TIDM38EO
RNS Number : 2282O
Metropolitan Funding PLC
09 June 2022
Metropolitan Funding PLC
Thames Valley Housing Association (TVHA) unaudited consolidated
results for the year ended 31 March 2022.
The TVHA group (trading as Metropolitan Thames Valley or MTVH),
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 2022.
Headlines
-- Operating Surplus before non-recurring (building
safety-related) expenses down 2% to GBP135m (2021: GBP138m).
Reported Operating Surplus is GBP122m (2021: GBP138m).
-- Total Revenue GBP406m, down 9% (2021: GBP446m) due to reduced market sale revenues.
-- Non sales income 85% of total turnover (2021: 76%)
-- 712 new homes completed (2021: 923 homes) of which 326 (2021: 704) were affordable.
-- GBP774m of available cash and facilities.
-- Net debt to EBITDA 11.4x (2021: 10.5x).
-- S&P credit rating A- (stable outlook) and a new A Stable from Fitch Rating.
-- RSH grading G1/V2.
-- Appointment of new Board members; Dennis Hone, Trevor Moross and Helen Cope.
Geeta Nanda, Chief Executive of Metropolitan Thames Valley,
commented:
" The wellbeing of our residents remains our ongoing central
priority. We are acutely aware that many customers are facing very
real financial uncertainty due to the cost-of-living crisis. Rising
inflation and increased energy costs are just two of the factors
placing added strain on them. Consequently, MTVH is providing a
range of focused support, including our specialist income and money
advice teams. In total, we have delivered GBP1.94m of financial
gains directly to our residents over the past year through
increased benefits and lower household bills. We have also
increased our hardship fund, to help relieve acute need.
Our underlying operating surplus fallen slightly to GBP135m and
we enjoy a strong liquidity position with around GBP774m of
available cash and facilities. Meanwhile, our overall
organisational health has been reviewed by the RSH through an IDA
(In Depth Assessment) in April 2022, and we await the outcome of
the review at the end of July.
MTVH last year set out a five-year strategy, "Serving People
Better Every Day," and the Board continues to focus on delivering
an improved service to customers. As part of this effort, Local
Housing Managers are now serving a smaller, more concentrated
geographical area. Consequently, they are able to spend more time
in the community, building relationships with residents and
delivering the services they need. The online customer experience
has also been streamlined, with a single customer-focused portal
which allows residents to make payments, request repairs and other
services. Over the past year, there has been a 25% increase in
service transactions and requests.
Maintaining and improving our existing stock remains a Board
priority, in the knowledge that decent homes are the foundation of
our residents' welfare and ambitions. We have therefore continued
to make a significant investment in homes, ensuring that they
remain safe, warm and dry. During the past year we spent GBP41m on
capital works, including 1,640 new kitchens, 2,045 new bathrooms,
171 new roofs and 609 new boilers.
Building safety continues to be a significant issue for the
built environment as a whole, generating uncertainty for many
customers. Consequently, the Safer Buildings programme remains a
key initiative to help address their concerns. During the past
year, 41 intrusive full block surveys were completed in order to
assess the works required to comply with guidelines. GBP12.9
million was expensed in respect of certain building safety measures
and these have been categorised in non-recurring costs. We are
supportive of the recently proposed changes to the Defective
Premises Act which will offer additional protections to
leaseholders from fire remediation costs and are working to
understand the impact of this on our remediation programme.
The drive towards becoming a net zero organisation by 2050
continues as MTVH becomes greener and more sustainable. Cavity wall
insulation has been installed in 1,500 homes this year, making them
more energy efficient. Importantly, we recently secured two bids
from the Social Housing Decarbonisation Fund at the Department for
Business, Energy and Industry Strategy, in partnership with the
Midlands Energy Hub and with Lambeth Council. This funding will
bring a further 1,700 homes up to EPC C standard, representing an
important step towards reaching our interim milestone of 75% of
homes at EPC C or better by 2026.
During the last year, we have had to contend with competing
priorities and challenging trends such as the rising cost of
materials. As a result, we have had to make some hard choices. We
have significantly reduced the market sale element of our
development plan and have been cautious in committing to new
schemes this year, spending less on new developments than we
planned. Nonetheless, 712 new homes have been built and projects
such as the regeneration at Clapham Park continue to make very real
progress. We remain thoroughly committed to giving as many people
as possible the chance to live well in a new home.
I would like to take this opportunity to thank my colleagues for
their dedication to our residents. This commitment is key as we
continue the journey towards improved customer satisfaction and
ultimately, giving as many people as possible the opportunity to
thrive".
Results overview
Total Housing operations (including supported housing and market
rent) were in line with expectations, with non-sales income
representing 85% (2021: 76%) of turnover. Underlying Social Housing
operating margin was 29% (2021: 32%), diluted by investment in
services and end of year provisions for bad debts. Sales revenue
was GBP59m (2021: GBP108m) with an average sales margin of 16%
(2021: 10%). We built 712 new homes (2021: 923 new homes) in the
year, investing GBP161m (2021: GBP158m) in new housing.
Underlying operating margins are 32% (2021: 31%) driven by the
return to an indexed rent roll and before exceptional items.
Liquidity remains strong at GBP774m (2021: GBP790m). Drawn
borrowings are GBP1.9bn (2021: GBP2.0bn).
Our partnership integration activities are complete and we
continue to deliver on the wider VFM savings that are embedded in
our Corporate Plan.
Operations review - Customer Services (including Care and
Support)
Social housing letting revenue was GBP309m (2021: GBP299m), with
underlying rental income up 3.2% in line with the inflation
settlement. We invested GBP41m (2021: GBP42m) in property
improvements, while our overall spend on fire safety was GBP23m
(2021: GBP21m). Our total spend on the existing estate was GBP127m
(2021: GBP127m) prioritising property compliance, condition and
customer satisfaction issues. Social rent arrears closed the year
at 5.2% (2021: 4.98%). We continue to proactively contact
vulnerable customers offering support and financial advice, as well
as assisting new claimants on to Universal Credit, to limit upward
pressure on arrears. Our average general needs re-let time worsened
from around 27 days in 2021 to an average of 41 days 2022, as the
time taken to complete repairs and move in new customers was
extended as a result of Covid restrictions.
Operations review - New homes development and sales
First tranche revenues were GBP42m (2021; GBP44m). We sold 339
First Tranche units at an average 12% surplus margin (2021: 380
units at 10% margin). In addition we sold 38 outright sale units at
an average underlying margin of 25% (2021: 151 units at 13%). As at
31 March 2022, MTVH held 168 unreserved completed units (2021:
262).
During the year we completed 455 staircasing transactions which
delivered GBP20.2m of operating surplus at a 36% margin (2021:
GBP16.5m at 37% from 370 completions). In addition, we completed
237 Homebuy loan redemption transactions, achieving GBP8.1m of
operating surplus at a 42% margin (2021: GBP5.8m at a 38% margin
from 206 completions). Surplus derived from Right to Buy disposals
increased by GBP1.9m to GBP2.8m .
The future development pipeline remains strong at 5,490 units
(2021: 6,914 units) which reflects the Board's decision to reduce
the newbuild programme, particularly the market sale exposure in
future years. During the year we completed the Clapham Park tender
exercise, seeking a Joint Venture partner with whom to deliver
futures sales phases, and announced that Countryside had been
appointed. The due diligence and setting up of the operational
arrangements are almost complete with formal sign-off due in Q1
FY23.
Debt and facilities
Net debt (excluding derivative financial instruments) at 31
March 2022 is GBP1.8bn (2021: GBP1.9bn) following another year of
good cash generation boosted by a good sales market and lower
development spend. The Net Cash Inflow for the year from Operating
and Investing activities was GBP141m (2021 GBP108m).
In addition MHT created an EMTN Programme in July 2021 and
issued a GBP250m 1.875% 2035 bond based on a Sustainable Financing
Framework and Ritterwald Sustainable Housing Certification.
Available liquidity (cash and committed secured undrawn
facilities) is slightly down at GBP774m (2021: GBP790m) largely as
a result of the full repayment of the BoE's GBP175m CCFF loan
during the year. Gearing remains strong on the Historic Cost basis
at 38% (2021: 38%). Interest cover was around 1.71 times (2021:
1.68 times) on an EBITDA- MRI basis.
The Standard & Poor's credit rating was confirmed in
December 2021 at A- (stable outlook), and Fitch Ratings awarded an
A Stable rating as part of the setup of the EMTN programme.
The Board expects to announce full audited consolidated results
for the year ended 31 March 2022 later in the summer.
2022 2021 %
GBPm GBPm
-------- -------- ------
Revenue 405.9 445.8 -9%
-------- -------- ------
Cost of sales -48.3 -96.1 50%
-------- -------- ------
Operating costs -262.4 -241.5 -9%
-------- -------- ------
Surplus from disposal of fixed assets
and investments 37.5 24.5 53%
-------- -------- ------
Share of Surplus from Joint Ventures 2.3 5.0 -54%
-------- -------- ------
Underlying Operating Surplus 135.0 137.7 -2%
-------- -------- ------
Non-recurring operating costs -12.9 0.0
-------- -------- ------
Operating Surplus 122.1 137.7 -11%
-------- -------- ------
Net interest payable -74.9 -75.0 0%
-------- -------- ------
Surplus on investment disposal -1.6 0.0
-------- -------- ------
Fair value adjustments -5.3 -2.1 -152%
-------- -------- ------
Taxation 0.4 0.0
-------- -------- ------
Total (Loss)/Surplus 40.7 60.6 -33%
-------- -------- ------
Actuarial gain / loss in respect of
pension schemes 21.2 -48.2 144%
-------- -------- ------
Change in fair value of hedged financial
instruments 12.1 11.9 2%
-------- -------- ------
Total comprehensive income for the
year 74.0 24.3 205%
-------- -------- ------
Housing properties 4,679.8 4,592.1 2%
-------- -------- ------
Investment properties and other fixed
assets 38.8 36.0 8%
-------- -------- ------
Investments 204.5 262.0 -22%
-------- -------- ------
Net current assets -15.6 -269.0 94%
-------- -------- ------
Total Assets less current liabilities 4,907.5 4,621.1 6%
-------- -------- ------
Amounts due to be repaid in more than
one year 2,305.1 2,067.8 11%
-------- -------- ------
Pension liabilities 49.5 74.4 -33%
-------- -------- ------
Capital and reserves 2,552.9 2,478.9 3%
-------- -------- ------
Total non-current liabilities and
reserves 4,907.5 4,621.1 6%
-------- -------- ------
Consolidated Statement of Cashflows for the
year ended 31 March 2022 (unaudited)
2022 2021 %
-------------- ------------- ------
GBPm GBPm
-------------- ------------- ------
Net cash from Operating Activities 248.2 264.7 -6%
-------------- ------------- ------
Net cash from Investing Activities -107.2 -156.6 -32%
-------------- ------------- ------
Net cash used in Financing Activities -145.7 -57.3 -154%
-------------- ------------- ------
Net movement in cash and cash
equivalents -4.7 50.8 -109%
-------------- ------------- ------
Cash and cash equivalents carried
forward 151.6 156.3 -3%
-------------- ------------- ------
Sales revenue and margins
(unaudited) 2022 2021
Revenue Margin Revenue Margin
-------- ------- -------- -------
First Tranche 42.1 12% 43.8 14%
-------- ------- -------- -------
Outright Sales 17.1 25% 64.9 9%
-------- ------- -------- -------
Staircasing 55.8 36% 44.4 37%
-------- ------- -------- -------
RTB / RTA 6.0 46% 2.8 30%
-------- ------- -------- -------
Redemptions 19.1 42% 15.5 38%
-------- ------- -------- -------
Fixed Asset Sales 24.3 27% 10.6 14%
-------- ------- -------- -------
Outlook
The uncertainty relating to the wider economy, costs of living
crisis and the war in Ukraine has caused some concerns to the
business in the early part of the year, although we have observed
continuing buoyancy in the sales market and asset valuations during
April and May. Inflation, particularly in respect of commodity
prices and forward energy prices for Winter 2022, have increased
sharply along with interest rates. These increases pose a
significant risk to the business given its cost base and raw
material requirements for new development and asset management,
mitigated in large part through the largely fixed rate debt book,
lack of undeveloped land bank and the link between rents and CPI
under the existing rent regime.
The proposed changes to the Defective Premises Act, removing the
option to recharge Leaseholders for fire remediation costs (subject
to a relatively low cap), creates future uncertainty as to the
level of costs which will fall to MTVH as freeholder. The current
MTVH approach to remediation is resulting in contractors
acknowledging construction failures and to date have led to
contractors agreeing to remediate at their own expense or otherwise
to accept the major responsibility for those costs. All
non-recoverable costs will be a charge to MTVH. In response to this
rising cost pressure which is being felt across the sector, the
Board has made the decision to reduce its development programme, in
particular reducing future exposure to outright sales risk.
Enquiries
Please contact:
Donald McKenzie , Director of Corporate Finance, at
donald.mckenzie@mtvh.co.uk or on (W) 0203-535-4434 or (M) 07738
714126
This information for investors is also available on our website:
https://www.mtvh.co.uk/about-us/investors/
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.
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