Last checked at 22 Dec 2023 12:00
Half Year Performance Update for the 6 months to 30 September 2023
The Guinness Partnership Limited (TGPL) is pleased to report our results for the six months to 30 September 2023. These results are based upon unaudited management accounts and operational performance reports.
Our Annual Financial Statements, Annual Report and ESG reports for the year to 31 March 2023, are available on our website.
Summary
In the six months to 30 September 2023, we have continued to deliver services to our customers, invest significantly in our existing homes and complete new affordable homes in what continues to be an incredibly challenging period for the social housing sector. Economic uncertainty, rising interest rates and continued high levels of inflation have impacted our residents, our workforce and our future plans. We continue to monitor and manage these risks so we can deliver appropriate levels of service to customers and maintain financial resilience.
Earlier this year we announced that we were in discussions with Shepherds Bush Housing Association (SBHA) about a potential partnership whereby SBHA would join the group. SBHA joined the Guinness Group as a subsidiary of TGPL on 4 December 2023. Our work to integrate the businesses begins immediately.
Performance highlights for The Guinness Partnership Limited for the six months to 30 September 2023 include:
· Turnover of £218m (£198m in September 2022)
· Operating surplus of £48.7m (49.2m in September 2022)
· Operating margin of 22.4% (24.9% in September 2022)
· Sale of 132 shared ownership homes realising a surplus of £0.8m.
· High levels of liquidity retained - £818m of cash and undrawn loan facilities.
· Current tenant arrears of 4.21%.
· Maintenance and investment on existing homes totalling £77m.
· Expenditure of £108m on new homes with 346 new affordable homes completed and 210 homes starting on site.
On 27 November 2023 Moody's affirmed Guinness's A3 credit rating with stable outlook.
On 19 December 2023 Standard & Poor's affirmed Guinness's A- credit rating with stable outlook.
Key Financial Results
Financial Indicators | Q2 2023/24 | Year Ending 31 Mar 2023 | Q2 2022/23 |
Operating Surplus | £48.7m | £95.1m | £49.2m |
Operating Margin | 22.4% | 21.9% | 24.9% |
Total Surplus | £22.6m | £59.3m | £36.5m |
Net Margin | 9.6% | 14.5% | 17.3% |
EBITDA-MRI Interest Cover RSH measure | 127% | 119% | 147% |
Interest cover (tightest lender covenant) | 181% | 118% | 179% |
Gearing | 41.5% | 39.2% | 40.8% |
Available Liquidity | £818m | £778.5m | £740m |
Detailed performance update
TGPL is reporting an operating surplus of £48.7m at the end of September which is slightly lower than that reported at the half-year in 2022/23; the reported operating margin of 22.4% is also lower.
Our turnover has increased to £218m (2022/23: £198m) due to a rent increase of 7% which was applicable to most of our homes, due to the letting of new homes delivered through our development programme and as a result of the transfer of engagements of Guinness Care which completed in December 2022. Operating cost increases have more than offset this increase in turnover with expenditure on responsive repairs and empty homes increasing significantly as demand for repairs, and the average cost per repair, have risen.
Net financing costs of £29.9m were incurred in the period on total drawn debt of £1.54bn. Interest costs have increased year-on-year as drawn debt levels have increased by £70m and variable interest rates have increased. We have loan facilities in place totalling £2.26bn with £720m currently undrawn, this covers 48 months of projected cashflow. 71% of our drawn debt is on a fixed rate of interest, thus providing some protection against interest rate increases.
For the period to the end of September we are reporting a total surplus of £22.6m (2022/3: £36.5m), with the year-on-year reduction caused by increased net interest costs and lower levels of surplus generated from sales of existing homes.
During the period £108m has been invested in our development programme with a further £77.3m (£22.5m capital spend and £54.8m revenue spend) invested in our existing homes. This includes building safety related expenditure of £6.7m.
The sale of 132 shared ownership homes have completed in the first six months of the year which generated a surplus of £0.8m. Shared ownership staircasing has generated an additional surplus of £1.3m. We had 294 shared ownership and outright sale properties unsold at 30 September 2023, 191 of these had been unsold for less than three months.
Current tenant arrears have increased to 4.21% during the year from 3.8% at 31 March 2023 but we have seen a slight reduction over the last 3 months. We are focusing on proactive debt management using a data led approach to identify customers at risk of arrears, we then take appropriate preventative measures. At the end of September 78% of our social rent tenants were in receipt of some form of welfare benefit.
Business update
On 4 December 2023 our partnership with SBHA, a housing provider operating in West London who owns and manages over 5,000 homes, reached legal completion with SBHA joining the Guinness Group as a subsidiary of TGPL.
Customer satisfaction at the end of September was below target at 67% with analysis of results showing that repairs performance and associated communication of progress remain key drivers of lower satisfaction. Satisfaction levels remain lower in London and the South. Demand for our responsive repairs service has increased by over 30% year-on-year which naturally creates service delivery pressures, we are working hard to ensure we have the resources in place to meet this increased demand in all parts of the country.
At the end of September 94.6% of emergency repairs had been completed within target time and Stage 1 complaints were resolved in an average of 9.3 days, within the 10-day timeframe required by the Housing Ombudsman.
At the end of September, 359 new homes had been completed (346 homes of affordable tenures) with construction starting on a further 210 new homes. It is now expected that 883 new homes will be completed in the year with 823 homes starting on site. Since April 2018, 2,789 new homes have been completed against our 2025 target of 5,500 homes, while construction has started on 5,188 homes. Current forecasts indicate that 4,657 homes will be completed by March 2025.
Our building safety programme is progressing to plan. Guinness has 39 High Rise Buildings with 16 of these requiring an External Wall System investigation. Investigations are now complete on all of these. Guinness has 205 medium rise buildings and we have identified that 87 of these may require an External Wall System of which 20 have been completed so far and a further 28 are due before March 2024. The remaining 39 will be completed over the coming years, none of these buildings have a high priority classification when using the Government's risk prioritisation tool.
All of our buildings with ACM cladding have been fully remediated. Work to replace the HPL cladding on 7 remaining high-rise buildings is on-going with 4 commenced on site and the remaining 3 due to commence in 2024. We have secured funding from the Government's Building Safety Fund for some of the above works and continue to pursue original developers, warranty providers and any available funding options wherever possible.
Compliance performance remains strong with Asbestos, water safety, electrical testing and lift servicing all reporting 100% compliance. Only 1 property did not have an in-date gas safety certificate due to access issues and 96.7% of domestic properties having had a domestic electrical test within the last 5 years.
Credit and regulatory ratings
Our credit ratings with Standard & Poor's and Moody's are at A- (stable) and A3 (stable) respectively.
Moody's affirmed our A3 (stable) rating on 27 November 2023 and Standard & Poor's affirmed our A- (stable) rating on 19 December 2023 following our annual rating reviews.
On the 26 April 2023, following an In-Depth Assessment (IDA), the Regulator of Social Housing confirmed our regulatory ratings were unchanged at G1 for Governance and V2 for Viability
Contact details
Rob Elliott, Director of Corporate Finance robert.elliott@guinness.org.uk
www.guinnesspartnership.com/about-us/for-investors
Disclaimer
The information contained herein (the "Trading Update") has been prepared by The Guinness Partnership Limited ("TGPL") and is for information purposes only. The Trading Update should not be construed as an offer or solicitation to buy or sell any securities issued by TGPL or any of its subsidiaries ("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.
Statements in the Trading Update, including those regarding possible or assumed future or other performance of the Group as a whole or any member of it, industry growth or other trend projections may constitute forward-looking statements and as such involve risks and uncertainties that may cause actual results, performance or developments to differ materially from those expressed or implied by such forward-looking statements. Accordingly, no assurance is given that such forward-looking statements will prove to have been correct. They speak only as at the date of the Trading Update and neither TGPL nor any other member of the Group undertakes any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments, occurrence of unanticipated events or otherwise.
None of TGPL, any member of the Group or anyone else is under any obligation to update or keep current the information contained in the Trading Update. The information in the Trading Update is subject to verification, does not purport to be comprehensive, is provided as at the date of the Trading Update and is subject to change without notice. Financial results quoted are unaudited. No reliance should be placed on the information or any projections, targets, estimates or forecasts and nothing in the Trading Update is or should be relied on as a promise or representation as to the future. No statement in the Trading Update is intended to be an estimate or forecast. No representation or warranty, express or implied, is given by or on behalf of TGPL, any other member of the Group or any of their respective directors, officers, employees, advisers, agents or any other persons as to the accuracy or validity of the information or opinions contained in the Trading Update (and whether any information has been omitted from the Trading Update). The Trading Update does not constitute a recommendation, nor is it legal, tax, accounting or investment advice.