TIDMBB26
RNS Number : 8128X
Guinness Partnership (The) Limited
22 December 2023
Half Year Performance Update for the 6 months to 30 September
2023
The Guinness Partnership Limited (TGPL) is pleased to report our
results for the six months to 30 September 2023. These results are
based upon unaudited management accounts and operational
performance reports.
Our Annual Financial Statements, Annual Report and ESG reports
for the year to 31 March 2023, are available on our website.
Summary
In the six months to 30 September 2023, we have continued to
deliver services to our customers, invest significantly in our
existing homes and complete new affordable homes in what continues
to be an incredibly challenging period for the social housing
sector. Economic uncertainty, rising interest rates and continued
high levels of inflation have impacted our residents, our workforce
and our future plans. We continue to monitor and manage these risks
so we can deliver appropriate levels of service to customers and
maintain financial resilience.
Earlier this year we announced that we were in discussions with
Shepherds Bush Housing Association (SBHA) about a potential
partnership whereby SBHA would join the group. SBHA joined the
Guinness Group as a subsidiary of TGPL on 4 December 2023. Our work
to integrate the businesses begins immediately.
Performance highlights for The Guinness Partnership Limited for
the six months to 30 September 2023 include:
-- Turnover of GBP218m (GBP198m in September 2022)
-- Operating surplus of GBP48.7m (49.2m in September 2022)
-- Operating margin of 22.4% (24.9% in September 2022)
-- Sale of 132 shared ownership homes realising a surplus of GBP0.8m.
-- High levels of liquidity retained - GBP818m of cash and undrawn loan facilities.
-- Current tenant arrears of 4.21%.
-- Maintenance and investment on existing homes totalling GBP77m.
-- Expenditure of GBP108m on new homes with 346 new affordable
homes completed and 210 homes starting on site.
On 27 November 2023 Moody's affirmed Guinness's A3 credit rating
with stable outlook.
On 19 December 2023 Standard & Poor's affirmed Guinness's A-
credit rating with stable outlook.
Key Financial Results
Financial Indicators Q2 2023/24 Year Ending Q2 2022/23
31 Mar 2023
Operating Surplus GBP48.7m GBP95.1m GBP49.2m
Operating Margin 22.4% 21.9% 24.9%
Total Surplus GBP22.6m GBP59.3m GBP36.5m
Net Margin 9.6% 14.5% 17.3%
EBITDA-MRI Interest Cover
RSH measure 127% 119% 147%
Interest cover (tightest lender
covenant) 181% 118% 179%
Gearing 41.5% 39.2% 40.8%
Available Liquidity GBP818m GBP778.5m GBP740m
Detailed performance update
TGPL is reporting an operating surplus of GBP48.7m at the end of
September which is slightly lower than that reported at the
half-year in 2022/23; the reported operating margin of 22.4% is
also lower.
Our turnover has increased to GBP218m (2022/23: GBP198m) due to
a rent increase of 7% which was applicable to most of our homes,
due to the letting of new homes delivered through our development
programme and as a result of the transfer of engagements of
Guinness Care which completed in December 2022. Operating cost
increases have more than offset this increase in turnover with
expenditure on responsive repairs and empty homes increasing
significantly as demand for repairs, and the average cost per
repair, have risen.
Net financing costs of GBP29.9m were incurred in the period on
total drawn debt of GBP1.54bn. Interest costs have increased
year-on-year as drawn debt levels have increased by GBP70m and
variable interest rates have increased. We have loan facilities in
place totalling GBP2.26bn with GBP720m currently undrawn, this
covers 48 months of projected cashflow. 71% of our drawn debt is on
a fixed rate of interest, thus providing some protection against
interest rate increases.
For the period to the end of September we are reporting a total
surplus of GBP22.6m (2022/3: GBP36.5m), with the year-on-year
reduction caused by increased net interest costs and lower levels
of surplus generated from sales of existing homes.
During the period GBP108m has been invested in our development
programme with a further GBP77.3m (GBP22.5m capital spend and
GBP54.8m revenue spend) invested in our existing homes. This
includes building safety related expenditure of GBP6.7m.
The sale of 132 shared ownership homes have completed in the
first six months of the year which generated a surplus of GBP0.8m.
Shared ownership staircasing has generated an additional surplus of
GBP1.3m. We had 294 shared ownership and outright sale properties
unsold at 30 September 2023, 191 of these had been unsold for less
than three months.
Current tenant arrears have increased to 4.21% during the year
from 3.8% at 31 March 2023 but we have seen a slight reduction over
the last 3 months. We are focusing on proactive debt management
using a data led approach to identify customers at risk of arrears,
we then take appropriate preventative measures. At the end of
September 78% of our social rent tenants were in receipt of some
form of welfare benefit.
Business update
On 4 December 2023 our partnership with SBHA, a housing provider
operating in West London who owns and manages over 5,000 homes,
reached legal completion with SBHA joining the Guinness Group as a
subsidiary of TGPL.
Customer satisfaction at the end of September was below target
at 67% with analysis of results showing that repairs performance
and associated communication of progress remain key drivers of
lower satisfaction. Satisfaction levels remain lower in London and
the South. Demand for our responsive repairs service has increased
by over 30% year-on-year which naturally creates service delivery
pressures, we are working hard to ensure we have the resources in
place to meet this increased demand in all parts of the
country.
At the end of September 94.6% of emergency repairs had been
completed within target time and Stage 1 complaints were resolved
in an average of 9.3 days, within the 10-day timeframe required by
the Housing Ombudsman.
At the end of September, 359 new homes had been completed (346
homes of affordable tenures) with construction starting on a
further 210 new homes. It is now expected that 883 new homes will
be completed in the year with 823 homes starting on site. Since
April 2018, 2,789 new homes have been completed against our 2025
target of 5,500 homes, while construction has started on 5,188
homes. Current forecasts indicate that 4,657 homes will be
completed by March 2025.
Our building safety programme is progressing to plan. Guinness
has 39 High Rise Buildings with 16 of these requiring an External
Wall System investigation. Investigations are now complete on all
of these. Guinness has 205 medium rise buildings and we have
identified that 87 of these may require an External Wall System of
which 20 have been completed so far and a further 28 are due before
March 2024. The remaining 39 will be completed over the coming
years, none of these buildings have a high priority classification
when using the Government's risk prioritisation tool.
All of our buildings with ACM cladding have been fully
remediated. Work to replace the HPL cladding on 7 remaining
high-rise buildings is on-going with 4 commenced on site and the
remaining 3 due to commence in 2024. We have secured funding from
the Government's Building Safety Fund for some of the above works
and continue to pursue original developers, warranty providers and
any available funding options wherever possible.
Compliance performance remains strong with Asbestos, water
safety, electrical testing and lift servicing all reporting 100%
compliance. Only 1 property did not have an in-date gas safety
certificate due to access issues and 96.7% of domestic properties
having had a domestic electrical test within the last 5 years.
Credit and regulatory ratings
Our credit ratings with Standard & Poor's and Moody's are at
A- (stable) and A3 (stable) respectively.
Moody's affirmed our A3 (stable) rating on 27 November 2023 and
Standard & Poor's affirmed our A- (stable) rating on 19
December 2023 following our annual rating reviews.
On the 26 April 2023, following an In-Depth Assessment (IDA),
the Regulator of Social Housing confirmed our regulatory ratings
were unchanged at G1 for Governance and V2 for Viability
Contact details
Rob Elliott, Director of Corporate Finance
robert.elliott@guinness.org.uk
www.guinnesspartnership.com/about-us/for-investors
Disclaimer
The information contained herein (the "Trading Update") has been
prepared by The Guinness Partnership Limited ("TGPL") and is for
information purposes only. The Trading Update should not be
construed as an offer or solicitation to buy or sell any securities
issued by TGPL or any of its subsidiaries ("the Group"), or any
interest in any such securities, and nothing herein should be
construed as a recommendation or advice to invest in any such
securities.
Statements in the Trading Update, including those regarding
possible or assumed future or other performance of the Group as a
whole or any member of it, industry growth or other trend
projections may constitute forward-looking statements and as such
involve risks and uncertainties that may cause actual results,
performance or developments to differ materially from those
expressed or implied by such forward-looking statements.
Accordingly, no assurance is given that such forward-looking
statements will prove to have been correct. They speak only as at
the date of the Trading Update and neither TGPL nor any other
member of the Group undertakes any obligation to update or revise
any forward-looking statements, whether as a result of new
information, future developments, occurrence of unanticipated
events or otherwise.
None of TGPL, any member of the Group or anyone else is under
any obligation to update or keep current the information contained
in the Trading Update. The information in the Trading Update is
subject to verification, does not purport to be comprehensive, is
provided as at the date of the Trading Update and is subject to
change without notice. Financial results quoted are unaudited. No
reliance should be placed on the information or any projections,
targets, estimates or forecasts and nothing in the Trading Update
is or should be relied on as a promise or representation as to the
future. No statement in the Trading Update is intended to be an
estimate or forecast. No representation or warranty, express or
implied, is given by or on behalf of TGPL, any other member of the
Group or any of their respective directors, officers, employees,
advisers, agents or any other persons as to the accuracy or
validity of the information or opinions contained in the Trading
Update (and whether any information has been omitted from the
Trading Update). The Trading Update does not constitute a
recommendation, nor is it legal, tax, accounting or investment
advice.
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END
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