TIDM42RA
RNS Number : 0597Y
Bromford Housing Group Ltd
10 May 2021
Bromford Housing Group
10 May 2021
Bromford Housing Group trading update for the period ending 31
March 2021
-- Bromford Housing Group (BHG) is today issuing its
consolidated trading update for the year ending 31 March 2021 (2021
FY).
-- The preliminary 2021 FY outturn is unaudited and is provided
for information purposes only. The year-end audit is currently
being undertaken and will include an impairment review and reflect
fair value adjustments for properties, derivatives and pensions,
which are not included in the unaudited figures, but are included
in the 2020 FY audited comparators.
-- Given the nature of the pandemic and the significant impact
on development activity, a reforecast was approved by Board in
October 2020 to reflect the revised annual projections for the
business. Actual performance is therefore set out against this
reforecast.
Highlights (Bromford Housing Group for the period ending 31
March 2021)
-- BHG own and manage 44,962 homes (44,480 as at 31 March 2020)
-- BHG continue to benefit from a G1 / V1 rating
-- BHG have maintained credit ratings of Moody's A2 and S&P A+
-- BHG have disposed of 307 homes across six local authority
areas outside of our core geographies, removing our presence from
these local authority areas as part of our strategic focus on our
core operating area
-- Turnover for the period was GBP266m (2020 FY: GBP271m)
-- Social housing turnover contributed to 85% of total turnover (2020 FY: 78%)
-- Operating surplus for the period was GBP98m (2020 FY: GBP97m)
-- Operating margin on social housing lettings was 35% (2020 FY: 32%)
-- Overall operating margin (including asset sales) was 37% (2020 FY: 36%)
-- Overall operating margin (excluding asset sales) was 31% (2020 FY: 30%)
-- Net margin on shared ownership (first tranche) was 22% (2020 FY: 26%)
-- Net margin on outright sales was 16% (2020 FY: 10%)
-- The surplus after tax for the period was GBP56m (2020 FY: GBP49m)
-- Net arrears as at 31 March 2021 was 1.9% (2020 FY: 2.0%)
-- Asset gearing as at 31 March 2021 was 38% (2020 FY: 40%)
-- Interest cover as at 31 March 2021 was 1.8x (2020 FY: 1.7x)
Robert Nettleton, Chief Executive Officer, commented:
"The Covid-19 pandemic resulted in an unprecedented year of
challenge and change for customers, colleagues and stakeholders.
Our primary focus throughout the past year was on the safety and
wellbeing of colleagues and customers.
Given the challenges, including the ability to deliver our full
investment programme, we are very pleased to report that our
customer advocacy improved by over 3% to 85.1% and arrears reduced
to under 2%. We have achieved this whilst improving our social
housing margin by 3% to 35% as a result of rent growth and
operational synergies following our mergers.
We pro-actively resumed development activity after the first
lockdown and are pleased to have completed over 900 new homes in
the year, the vast majority of which are at social and affordable
tenures. Whilst new home sales activity was down by 22% on the
previous year as a result of the restrictions during the first
three months of the financial year, we ended the year with only 45
completed homes unsold (2020 FY: 103 homes).
Our sustainability agenda continues to be a high strategic
priority. During the year we established our baseline carbon
emissions position and finalised our inaugural accredited
Sustainability Finance Framework which will drive a number of
initiatives including meeting SAP C ratings across all our homes by
2030.
As the UK's successful vaccine rollout continues and further
restrictions lift, we look forward to the future in which we will
deliver our full investment programme, complete our catch-up
repairs and retain our unwavering focus on enabling our customers
to thrive."
Imran Mubeen, Director of Treasury, commented
"We continue to place ESG at the forefront of our corporate and
treasury activity, successfully achieving external accreditation
for our Sustainability Finance Framework which will soon be
published. We are especially proud of our new GBP75m revolving
credit facility with SMBC which establishes our second
Sustainability Linked Loan, the first in the sector linked to
Governance, and generates interest savings as we successfully
reduce our gender pay gap.
We have continued our pro-active approach to new funding and
returned to the capital markets twice to leverage the low rate
environment and generate GBP200m through new record low coupons,
both on a deferred basis. This funding will be drawn in May 2021
and January 2022, providing us with the certainty of funding as we
emerge from the pandemic to deliver more homes.
We end the year with over twice the level of required liquidity,
with significant headroom continuing in our gearing and interest
cover covenants for future borrowing, and with the affirmation of
our dual credit rating platform across Moody's and S&P (A2/
A+)."
Development: housing completions (31 March 2021)
Unit Type Housing completions
31 March 2021
------------------- --------------------
Social rent 392
Affordable rent 273
Shared ownership 210
Open market sales 27
Total 902
-- BHG completed 902 new homes in the full year ending 31 March
2021 (875 affordable housing tenure and 27 open market sale). In
the Board approved budget for the financial year ending 31 March
2022, we expect to complete over 1,200 new homes.
-- BHG achieved 295 new home sales in the full year ending 31
March 2021 (258 shared ownership first tranche sales and 37 open
market sales). BHG's proactive sales strategy through the pandemic
with a revamp of the sales website to offer virtual viewings and
sharper response times to enquiries enabled sales to recover
towards pre-Covid levels by the end of the year. In the Board
approved budget for the financial year ending 31 March 2022, we
expect to achieve over 350 sales.
Development: pipeline
-- In its latest Board approved business plan, BHG outlined an
ongoing plan to deliver a further c. 11,000 new homes by 2029 under
the remaining period of its New Homes Programme. In the pursuit of
this development strategy, Bromford Housing Group Investments
Limited has been established to deliver joint ventures with private
developers on large, mixed tenure development to optimise
commercial return with risk mitigation. BHG are also in the process
for applying for the Government's Affordable Homes Programme 2021
to 2026, which would further mitigate risk in the development
strategy.
Unaudited Financial Metrics
Statement of comprehensive income 31 Mar 2021 31 Mar 2021 31 Mar 2020
Actual Forecast Actual
-------------------------------------- ------------ ------------ ------------
Turnover from social housing lettings GBP225m GBP226m GBP212m
Turnover GBP266m GBP262m GBP271m
Operating surplus (including asset GBP98m GBP98m GBP97m
sales)
Surplus after tax GBP56m GBP56m GBP48m
-------------------------------------- ------------ ------------ ------------
Margins 31 Mar 2021 31 Mar 2021 31 Mar 2020
Actual Forecast Actual
---------------------------------------- ------------ ------------ ------------
Operating margin(1) on social housing
lettings(2) 35% 35% 32%
Overall operating margin(3) (excluding
asset sales) 31% 32% 30%
Overall operating margin(3) (including
asset sales) 37% 37% 36%
Operating margin on shared ownership
(first tranche)(4) 22% 20% 26%
Operating margin on outright sales(5) 16% 14% 10%
---------------------------------------- ------------ ------------ ------------
Key financial ratios 31 Mar 2021 31 Mar 2021 31 Mar 2020
Actual Forecast Actual
---------------------------------- ------------ ------------ ------------
EBITDA MRI/ net interest paid(6) 1.8x 1.8x 1.7x
Social housing interest cover(7) 1.6x 1.6x 1.7x
Asset gearing(8) 38% 38% 40%
Net debt per unit(9) GBP24k GBP24k GBP24k
---------------------------------- ------------ ------------ ------------
Liquidity 31 Mar 2021
Actual
------------------------------------ ------------
18 month liquidity requirement(10) GBP194m
Cash and undrawn facilities(11) GBP501m
Liquidity ratio(12) 2.6x
Unencumbered stock 9,142 homes
-------------------------------------- ------------
Credit ratings
--------------- --------------
Moody's A2 (stable)
S&P A+ (negative)
--------------- --------------
Notes:
(1) Operating surplus / Turnover
(2) General Needs, Supported housing, Affordable rent and Low
cost home ownership tenures
(3) Operating margin including asset sales includes all
activity; operating margin excluding asset sales removes gain or
loss on disposal of assets
(4) Operating surplus on First tranche shared ownership sales /
Turnover from First tranche shared ownership sales
(5) Operating surplus on outright sales / Turnover from outright
sales
(6) (Operating surplus + Depreciation + Amortisation -
Capitalised major repairs) / Net interest paid
(7) Operating surplus on Social housing lettings / Net interest
paid
(8) Net debt / Housing assets at historic cost
(9) Net debt / Total units owned and managed
(10) 18 month cashflow requirement - 20% of sales income +
GBP25m
(11) Cash and undrawn RCF
(12) Cash and undrawn facilities / 18 month liquidity
requirement
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 or recommendation to invest in Bromford's bonds.
For further information, please contact:
Imran Mubeen, Director of Treasury
07711 221464
https://www.bromford.co.uk/investorrelations/
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END
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