TIDM38EO
RNS Number : 9992G
Metropolitan Funding PLC
01 December 2020
Metropolitan Funding PLC
Thames Valley Housing Association (TVHA) trading update and
unaudited consolidated financial results for the six months ended
30 September 2020
TVHA, one of the UK's leading providers of affordable housing
and care and support services, announces a trading update for the
first six months (H1) of the financial year 2020/21.
Highlights
-- Revenues up 12% compared with equivalent period last year at GBP233m (2019: GBP208m).
-- Operating surplus of GBP72.6m (H1 2019: GBP68.4m) and a total
surplus of GBP37.4m (H1 2019: GBP30.9m).
-- Strong arrears performance of c.5.3% (March 2020 c.4.8%) despite the impact of Covid-19.
-- GBP776m (March 2020: GBP649m) of available liquidity.
-- Strong sales with 245 (291) units completed in the first
half. We have sold down stock and are well positioned to face any
future challenges in the market.
-- Strong cash performance which underscores the resilience of
the business through the lockdown periods.
-- Recruitment of five new non-executive directors giving us a
skilled, balanced and diverse Board.
-- S&P confirmed the Group rating as A- (Stable) in December 2019.
-- 302 new homes completed (2019: 450) and on track to complete
more than 800 new homes in the full year.
-- Clapham Park Regeneration - following planning permission in
December 2019, we are on site to deliver 50 new rented homes, at
the first site of the new masterplan. A Joint Venture partner to
deliver a further 2,400 homes, (a mix of 742 homes for social and
affordable rent, 376 shared ownership properties and 1,367 market
sale homes), is to be appointed by May 21.
Geeta Nanda, Chief Executive, commented:
"The first six months of the 2020/21 financial year have been
dominated by Covid-19 and, from the very beginning, we've responded
well to the challenges it has presented, focusing on maintaining
people's safety and wellbeing, and ensuring customers' needs
continue to be met.
"Throughout the pandemic, we have maintained frontline services
such as Care and Support operations and NHS keyworker accommodation
schemes thanks to the dedication of our frontline colleagues. We
have provided targeted support to residents, working in partnership
with local stakeholders, and putting in place a programme of
proactive welfare calls to those believed to be at-risk - with
nearly 8,000 calls made to date. We also established a dedicated
Support Hub triaging service shortly after lockdown measures were
introduced, to provide help and referrals. The support provided has
had a positive impact on people's lives, and we're pleased to see
rent arrears levels at c. 5.3%, despite the challenges of
Covid-19.
"In our initial response to the pandemic - and until its impact
was clearer - we adopted a more restrained approach to spending.
We're very pleased that our performance in areas such as sales has
been positive, and we've been able to release investment which had
temporarily been put on hold.
"We've demonstrated financial resilience in response to
Covid-19, with our turnover and operating surplus up on this time
last year, and our liquidity remaining strong. Although uncertainty
remains about the longer term economic and health impacts of the
pandemic, our financial resilience and stability positions us well
for the remainder of the financial year.
"Accountability, transparency and engaging with our residents
and customers are at the heart of everything we do and we welcome
the proposals outlined in the recent Social Housing White Paper. We
look forward to discussing with government how they can be
delivered as part of the progress we are already making to improve
customer engagement and our responsiveness to complaints, as well
as the investment we are making in our existing and new homes to
ensure they are safe and in good condition.
"Building safety remains a priority, and our financial plan has
built in the capacity to allocate greater financial resources to
our Safer Buildings programme. We plan to survey 48 of our tallest
buildings by the end of the financial year, with a net spend of
GBP4.5m expected in this area across 2020/21.
"At Clapham Park - our flagship regeneration scheme in Lambeth,
south London - we have been very happy to see the first new homes
delivered as part of our revised masterplan. On completion, the
project will more than double the number of homes at Clapham Park
to more than 4,000 homes, of which 53% will be affordable.
"We're committed to good practice when it comes to
environmental, social and governance (ESG) performance reporting -
and are pleased to have become an early adopter of The Good
Economy's Sustainability Reporting Standard for social housing.
We're also driving forward our diversity and inclusion agenda, and
this year sees the launch of a new strategy to guide our approach
to creating a truly inclusive organisation.
"We're delighted to have appointed five new members to our
Board: Gurpreet Gujral joined in March 2020 and Tania Brisby joined
in October 2020. Davinder Dhillon, Nigel Ingram, and Ofei
Kwafo-Akoto will all join in January 2021. The new appointees
replace Paul Bridge, Kathryn Davis, Stuart Beevor, and Jerry Piper
- members who have made valued contributions to the Board and have
reached or are reaching the end of their tenures with us: their
part in the success of the merger has been immeasurable.
"Our new members were appointed based on their skills and
experience in finance, treasury, property maintenance and law - all
areas in which the Board is focused on further strengthening its
range of expertise. We look forward to working with them, and all
colleagues across the organisation, as we continue to pursue
delivery of our purpose - giving everyone a home and the chance to
live well."
Results overview - Thames Valley Housing Group
Turnover from core Customer Services operations (ie excluding
home sales) was up 1% period on period as the business benefited
from the return to the CPI +1% rent settlement. Increased Care and
Support fee income offset the fall in fees and other income.
Revenues from home sales are up 57% largely due to the completion
of the bulk sales at Clapham Park to ResiCap. We sold 245 units
(including 140 first tranche sales) in the first six months of the
year, compared to 291 (including 281 first tranche sales) in the
same period last year. In general, prices for homes, particularly
Shared Ownership, remain in line with our expectations, although
sales rates are slower. Average H1 sales margin was 12.4% (H1 2019:
16%).
Operating surplus (including profit from disposals) is GBP4.2m
higher than the same period last year at GBP72.6m (2019: GBP68.4m),
largely due to the surplus on sales, but partly offset by reduced
profits on disposals, which are down 45% period on period and which
have been particularly adversely affected by the lockdowns.
Operating costs and Overheads were also lower, with overhead costs
benefitting from lower levels of frontline activity and the move to
working from home. Operating margin for the first six months is 1.8
ppts lower at 31.1% (2019 32.9%), due to the dilutive effect of
increased new build sales and lower volumes of staircasing and
redemptions.
Cashflow from operations through the first six months was
GBP79.2m higher than the corresponding period last year due to
strong sales and lower levels of development expenditure. GBP86.5m
(2019: GBP128.5m) was invested in new development projects in the
period to 30 September, reflecting the impact on development sites
during the first lockdown, and GBP7m (2019: GBP29m) spent on
capitalised repairs to the existing estate.
We continue to invest in the condition of our stock, including
the rising cost of fire safety. Lockdown impacted our ability to
mobilise the programme as well as seeing reduced demand for repairs
and the provision of a minimum viable service option to the end of
July. Underlying net interest costs (excluding mark to market
movements on derivatives) are GBP0.8m higher than the same period
last year reflecting sales receipts and limited incremental
development and repairs spending.
The organisation completed 302 homes during the first half of
the year (2019: 450) and remains on track to deliver more than 800
new homes for the full year.
At 30 September 2020, we had c. GBP776m (2019: c. GBP475m) of
available liquidity (both cash and committed facilities) and total
debt of GBP1,916m (2019: GBP1,906m).
Thames Valley Housing Association's Standard & Poor's credit
rating was confirmed as A- (Stable outlook) in December 2019.
Outlook
This outlook statement is subject to the uncertainty/unforeseen
business interruption that might be caused by the pandemic and
future government measures as well as an economic environment that
remains challenging in 2021, and beyond.
The core housing business continues to perform well despite the
impact of Covid-19. Total revenue is expected to be in line with
last year. We continue to be impacted by Covid-19 and uncertainty
over Brexit, but have seen the benefits of strong sales demand.
Underlying operating surplus is in line with our pre-Covid
expectations and is expected to show a similar improvement for the
full year as at the half year.
We are continuing with our Safer Buildings programme and the
need to put resident safety first, resulting in a reduction in
development aspirations, as capital is redeployed for improvements
to assets. We have adopted a risk-based approach to the review of
blocks over 18m, to determine the extent of any remediation
requirements. We have access to NHBC and the government's Safer
Buildings Fund where we meet qualification requirements, however
the overriding expectation is that developers/warranty providers
will pick up the costs of remediation. Fire safety does however,
remain a risk to MTVH and the wider sector given the number of
homes in ownership and management, and the potential impact of
future remediation may reduce the capacity to develop new homes and
dilute margins and covenant capacity.
Liquidity management remains a key focus as we monitor sales and
rental receipts to ensure cash certainty.
The government published the Social Housing White Paper 'The
Charter for Social Housing Residents' in mid-November. We welcome
the proposals and will continue to build on the progress already
made to implement them in full.
The terms of the new Affordable Homes Programme (AHP) have been
announced, with GBP7.4bn available from April 2021 to deliver up to
130,000 affordable homes by March 2026. The clear focus is on home
ownership - c 50% funding for 'routes into home ownership'
including Shared Ownership and Rent-to-Buy. New rented units will
be subject to Right-to-Shared-Ownership (RTSO) and the sector has
concerns over declining rates of development of new rented
affordable homes.
The 2020 Spending Review announcement of a new GBP7.1bn National
Home Building Fund (NHBF) over the next four years to unlock up to
860,000 homes is to be welcomed. The key elements of NHBF are
GBP4.8bn of capital grant funding, and GBP2.2bn of new loan finance
to support house builders, both elements further supporting our
strategy.
MTVH has signed up as an early adopter of the Sustainability
Reporting Standard for Social Housing and will report against the
criteria for the first time in the summer of 2021.
TVHA will report results for the year ended 31/03/21, trading as
Metropolitan Thames Valley, in summer 2021.
Consolidated financials
Statement of comprehensive income
GBP000's FY19/20 H1 30/09/2020 H1 30/09/2019 PoP
Audited Unaudited Unaudited %
Rent and service charge
income 295,281 151,233 148,159 2%
Care and support income 16,636 8,171 7,522 9%
Outright/first tranche
sales 131,248 64,280 40,994 57%
Fees and other income 21,803 9,671 11,311 -14%
-------------- -------------- --------
Total turnover 464,968 233,355 207,986 12%
----------------- -------------- -------------- --------
Outright/first tranche
cost of sales -111,179 -56,287 -34,437 63%
Operating costs -186,603 -84,770 -87,936 -4%
Depreciation -37,157 -17,221 -17,586 -2%
Overheads -33,795 -12,001 -16,046 -25%
Profits on disposals 34,432 9,474 17,095 -45%
Non recurring (merger
costs) -4,092 - -679 -
-------------- -------------- --------
Operating surplus 126,575 72,550 68,397 6%
----------------- -------------- -------------- --------
Net interest -77,260 -38,058 -37,238 2%
Fair value movements and
other instrument revaluations -484 2,911 -275 -1,159%
Exceptional items - - - -
-------------- -------------- --------
Profit before tax 48,831 37,403 30,884 21%
----------------- -------------- -------------- --------
Sales margin for the first six months 12.4% (2019: 16%)
Operating margin for the first six months 31.1% (2019:
32.9%)
Statement of financial position
GBP000's FY19/20 H1 30/09/2020 H1 30/09/2019 PoP %
Audited Unaudited Unaudited
Tangible fixed
assets 4,518,930 4,587,252 4,460,734 3%
Homebuy and investments 270,811 268,199 266,639 1%
Current assets 365,434 292,361 366,675 -20%
Creditors - amounts
falling due within
one year -371,509 -351,171 -336,561 4%
---------- -------------- --------------
Total assets
less current
liabilities 4,783,666 4,796,642 4,757,487 1%
---------- -------------- -------------- ------
Creditors due
after more than
one year 2,297,767 2,277,211 2,346,079 -3%
Provisions and
pension obligations 31,223 28,877 77,514 -63%
Reserves 2,454,676 2,490,554 2,333,894 7%
4,783,666 4,796,642 4,757,487 1%
---------- -------------- -------------- ------
Cashflow
GBP000's FY1920 H1 30/09/2020 H1 30/09/2019
Audited Unaudited Unaudited
Net cashflow from operations 119,627 61,813 59,118
Sales proceeds 127,496 60,713 26,166
Development expenditure -281,169 -86,520 -128,468
---------- -------------- --------------
Total net cashflow from
operations -34,046 36,006 -43,184
---------- -------------- --------------
Disposal proceeds 82,114 24,796 25,377
Major repairs -42,162 -7,049 -29,008
Other -12,930 -5,911 -7,890
Net drawdown (repayment)
of debt 12,230 -27,906 -60,334
Net interest/fees -122,596 -48,296 -43,971
-117,
Net cash movement in period 390 -28,361 -159,010
---------- -------------- --------------
Opening cash 185,697 68,307 194,477
Restricted cash 37,145 41,052 30,274
Closing cash 105,452 80,998 65,741
---------- -------------- --------------
Enquiries
Please contact Donald McKenzie, Director of Corporate Finance,
on 0203-535-4434/ 07738-714126 or at donald.mckenzie@mtvh.co.uk
This information for investors is also available on our
website:
https://www.mtvh.co.uk/about-us/investors/
Notes
1) Operating margin is operating surplus/turnover
2) Thames Valley Housing Association (TVHA) is the parent of the
group trading under the brand of Metropolitan Thames Valley (MTVH).
Metropolitan Housing Trust (MHT) is a wholly owned subsidiary of
TVHA and MHT owns 100% of the shares of Metropolitan Funding
Plc.
Disclaimer
The information in this announcement of unaudited consolidated
interim results has been prepared by the Thames Valley Housing
Association group and is for information purposes only.
The unaudited results announcement should not be construed as an
offer or solicitation to buy or sell any securities, 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 results 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 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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