TIDM42RA
RNS Number : 7462T
Bromford Housing Group Ltd
18 November 2019
Bromford Housing Group
18 November 2019
Bromford Housing Group trading update for the period ending 30
September 2019
-- Bromford Housing Group (BHG) is today issuing its
consolidated trading update for the six months ending 30 September
2019 (2019 HY).
-- There have been no changes to the Group structure in the
period, with Merlin Housing Society Limited (Merlin) and Severn
Vale Housing Society (Severn Vale) joining the Group in FY 2018/19.
The HY 2018 figure comparators include Merlin who joined the Group
in July 2018, but not Severn Vale who joined the Group later in
January 2019.
-- These figures are unaudited and for information purposes only.
Highlights (Bromford Housing Group for the period ending 30
September 2019)
-- BHG own and manage 42,944 homes (42,735 as at 31 March 2019)
-- BHG have maintained their G1 / V1 rating further to a post-merger In Depth Assessment (IDA).
-- BHG have entered into a strategic partnership with Homes
England, securing GBP66m of grant funding
-- BHG have disposed of 86 homes in Newcastle under Lyme and
Staffordshire Moorlands, effectively removing presence from these
local authority areas as part of our strategic focus on our Top 4
areas
-- Turnover for the period was GBP137m (2018 HY: GBP124m)
-- Social housing turnover contributed to 79% of total turnover (2018 HY: 78%)
-- Operating surplus for the period was GBP50m (2018 HY: GBP46m)
-- Operating margin on social housing lettings was 35% (2018 HY: 41%)
-- Overall operating margin (including asset sales) was 37% (2018 HY: 37%)
-- Overall operating margin (excluding asset sales) was 33% (2018 HY: 34%)
-- Net margin on shared ownership (first tranche) was 21% (2018 HY: 21%)
-- Net margin on outright sales was 15% (2018 HY: 20%)
-- The surplus after tax for the period was GBP30m (2018 HY: GBP28m)
-- Asset gearing as at 30 September 2019 was 39%
-- Interest cover as at 30 September 2019 was 2.2x
Commenting on the results, Lee Gibson, Chief Financial Officer,
said:
"It has been another successful period for the Bromford Housing
Group as we pursue our new Corporate Strategy. We continue to focus
on our core business of social housing which contributes to almost
80% of turnover and we are pleased to have delivered to budget once
again. We have also rationalised our geographical focus,
undertaking strategic disposals programmes to extricate from two
local authority areas. We will undertake further stock
rationalisation as we focus our delivery to our Top 4 areas.
We continue to pursue our ambition of delivering 13,100 new
homes by 2028 and have de-risked our approach to development
through our strategic partnership with Homes England and also
through working with a number of leading developers through the
Bromford Construction Partnership. We have completed 497 homes over
the past six months and remain on track to meet this year's
delivery target. We are aware that market sales are down against
budget due to a re-profiling our sales activity and we would expect
to recover most of this in the period to 31 March 2020."
Imran Mubeen, Head of Treasury, added:
"The period saw the expected regrade of our Moody's rating to A2
to align with the development aspirations and associated borrowings
in our new business plan. We continue to benefit from one of the
strongest dual credit rating platforms in the sector, which we will
pro-actively monitor and maintain through internal shadow credit
rating on all future Group business plans. After the regrade, the
strength of our credit profile and the headroom in our existing
interest cover and metrics was once again realised in the issue of
our third bond at sector leading rates in 18 months.
We continue to benefit from strong levels of liquidity and look
forward to working with funders and investors to maintain this
position. We continue to rationalise and optimise our existing loan
book and we are also pro-actively pursuing our ESG agenda to issue
ESG linked debt in the near future."
Development: housing completions (2019 HY)
Unit Type Housing completions
2019 HY
------------------- --------------------
Social rent 121
Affordable rent 149
Shared ownership 181
Open market sales 46
Total 497
-- BHG expect to complete more than 1,000 new homes for the
financial year ending 31 March 2020; having completed 497 new homes
in the financial year to date (451 of which represent affordable
housing tenure and 46 open market sale).
-- BHG entered into a strategic partnership with Homes England
in April 2019, securing GBP66m of grant funding, enabling us to
work together to achieve our ambitious development programme
target. We are currently on track to deliver c. 1,400 new homes
committed through the partnership in the period to 31 March
2024.
-- BHG have also launched the Bromford Construction Partnership,
a collaboration worth GBP160m with four construction partners (EG
Carter, Speller Metcalfe, Lovell and Galliford Try) to deliver up
to 400 new homes per year and has entered into a partnership with
Taylor Wimpey to deliver 455 new homes at the Innsworth site in
Gloucestershire.
Development: pipeline
-- BHG continue to 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 30 Sep 2019 30 Sep 2019 30 Sep 2018
Actual Budget Actual
-------------------------------------- ------------ ------------ ------------
Turnover from social housing lettings GBP108m GBP107m GBP97m
Turnover GBP137m GBP147m GBP124m
Operating surplus (including asset GBP50m GBP52m GBP46m
sales)
Surplus after tax GBP30m GBP28m GBP28m
-------------------------------------- ------------ ------------ ------------
Margins 30 Sep 2019 30 Sep 2019 30 Sep 2018
Actual Budget Actual
---------------------------------------- ------------ ------------ ------------
Operating margin(1) on social housing
lettings(2) 35% 35% 41%
Overall operating margin(3) (excluding
asset sales) 33% 31% 34%
Overall operating margin(3) (including
asset sales) 37% 35% 37%
Operating margin on shared ownership
(first tranche)(4) 21% 17% 21%
Operating margin on outright sales(5) 15% 15% 20%
---------------------------------------- ------------ ------------ ------------
Key financial ratios 30 Sep 2019
Actual
---------------------------------- ------------
EBITDA MRI/ net interest paid(6) 2.2x
Social housing interest cover(7) 1.8x
Asset gearing(8) 39%
Net debt per unit(9) GBP24k
------------------------------------ ------------
Liquidity 30 Sep 2019
Actual
----------------------------------- -------------
18 month liquidity requirement(10) GBP345m
Cash and undrawn facilities(11) GBP601m
Unencumbered stock 10,182 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
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, Head of Treasury
07711 221464
https://www.bromford.co.uk/investorrelations/
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END
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