TIDM20SY
RNS Number : 5835S
Optivo Finance PLC
16 November 2021
OPTIVO
TRADING UPDATE FOR INVESTORS
SIX MONTHS TO 30 SEPTEMBER 2021
"The first half of 2021/22 saw us delivering a steady
operational performance with profits ahead of budget due to
seasonality in our planned repairs and maintenance expenditure. We
expect full-year profits broadly around original budget level.
We're looking forward to continuing our planned maintenance
programme in line with budget in the second half of 2021/22 and
delivering new homes in line with our development plans.
We maintained our strong financial position with our Moody's A3
(stable) credit rating reconfirmed and GBP736m committed liquidity
(H1 2020: GBP788m) to cover our GBP421m development commitments (H1
2020: GBP583m). We also published our second annual ESG
transparency report at www.optivoinvestors.co.uk."
Sarah Smith, Chief Financial Officer
16 November 2021
Key financial indicators
Income & expenditure (GBPm) FY 2020/21 H1 2020/21 H1 2021/22
audited unaudited unaudited
Total turnover 332 154 175
Of which: Non-sales turnover 301 146 150
Initial sales turnover 31 8 25
Operating surplus 104 54 55
Operating margin excluding sales 24% 31% 26%
Surplus after interest 1 51 30 32
---------------------------------- ----------- ----------- -----------
Note: (1) Before fair value, tax and pension scheme
movements
This year we have budgeted for significant one-off fire safety
remediation works costs and this continues to weigh on our
operating margins. We expect to see compression to our operating
margin over the full year as planned repairs and maintenance costs
are, as last year, expected to be more heavily weighted towards
H2.
Balance sheet (GBPm) 31.3.2021 30.9.20 30.9.21
audited unaudited unaudited
Social housing assets (historical
cost) 3,083 2,972 3,152
Investment properties (valuation)
2 132 147 132
Total debt 3 1,490 1,492 1,524
Cash & cash equivalents 87 98 74
----------------------------------- ---------- ----------- -----------
Note: (2) Investment properties are revalued annually
Note: (3) Excluding capitalised debt arrangement costs
Cash flows (GBPm) FY 2020/21 H1 2020/21 H1 2021/22
audited unaudited unaudited
Cash from Operations 141 45 59
Investing activities (154) (66) (79)
Financing activities (38) (18) 8
Net change in cash (51) (39) (13)
---------------------- ----------- ----------- -----------
Key strategic indicators
Resident satisfaction FY 2020/21 H1 2020/21 H1 2021/22
Service 89% 89% 88%
Repairs 97% 98% 97%
Neighbourhoods 92% 93% 90%
----------------------- ----------- ----------- -----------
Our service score at 87.8% was almost in line with our 2021/2022
target of 88%. Results now out for 2020/21 show us once again top
performer in our peer group for customer satisfaction.
We supported 156 residents into employment in H1. We exceeded
our target for the proportion of our own staff that were satisfied
with us as an employer.
Lettings
General needs and HOPS 4 FY 2020/21 H1 2020/21 H1 2021/22
key operational indicators audited unaudited unaudited
Void rental losses 1.1% 1.7% 1.0%
Overall rent arrears 4.1% 4.5% 4.1%
----------------------------- ----------- ----------- -----------
Note: (4) Housing for older people
Void losses from our social lettings portfolio were better than
budgeted. We saw higher than expected voids from our commercial
portfolio, driven mainly by student accommodation. Over the last
year student accommodation has been impacted by the move to online
study, lockdown measures and travel restrictions. Our position for
the new academic year is a significant improvement, though there
remains room for improvement, with 92% occupancy at the end of
September.
Overall rent arrears are in line with other recent periods and
are within acceptable levels. A large proportion of rent arrears
can be attributed to residents who receive Universal Credit and
we've been considering the likely impact of the end of the GBP20
uplift. Our Financial Inclusion Team continues to do a great job in
providing information and helping residents on a wide range of
financial matters including energy advice.
Asset management
Expenditure on homes (GBPm) FY 2020/21 H1 2020/21 H1 2021/22
audited unaudited unaudited
Routine maintenance 28 10 13
Planned maintenance 48 18 19
Major repairs 7 7 8
----------------------------- ----------- ----------- -----------
Our maintenance costs were behind budget in H1 as access to some
properties remained restricted. However, we expect an acceleration
in maintenance activity in H2. Our surveys show that 97% of our
residents are satisfied with the repair work we carry out.
Development & sales
Investment in new homes (GBPm) FY 2020/21 H1 2020/21 H1 2021/22
audited unaudited unaudited
Spent during the period 190 76 112
Future spend in contract 498 583 421
-------------------------------- ----------- ----------- -----------
Number of new homes FY 2020/21 H1 2020/21 H1 2021/22
unaudited unaudited unaudited
Started in the period 1,002 193 211
Completed in the period 577 89 262
In contract at the reporting
date 2,828 2,828 2,800
Number of sites in contract 41 37 41
------------------------------ ----------- ----------- -----------
Number of new homes 31.3.2021 30.9.2020 30.9.2021
available for sale unaudited unaudited unaudited
Open market sales 7 8 1
Shared ownership first tranche 250 258 172
Of which unsold over six months 106 208 95
----------------------------------- ----------- ----------- -----------
Supply chain issues in terms of materials and labour have been a
feature of recent months across our industry as well as many
others. Our full-year target to start construction of 815 new homes
in 2021/22 remains unchanged.
There was only one property available for sale on the open
market at the end of H1 and all together there have been 12 open
market sales year-to-date.
Financing
Funding sources (GBPm) 31.3.2021 30.9.2020 30.9.2021
audited unaudited unaudited
Cash and cash equivalents 87 98 74
Available bank facilities 640 690 684
Retained bonds held:
2035 100 100 0
2043 0 0 0 5
2048 0 0 0
-------------------------- ---------- ----------- -----------
Key metrics 31.3.2021 30.9.2020 30.9.2021
audited unaudited unaudited
Interest rate profile:
% of net debt on fixed basis 96% 94% 92%
Weighted average duration 11 years 12 years 12 years
Weighted average debt cost 3.64% 3.79% 3.62%
Derivative mark-to-market GBP136m GBP174m GBP124m
------------------------------- ----------- ----------- -----------
Note: (5) In September 2020 we announced we would tap our 2043
bond by GBP150 million notional and we expect to complete
documentation for this shortly, increasing the 2043 bonds to GBP300
million notional. At the same time we announced a forward purchase
agreement with investors to sell GBP100 million notional amount
(raising GBP151 million proceeds) of the newly created bonds for
delivery in March 2022. After documentation is complete, we will
deliver GBP100 million notional bonds to settle the forward
purchase agreement and retain GBP50 million notional bonds to sell
in due course.
We completed the sale of GBP100m of our 2035 retained bond in
August. We used proceeds to repay legacy bank facilities and
improve the security efficiency of our debt.
We're due to receive GBP151m proceeds from our 2043 bond tap in
March 2022 in order to repay our Bank of England Covid Corporate
Financing Facility borrowings.
We are in compliance with all financial and non-financial
covenants.
External ratings
31.3.2021 30.9.2020 30.9.2021
Regulator of Social Housing
Governance judgement G1 G1 G1
Financial viability judgement V1 V1 V1
Moody's
Rating A3 A2 A3
Outlook (stable) (negative) (stable)
------------------------------- ------------ -------------- ------------
Moody's carried out their annual review in August this year and
have reaffirmed our rating of A3 (stable outlook). Moody's cited
our profitable core business, market position, strong balance sheet
and unencumbered asset position, financial policies, stress
testing, development flexibility and liquidity as credit
strengths.
Investor calendar
Financial year end 31 March 2022
Full year trading update May 2022
Audited financial statements July 2022
Investor update meetings August 2022
Property security valuations for listed bonds by 31 May 2022 (2035 bond)
by 31 July 2022 (2043 & 2048)
More information
https://optivoinvestors.co.uk/
Tariq Kazi
Director of Corporate Finance
tariq.kazi@optivo.org.uk
020 8036 2293
ABOUT OPTIVO
Optivo is registered in England with limited liability under the
Co-operative and Community Benefit Societies Act 2014 (with
registered number 7561) and is a Registered Provider of Social
Housing whose activities are regulated by the Regulator of Social
Housing (with registered number 4851). As such, Optivo has
charitable status but is exempt from registration with the Charity
Commission.
Optivo Finance plc (company number 07933814) is a wholly owned
subsidiary of Optivo and is an issuer of GBP-denominated bonds
listed on the London Stock Exchange.
IMPORTANT NOTE
This update contains certain 'forward-looking' statements
reflecting, among other matters, our current views on markets,
activities and prospects. Actual outcomes may differ materially.
Such statements are a correct reflection of our views only on the
publication date and no representation or warranty is given in
relation to them, including as to their completeness or accuracy or
the basis on which they were prepared. Financial results quoted are
unaudited. No reliance should be placed on the information
contained within this update. We do not undertake to update or
revise such public statements as and when our expectations change
in response to events. This update is neither recommendation nor
advice. This is not an offer or solicitation to buy or sell any
securities.
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END
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