TIDM42RA
RNS Number : 4693M
Bromford Housing Group Ltd
11 May 2020
Bromford Housing Group
11 May 2020
Bromford Housing Group trading update for the period ending 31
March 2020
-- Bromford Housing Group (BHG) is today issuing its
consolidated trading update for the year ending 31 March 2020 (2020
FY).
-- The consolidated year end performance measures set out for
2020 FY reflect the first full year of trading for the new group
inclusive of Merlin and Severn Vale. In FY 2019, Merlin performance
reflected the full twelve month period to 31 March 2019 under
merger accounting rules, but Severn Vale was accounted for under
acquisition accounting rules with a fair value determination of
assets and liabilities at 2 January 2019.
-- The preliminary 2020 FY outturn are unaudited and for
information purposes only. The figures are largely unaffected by
the coronavirus outbreak. Further assessments are currently being
undertaken to understand the impact of the lockdown, further
extended periods of social distancing and the subsequent resumption
to regular business activity and economic recovery.
-- The 2020 FY year-end audit is currently being undertaken and
will include an impairment review. The associated financial impact
on 2021 FY is also being considered with a revised forecast
reflecting a reduction in development in the short-term; a
slow-down in planned maintenance; a reduced sales programme and an
increase in arrears associated with self-payers.
-- Further information on BHG's response to the coronavirus
outbreak can be accessed via the previous update issued on 14 April
2020 (RNS Number 5428J) , available at the following link:
https://www.bromford.co.uk/media/11220/bromford-responding-to-the-coronavirus-pandemic-rns.pdf
Highlights (Bromford Housing Group for the period ending 31
March 2020)
-- BHG own and manage 43,466 homes (42,735 as at 31 March 2019)
-- BHG have maintained their G1 / V1 rating further to a post-merger In Depth Assessment (IDA).
-- Turnover for the period was GBP270m (2019 FY: GBP257m)
-- Social housing turnover contributed to 81% of total turnover (2019 FY: 78%)
-- Operating surplus for the period was GBP99m (2019 FY: GBP83m)
-- Operating margin on social housing lettings was 33% (2019 FY: 35%)
-- Overall operating margin (including asset sales) was 37% (2019 FY: 33%)
-- Overall operating margin (excluding asset sales) was 30% (2019 FY: 30%)
-- Net margin on shared ownership (first tranche) was 23% (2019 FY: 22%)
-- Net margin on outright sales was 14% (2019 FY: 19%)
-- The surplus after tax for the period was GBP53m (2019 FY: GBP69m)(a)
-- Asset gearing as at 31 March 2020 was 39%
-- Interest cover as at 31 March 2020 was 1.6x
(a) 2019 FY includes a GBP21m one-off adjustment for the fair
value acquisition of Severn Vale. This is not repeated in 2020
FY.
Robert Nettleton, Chief Executive Officer, commented:
"It has been a successful year for Bromford as we continue to
focus on our purpose, our core business and our strategic
objectives. Our social housing business continues to thrive
contributing over 80% of our turnover, and during the year we
disposed of our entire student portfolio. We have delivered over
1,000 new homes and have continued to de-risk the plan by further
increasing our focus on affordable housing. Our in house delivery
is supported by our partnerships with Homes England and a number of
leading developers.
The outbreak of the coronavirus has presented us with new
challenges which are likely to have a near term impact on
development, sales and arrears. We are confident that we are well
positioned to successfully respond to these challenges. Our
business plan remains agile, with the ability to re-purpose our
approach to tenure and we continue to benefit from low levels of
WIP of circa GBP50m and limited outright sale exposure. We have
also undertaken significant treasury activity again this year;
maintaining strong levels of liquidity, in excess of half a billion
pounds, through additional facilities including our inaugural ESG
linked loan and a new deferred private placement that we are due to
draw in August 2020. As a result, our shadow credit ratings affirm
maintenance of our baseline ratings across a number of new and
adverse scenarios associated with the current lockdown.
These are clearly challenging times for people. We will continue
to focus firstly on the safety and wellbeing of our customers and
colleagues as we continue to work through the outbreak and emerge
to resume regular operations."
Development: housing completions (31 March 2020)
Unit Type Housing completions
31 March 2020
------------------- --------------------
Social rent 310
Affordable rent 341
Shared ownership 318
Open market sales 58
Total 1,027
-- BHG completed 1,027 new homes in the full year ending 31
March 2020 (969 of which represent affordable housing tenure and 58
open market sale). In the latest Board approved budget for the
financial year ending 31 March 2021, before the impact of Covid-19,
we expected to complete over 1,300 new homes.
Development: pipeline
-- In its latest Board approved business plan, BHG outlined an
ongoing plan to deliver a further c. 12,000 new homes by 2028 under
the remaining period of 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 2020 31 Mar 2020 31 Mar 2019
Actual Budget Actual
-------------------------------------- ------------ ------------ ------------
Turnover from social housing lettings GBP218m GBP218m GBP201m
Turnover GBP270m GBP280m GBP257m
Operating surplus (including asset GBP99m GBP97m GBP83m
sales)
Surplus after tax GBP53m GBP49m GBP69m
-------------------------------------- ------------ ------------ ------------
Margins 31 Mar 2020 31 Mar 2020 31 Mar 2019
Actual Budget Actual
---------------------------------------- ------------ ------------ ------------
Operating margin(1) on social housing
lettings(2) 33% 36% 35%
Overall operating margin(3) (excluding
asset sales) 30% 30% 30%
Overall operating margin(3) (including
asset sales) 37% 35% 33%
Operating margin on shared ownership
(first tranche)(4) 23% 18% 22%
Operating margin on outright sales(5) 14% 16% 19%
---------------------------------------- ------------ ------------ ------------
Key financial ratios 31 Mar 2020
Actual
---------------------------------- ------------
EBITDA MRI/ net interest paid(6) 1.6x
Social housing interest cover(7) 1.7x
Asset gearing(8) 39%
Net debt per unit(9) GBP24k
------------------------------------ ------------
Liquidity 31 Mar 2020
Actual
----------------------------------- -------------
18 month liquidity requirement(10) GBP322m
Cash and undrawn facilities(11) GBP545m
Unencumbered stock 10,768 homes
----------------------------------- -------------
Credit ratings
--------------- ------------
Moody's A2 (stable)
S&P A+ (stable)
--------------- ------------
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/
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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