TIDM38EO
RNS Number : 0709I
Metropolitan Funding PLC
30 November 2022
Metropolitan Housing Trust Ltd / Metropolitan Funding PLC
Thames Valley Housing Association (TVHA) trading update and
unaudited consolidated financial results for the six months ended
30 September 2022
TVHA group (trading as MTVH), 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
2022/23.
Highlights
-- Operating surplus of GBP69.8m (H1 2021: GBP70.4m);
-- Total surplus of GBP34.8m (H1 2021: GBP31.8m).
-- Operating margin of 35.3% (33.2%) for the first six months of the year
-- Revenues at GBP198m (2021: GBP212m)
-- Rent arrears of c.5.7% (March 2021 c 5.2%)
-- GBP721m (March 2022: GBP750m) of available liquidity.
-- Sales of 149 (2021: 229) units completed in the first half.
-- Total fire safety spend GBP8.1m (FY 21 GBP23m).
-- S&P Group rating of A- (Stable outlook), confirmed in
December 2021, moved to A- (Negative outlook) following the UK
sovereign downgrade in October 2022.
-- Fitch Ratings confirmed TVHA as A (Stable) in October 2022.
-- 107 new homes completed (H1 2021: 391) and on track to
complete more than 525 new homes in the full year.
-- The new Joint Venture with Countryside for the regeneration
of Clapham Park, delivering nearly 2,500 homes in south London, was
completed on 14 June 2022.
-- A new 50:50 Joint Venture with Legal and General Affordable
Homes was announced on 14 November 2022 targeting the delivery of
over 2,500 shared ownership and affordable rent homes over the next
seven years in London and the South-East.
Geeta Nanda, Chief Executive, commented:
"Despite an inflationary environment putting cost pressures on
the organisation, this has been a robust half-year. Performance is
in line with expectations and ensures we are an organisation with
the resilience to continue investing in existing properties while
building new homes. This stable position was underscored by the A
rating awarded by Fitch Ratings and the A- rating from S&P
Group."
"Progress continues to be made at our flagship regeneration
scheme at Clapham Park, South London, with construction works on
the second phase of 520 new homes now underway. Meanwhile, delivery
of new affordable homes has been boosted by the completion of a
Joint Venture partnership with Legal and General Affordable Homes.
It will deliver over 2,500 shared ownership and affordable rent
homes over the next seven years in London and the South-East."
"Following this reporting period, the government confirmed that
social rents in the UK will be capped at 7%. With this clarity, we
have committed to cap shared ownership rent increases at the same
percentage."
Board Membership Changes
The Board of THVH is regularly refreshed in line with the NHF
Rules.
Gary Admans was appointed to the Board from his role as
Independent Member on the Treasury Committee on 20 June 2022,
following the retirement of Tania Brisby.
Helen Cope was appointed to the Board on 01 March 2022.
Results overview - Thames Valley Housing Group
Turnover from core social housing (ie excluding home sales) was
up 3.6% compared to last year as the business benefited from a CPI
+1% rent settlement. At the same time, some recent Care &
Support contract wins have driven a 16% increase in non-housing
social incomes. Revenues from home sales are down 49%. We sold 149
units in the first six months (compared to 229 in the same period
last year. At 30 September 2022, we had 67 unsold units, of which
only 42 are unsold over 90 days, with a sales value of GBP4.9m.
While sales are currently in line with expectations, we remain
well-placed if the sales market weakens.
Operating surplus (including profit from disposals) is GBP0.5m
lower than the same period last year at GBP69.9m (2021: GBP70.4m).
Operating costs are higher at GBP101.2m (2021: GBP99m) as we invest
in fire safety and our existing stock, and operational improvements
to front line customer focused activity, supported by increased
headcount. Operating margin for the first six months is 2.1 ppts
higher at 35.3% (2021 33.2%), due to the accretive effect of higher
staircasing and redemption volumes.
Cashflow from operations through the first six months was
GBP21.2m better than the corresponding period last year due to a
reduction in the maturing debt repaid.
Investment in new development projects totalled GBP92.6m (2021:
GBP83.7m) in the period to 30 September and GBP14.0m (2021:
GBP23.8m) was spent on capitalised repairs to the existing estate.
The organisation completed 107 homes during the first half of the
year (2021: 391) and remains on track to deliver more than 525 new
homes for the full year.
Underlying net interest costs (excluding mark to market
movements on derivatives) are GBP1.4m higher than the same period
last year as variable rates increase from historic lows. At 30
September 2022, we had GBP747m (2021: GBP750m) of available
liquidity (both cash and committed facilities) and total debt of
GBP1,908m (2021 GBP1,923m). Liquidity management remains a key
focus to mitigate the impact of a wider economic downturn. At the
same time, our relatively low gearing, at 38%, and over GBP350m of
available security provides further resilience to shock.
Thames Valley Housing Association's Standard & Poor's credit
rating was confirmed as A- (Stable outlook) in December 2021
(although following the UK Sovereign Rating downgrade in October
2022, the outlook was moved to Negative).
Fitch Ratings confirmed the organisation as A (Stable) in July
2022.
Outlook
This outlook statement is subject to uncertainty/unforeseen
market and business interruption as a result of uncertainty over
the direction of government policy. The economic environment
remains challenging, with rising inflation and interest rates,
supply chain and labour shortages, and concerns over energy
supplies.
The core housing business continues to perform well despite the
impact of higher inflation, interest rates and energy prices. Total
revenue including home sales is expected to be around 5% lower than
last year due to lower sales revenues. Operating surplus is
expected to be in line with FY22.
Fire safety remains a risk to MTVH and the wider sector given
the number of homes in ownership and management. The longer term
impact of remediation obligations has led to a reduction in our
capacity to develop new homes, particularly homes for sale.
We are continuing with our Safer Buildings programme driven by
our desire to put customer safety first. We have completed the
review of blocks over 18m and commenced a risk-based approach to
the review of blocks under 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, and we expect that developers/warranty providers will
pick up the costs of remediation for newer buildings where this
relates to construction defect.
The November 2022 Autumn Statement the Chancellor confirmed
after months of speculation that Affordable Rents were to be capped
at 7% for FY24, and that pensions and benefits would increase by
CPI at 10.1%. Whilst this provides support for those on lower
incomes, the squeeze on RP margins will remain as overhead costs
continue to rise. This will impact on the level of service delivery
and the number of completed new homes.
MTVH is early adopter of the Sustainability Reporting Standard
for Social Housing as part of its wider Sustainability Strategy and
reported for the first time this year. In addition, MTVH has
published a Use of Proceeds report as part of the Sustainable
Financing Framework, and both reports are available on the
Investors section of the corporate website.
TVHA will report results for the year ended 31 March 2023,
trading as Metropolitan Thames Valley, in summer 2023.
Consolidated financials
Statement of comprehensive income
Statement of Financial Position
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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