TIDM94BD
RNS Number : 2908J
Incommunities Treasury PLC
10 December 2022
Incommunities Limited ("Group") trading update and unaudited
financial results for the period ended 30 September 2022
Incommunities Treasury Plc's parent company, Incommunities Group
Limited ("Group") is pleased to announce the release of its
unaudited half year financial statements for the period ended 30
September 2022.
Incommunities Limited is one of the largest Registered Providers
in Yorkshire owning and managing 22,674 homes properties mainly
across Bradford and Huddersfield, of which 22,654 are social
housing properties, highlighting our commitment to provide and
maintain high-quality affordable housing for our communities.
Financial and operational highlights
Despite the ongoing macroeconomic pressures, the Group's
financial performance remains strong. Over the first half of the
year, the Group has delivered an operating surplus of GBP9.0mn from
turnover of GBP51.7mn, equating to an operating margin of 17.4%.
The net surplus after interest and other adjustments is
GBP7.4mn.
Year to Date Target Actuals (1)
Operating surplus/(deficit) (before fixed asset sales) 18.0% 17.4%
Social Housing operating margin 15.7% 15.0%
Liquidity ratio >1 2.1
EBITDA-MRI Interest Cover 174.5% 243.8%
-- Housing fixed assets - housing properties at cost stood at
GBP599mn, up from GBP593mn in FY22.
-- Investment programme - investment to 30 September 2022 was
GBP3.7mn. The Group remains committed to improving the lives of our
tenants through investment in their homes.
-- Development programme - for the six months to 30 September
2022, the Group gross spend was GBP11.8m on ten active schemes. The
Group generated GBP0.6mn from first tranche sales on shared
ownership properties and received a further GBP0.3mn in grant
income.
-- Liquidity - Remains strong, the cash position as of 30
September 2022 was GBP22.4mn, with further undrawn facilities of
GBP105mn.
-- Funder Covenants - All funder covenants have been met and are
forecast to be met for the current financial year.
Target Forecast (2)
Interest Cover 110% 130%
Gearing 70% 43%
Net Debt per Unit GBP23,000 GBP13,026
Notes
1. Unaudited accounts
2. Unaudited accounts
Business Outlook
We continue to monitor all potential risks the Group could face
with successful risk management a core component of our wider
governance and internal control framework. We continue to operate
under challenging market conditions with the potential to impact
sales and prices and we are seeing emerging themes not too
dissimilar to those impacting the housing sector and industry more
widely including cyber threats and pressures on the supply chain.
The Board continue to monitor the potential impact and remain well
placed to navigate the current economic volatility through relevant
mitigation plans.
Inflation - CPI inflation rose to 11.1% in November 2022 and
remains well above the Bank of England's 2.0% inflationary target.
Inflationary pressures have been factored into our future financial
performance for the remainder of the current year as well as future
years through stress testing of the financial plan.
Rent Cap - Incommunities is subject to the Rent Standard which
is currently set at Consumer Price Index (CPI) plus 1%. Based on
September 2022 CPI figures (10.1%) and subject to no rent cap, this
would equate to 11.1%. However, a consultation was launched on in
August to invite views from social housing tenants and landlords on
a proposed rent cap to understand how best to support households
with the cost of living.
On 17(th) November 2022, the government confirmed a 7% rent cap
on the amount by which housing associations could raise rents by
from 1(st) April 2023.
Interest Rates - The base rate was increased from 2.25% to 3.0%
on 3(rd) November 2022 by the Bank of England in response to the
inflationary pressures in the economy. Incommunities protects its
loan portfolio against the impact of base rates increases on
financing costs. The debt portfolio is 98% fixed, against minimum
limit of 60% fixed in our TMP. This gives a strong degree of
mitigation against interest rate increases for Incommunities.
Cost, Material and Labour Availability - Cost pressures and
scarcity of materials and labour in the repairs markets have been
flagged as issues facing the delivery of the day-to-day repairs,
investment and new build programmes. The large increases in energy
costs in the global markets linked to the conflict in Ukraine will
add to these pressures. The cost pressure around utilities has been
reflected in the half year financial position.
COVID-19 - The business continues to monitor the impact of
COVID-19. However, no impact on income or cash collection is being
experienced. All housing operations are being delivered and the
capital programmes for investment and new build are forecast to be
delivered despite the pressures identified in the preceding
paragraph. This is of course subject to any further government
lockdowns that may be required in future.
Executive Appointments
Janey Carey joined Incommunities in September as Executive
Director of Customer and Communities, bringing skills and previous
experience of transforming strategic and operational housing
services,
We are also pleased to announce the recent appointment of
Catherine Bett, as Director of Finance. Catherine joins from Plus
Dane Housing.
Shaeen Azam will be leaving Incommunities and her role as
Executive Director of Finance later this month. We wish her well
for the future and thank her for the contribution she has made to
reshaping the finance team at Incommunities.
Appendix
Statement of Comprehensive Income to 30 September 2022
30 Sep 22 (3) 30 Sep 21
GBP'000 GBP'000
Rent and service charges income 49,529 48,127
-------------- ----------
Other income 1,722 1,449
-------------- ----------
Amortisation of Social Housing Grant 416 422
-------------- ----------
Turnover 51,667 49,998
-------------- ----------
Core operating costs (34,428) (32,577)
-------------- ----------
Depreciation (8,274) (8,904)
-------------- ----------
Surplus on fixed asset disposals 3,601 2,306
-------------- ----------
Net Interest (5,202) (5,537)
-------------- ----------
Net Surplus 7,364 5,286
-------------- ----------
Statement of Financial Position as at 30 September 2022
30 Sep 22 (4) 31 Mar 22
GBP'000 GBP'000
Tangible fixed assets and investments 436,461 431,543
-------------- ----------
Current assets 27,999 25,523
-------------- ----------
Current liabilities (13,362) (16,076)
-------------- ----------
Total assets less current liabilities 451,098 440,990
-------------- ----------
Creditors due after more than one year (356,971) (354,228)
-------------- ----------
Pension liabilities and other provisions (44,478) (44,478)
-------------- ----------
Total net assets 49,649 42,284
-------------- ----------
Total Reserves 49,649 42,284
-------------- ----------
Notes
3. Unaudited accounts
4. Unaudited accounts
Disclaimer
These materials have been prepared by Incommunities solely for
use in publishing and presenting its results for the six months
ending 30 September 2022.
These materials do not constitute or form part of and should not
be construed as, an offer to sell or issue, or the solicitation of
an offer to buy or acquire securities of Incommunities in any
jurisdiction or an inducement to enter into investment activity. No
part of these materials, nor the fact of their distribution, should
form the basis of, or be relied on or in connection with, any
contract or commitment or investment decision whatsoever. Neither
should the materials be construed as legal, tax, financial,
investment or accounting advice.
These materials contain statements with respect to the financial
condition, results of operations, business and future prospects of
Incommunities that are forward-looking statements. By their nature,
forward-looking statements involve risk and uncertainty because
they relate to events and depend on circumstances that will occur
in the future. There are a number of factors that could cause
actual results and developments to differ materially from those
expressed or implied by these forward-looking statements, including
many factors outside Incommunities' control
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