Last checked at 15 May 2019 08:28
RNS Number: 0933Z
Bromford Housing Group
15 May 2019
Bromford Housing Group trading update for the year ending 31 March 2019
o Bromford Housing Group (BHG) is today issuing its consolidated trading update for the year ended ended 31 March 2019 (2019).
o Merlin Housing Society Limited (Merlin), became a Registered Provider subsidiary of BHG on 2 July 2018. Severn Vale Housing Society (Severn Vale) joined BHG on 2 January 2019 as transfer of engagements into Merlin.
o The consolidated year end performance measures set out in this document are provided for BHG inclusive of Merlin and Severn Vale. Merlin performance reflects the full twelve month period to 31 March 2019 under merger accounting rules. Severn Vale is accounted for under acquisition accounting rules with a fair value determination of assets and liabilities at 2 January 2019. Comparative metrics for 31 March 2018 (2018) are provided on the same basis of consolidation.
o These figures are unaudited and for information purposes only.
Highlights (BHG for the period ending 31 March 2019)
o BHG own and manage 42,735 homes
o Turnover for the period was £257m (2018: £221m)
o Social housing lettings turnover contributed to 76% of total turnover (2018: 85%)
o Operating surplus (including asset sales) for the period was £85m (2018: £89m)
o Operating margin on social housing lettings was 35% (2018: 40%)
o Overall operating margin (including asset sales) was 33% (2018: 40%)
o Overall operating margin (excluding asset sales) was 31% (2018: 35%)
o Net margin on shared ownership (first tranche) was 22% (2018: 22%)
o Net margin on outright sales was 19% (2018: n/a)
o The surplus after tax for the period was £56m (2018: £64m)
o Asset gearing as at 31 March 2019 was 39%
o Interest cover as at 31 March 2019 was 2.0x
Commenting on the results, Lee Gibson, Chief Financial Officer, said:
"It has been a busy and successful year for the Bromford Housing Group. Merlin and Severn Vale are now fully integrated into the Group and we are pleased to now deliver the Bromford proposition to over 40,000 households. We are proud of our customer advocacy results which remain high at 89%.
We are delighted with our preliminary year end results. We have out-performed the consolidated Group budget on a number of key metrics including turnover, operating surplus and overall margin. The operating surplus has reduced slightly year-on-year, reflecting the ongoing investment we are making in our business transformation programme and neighbourhood coaching model which will ultimately drive an improved customer experience and longer term operational efficiencies and financial savings.
We have refreshed our New Homes Plan and are now targeting c.13,100 new homes by 2028, with a greater focus on social and affordable homes than in the previous plan. We delivered over 1,200 homes in the financial year and have been appointed as one of Homes England's strategic partners with a grant award of £66m. This, combined with our continuing financial strength, will help us to make an even bigger impact in the communities where we work."
Imran Mubeen, Head of Treasury, added:
"The Group now benefits from strong levels of liquidity, having successfully raised over £0.5bn of new funding in the financial year. We followed our £300m debut public bond with our inaugural £100m private placement in the US market and a new £100m RCF. We were delighted to bring new investors to Bromford.
The Group's low leverage with significant headroom against key funding covenants, and the strength of our financial performance present effective capacity for future borrowings. We are delighted to have maintained our leading dual sector credit ratings following the recent mergers (Moody's A1, S&P A+) and remain committed to maintain two credit ratings moving forwards."
Development: housing completions (31 March 2019)
Unit type | Housing completions 31 March 2019 |
Social rent | 270 |
Affordable rent | 490 |
Shared ownership | 442 |
Open market sales | 34 |
Total | 1,236 |
o BHG completed 1,236 new homes in the full year ending 31 March 2019. We expect to complete over 1,000 new homes for the financial year ending 31 March 2020.
Development: pipeline
o BHG plan to deliver c. 13,100 new homes by 2028 under its New Homes Programme. In the pursuit of this development strategy, BHG are engaging in discussion to explore joint venture arrangements with third parties to optimise commercial return with risk mitigation.
Unaudited Financial Metrics
Statement of comprehensive income
| 31 Mar 2019 Actual | 31 Mar 2019 Budget | 31 Mar 2018 Actual | |
Turnover from social housing lettings | £196m | £190m | £187m | |
Turnover | £257m | £251m | £221m | |
Operating surplus (including asset sales) | £85m | £82m | £89m | |
Surplus after tax | £56m | £44m | £64m | |
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Margins
| 31 Mar 2019 Actual | 31 Mar 2019 Budget | 31 Mar 2018 Actual |
Operating margin1 on social housing lettings2 | 35% | 36% | 40% |
Overall operating margin3 (exc asset sales) | 31% | 30% | 35% |
Overall operating margin3 (inc asset sales) | 33% | 33% | 40% |
Operating margin on shared ownership (first tranche) 4 | 22% | 20% | 22% |
Operating margin on outright sales5 | 19% | 17% | n/a |
Key financial ratios
| 31 Mar 2019 Actual |
EBITDA MRI / net interest paid6 | 2.0x |
Social housing interest cover7 | 1.8x |
Asset gearing8 | 39% |
Net debt per unit9 | £22k |
Liquidity
| 31 Mar 2019 Actual |
18 month liquidity requirement10 | £249m |
Cash and undrawn facilities11 | £545m |
Unencumbered stock | 11,177 homes |
Credit ratings
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Moody's | A1 (negative) |
S&P | A+ (negative) |
Notes:
1Operating surplus / Turnover
2General Needs, Supported housing, Affordable rent and Low cost home ownership tenures
3Operating margin including asset sales includes all activity; operating margin excluding assets removes gain or loss on disposal of assets
4 Operating surplus on First tranche shared ownership sales / Turnover from first tranche shared ownership sales
5Operating surplus on outright sales / Turnover from outright sales
6(Operating surplus + Depreciation + Amortisation - Capitalised major repairs) / Net interest paid6
7 (Operating surplus on Social housing lettings) / Net interest paid6
8Net Debt / Housing assets at historic cost
9 Net debt / Total units owned & managed
10 18 month cashflow requirement - 20% of sales income + £25m
11Cash and undrawn RCF
This trading update contains certain forward looking statements about the future outlook for BHG. These have been prepared and reviewed by Bromford only and are unaudited. Forward looking statements inherently involve a number of uncertainties and assumptions. Although the Directors believe that these statements are based upon reasonable assumptions on the publication date, any such statements should be treated with caution as future outlook may be influenced by factors that could cause actual and audited outcomes and results to be materially different. Additionally, the information in this statement should not be construed as solicitation/recommendation to invest in Bromford's bonds
For further information, please contact:
Imran Mubeen, Head of Treasury
07711 221464
https://www.bromford.co.uk/investorrelations/
END