflecting, among other things, our
current views on markets, activities and prospects. 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.
This information is provided by RNS, the news service of the
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END
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