TIDM38EO TIDM42YK
RNS Number : 7877U
Metropolitan Funding PLC
28 November 2023
Metropolitan Housing Trust Ltd / Metropolitan Funding PLC
Thames Valley Housing Association (TVHA), trading as MTVH,
announces trading update and unaudited consolidated financial
results for the six months ended 30 September 2023
Strong H1 performance provides foundations for full year
growth
Overview and highlights
o Despite high inflation and rising interest rates putting
upward pressure on costs and lowering housing market confidence our
H1 2023 operating surplus improved to GBP75.2m (H1 2022:
GBP69.8m).
o Total revenue increased to GBP209m (H1 2022: GBP197.8m)
o Operating margin improved to 36.0% (H1 2022: 35.3%)
o Total surplus was GBP34.5m (H1 2022: GBP34.8m).
o Revenue from rent and service charges GBP175m (H1 2022:
GBP161m) with rent arrears slightly improving to c.5.3% (March 2022
c 5.7%).
o Following the Government's announcement of a 7% 2023/24 social
rent cap, we have committed to cap shared ownership rent increases
at the same percentage for FY 2024.
o We invested GBP16.5m in planned improvement works to our
estate (H1 2022: GBP14m) and fire safety spend was GBP5.3m (FY22
GBP8.1m).
o We remain committed to supporting residents during the cost of
living crisis and GBP338k was spent from the Hardship Fund in the
half year.
o Our development programme is on track to deliver more than 815
new homes in the full year through partnership projects such as
Clapham Park and Westhorpe Gardens.
o In H1 2023 we completed 293 new homes (H1 2022: 107)
o Sales of 116 units completed (H1 2022: 149)
o Our financial position remains strong and supports our
strategy for continued sustainable growth.
o GBP765m (March 2023: GBP725m) of available liquidity.
o S&P Group rating of A- (Negative outlook), following the
UK sovereign downgrade in October 2022.
o Fitch Ratings refreshed rating as A (Negative outlook) in
October 2023.
o Ritterwald refreshed the Sustainable Housing Certification,
moving MTVH up to Frontrunner for both Social and Governance, and
Ambassador for Environmental criteria.
Geeta Nanda, OBE, Chief Executive, commented:
"Despite the challenging economic environment we have continued
to invest in homes, communities, business systems and processes to
serve residents better every day.
We are also investing to build the new homes the country needs.
We completed 293 homes in the first half of the year and are on
track to deliver 815 in the full year. Excellent progress continues
to be made at our flagship regeneration scheme at Clapham Park,
South London, with construction works on the second phase of 520
new homes now underway.
We have affirmed our position as a market leader in shared
ownership by expanding our partnerships to provide sales and
construction services for 12 other shared ownership providers, and
through a new Joint Venture with Legal & General Affordable
Homes.
Our strong first half performance leaves us confident for the
full year outcome and our robust financial position is underscored
by the A rating awarded by Fitch Ratings and the A- rating from
S&P Group."
Statement of comprehensive income
GBP million 6 months 6 months Movement
ended 30 ended 30
September September
2023 2022
Turnover - rent and service 189.1 172.9
charges
Operating costs (149.5) (128.9)
----------- ----------- ---------
Net surplus on rental operations 39.6 44.0 (4.4)
----------- ----------- ---------
Turnover - sales 13.5 19.4
Cost of sales (11.5) (15.6)
----------- ----------- ---------
Net surplus on new build
sales 2.0 3.8 (1.8)
----------- ----------- ---------
Surplus on disposal of fixed 32.5 25.8 6.7
assets
Gains from joint ventures 6.1 5.5 0.6
----------- ----------- ---------
Building Safety and non-recurring (5.0) (9.1) 4.1
----------- ----------- ---------
Operating surplus 75.2 70.0 5.2
----------- ----------- ---------
Net interest payable (43.4) (39.8) (3.6)
Gains on financial derivatives 2.7 4.6 (1.9)
----------- ----------- ---------
Surplus to 30 September 34.5 34.8 (0.3)
----------- ----------- ---------
Senior Leadership Changes
Helen McTeer who has been with MTVH for over 11 years was
appointed to the role of Executive Director of Corporate Services
in October 2023 following the departure of Jane Long who took up a
position as CEO of a children's hospice.
Trading overview
Turnover from core social housing (ie excluding home sales) was
up 9% compared to the same period last year.
Turnover from sales was lower as we sold 116 units in the first
six months (compared to 149 in the same period last year). At 30
September 2023, we had 170 unsold units, of which only 54 are
unsold over 90 days, with a sales value of GBP7.1m. While sales are
currently in line with expectations, we remain well-placed if the
sales market weakens.
Operating surplus (including profit from disposals and after
expensed fire safety costs of GBP5m) was GBP5.2m higher than the
same period last year at GBP75.2m (2021: GBP69.9m).
Operating costs in the first six months were GBP111.0m (2022:
GBP92.1m). In FY23, the amount we spent on improvements to homes
was weighted significantly towards H2 whereas this year the spend
will be more evenly profiled. H1 24 maintenance-related expenses
were GBP12m higher compared to H1 23, but GBP10m lower than H2 23.
Year on year inflationary pressure also increased costs relating to
salaries, utilities and managing agents. Operating margin for the
first six months is 0.7 ppts higher at 36.0% (2022 35.3%).
Cashflow from operations (before interest and movements in debt)
was GBP9.4m higher than H1 last year, with increases in sales
(including aftersales) and disposals proceeds of GBP64.1m more than
offsetting a GBP31.5m increase in development expenditure.
Investment in new development projects totalled GBP124.1m (2022:
GBP92.6m) in the period to 30 September and GBP16.5m (2022:
GBP14.0m) was spent on capitalised repairs to the existing estate.
The organisation completed 293 homes during the first half of the
year (2022: 107) and remains on track to deliver more than 815 new
homes for the full year.
Underlying net interest costs (excluding mark to market
movements on derivatives) are GBP3.6m higher than the same period
last year as variable rates increase from historic lows. At 30
September 2023, we had GBP765m (Sep 2022: GBP747m) of available
liquidity (both cash and committed facilities) and total debt of
GBP1,901m (2022 GBP1,908m). Liquidity management remains a key
focus to mitigate the impact of a wider economic downturn. At the
same time, our relatively low gearing, at 38%, and over GBP410m of
available security provides further resilience to shock.
Thames Valley Housing Association's Standard & Poor's credit
rating was downgraded to A- (Negative outlook) in October 2022
following the UK Sovereign Rating downgrade.
Fitch Ratings refreshed the organisation rating as A (Negative)
in October 2023.
Full-year outlook
This outlook statement is subject to uncertainty/unforeseen
market and business interruption as a result of uncertainty over
the direction of government policy. The economic and geopolitical
environments remain challenging, with persistently high levels of
inflation and interest rates, along with supply chain and labour
shortages, and continuing concerns over energy supplies.
Trading
The core housing business continues to perform well. Total
revenue including home sales is expected to be around c 5% higher
than last year due to sales revenues from strategic asset
disposals. Underlying Operating surplus (before any non-recurring
charges) is also expected to be c 5% higher than FY23.
The rent regime of CPI+1% for Affordable Rents will apply an
increase of 7.7% to our social rents for FY25. This will boost
revenues but margins will continue to be squeezed as operating
costs are expected to rise by more than this. This will impact on
our capacity to build new homes. MTVH is committed to providing
increased support for those who face financial hardship.
Investment in building safety
Fire safety and Damp and Mould works have increased investment
to our existing homes. This is a sector issue. The longer term
impact of remediation obligations has led to a reduction in our
capacity to develop new homes, particularly homes for sale.
We are continuing with our Safer Buildings programme driven by
our desire to put customer safety first. We have completed the
review of blocks over 18m and are substantially through our risk
based review of blocks under 18m, to determine the extent of any
remediation requirements. In certain cases, there has been a
requirement to carry out further, more intrusive surveys. We have
access to NHBC and the government's Safer Buildings Fund where we
meet qualification requirements. We expect that developers/warranty
providers will pick up the costs of remediation for newer buildings
where this relates to construction defect. We will seek to either
accelerate the remediation or redevelop the at-risk blocks, having
confirmed we would not seek recovery from Leaseholders.
TVHA will report results for the year ended 31 March 2024,
trading as Metropolitan Thames Valley, in summer 2024.
Consolidated financials
Statement of comprehensive income
Statement of Financial Position
Cashflow
Enquiries
Please contact Donald McKenzie, Director of Corporate Finance,
on 0203-535-4434/ 07738-714126 or at donald.mckenzie@mtvh.co.uk
This information for investors is also available on our
website:
https://www.mtvh.co.uk/about-us/investors/
Notes
1) Operating margin is operating surplus/turnover
2) Thames Valley Housing Association (TVHA) is the parent of the
group trading under the brand of Metropolitan Thames Valley (MTVH).
Metropolitan Housing Trust (MHT) is a wholly owned subsidiary of
TVHA and MHT owns 100% of the shares of Metropolitan Funding
Plc.
Disclaimer
The information in this announcement of unaudited consolidated
interim results has been prepared by the Thames Valley Housing
Association group and is for information purposes only.
The unaudited results announcement should not be construed as an
offer or solicitation to buy or sell any securities, or any
interest in any such securities, and nothing herein should be
construed as a recommendation or advice to invest in any such
securities.
This unaudited results announcement contains certain
'forward-looking' statements reflecting, among other things, our
current views on markets, activities and prospects. By their
nature, forward looking statements involve a number of risks,
uncertainties or assumptions that could cause actual results to
differ materially from those expressed or implied by those
statements. 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.
We do not undertake to update or revise such public statements as
our expectations change in response to events. Accordingly undue
reliance should not be placed on forward looking statements.
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END
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