TIDM20SY
RNS Number : 1108U
Optivo Finance PLC
20 November 2019
OPTIVO TRADING UPDATE
HALF YEAR 2019-20
This is Optivo's unaudited trading update for the six months to
30 September 2019.
Financial highlights
GBPm H1 2019/20 H1 2018/19 FY 2018/19
unaudited unaudited audited
Turnover 162 161 314
Operating surplus 50 59 103
Surplus before tax 28 38 88
Total assets 3,247 2,907 3,142
Total borrowings 1,366 1,147 1,281
Available undrawn borrowing
facilities 515 543 380
RSH* governance judgement G1 G1 G1
RSH financial viability judgement V1 V1 V1
Moody's credit rating A2 (negative) A2 (stable) A2 (stable)
----------------------------------- -------------- ------------ ------------
* Regulator of Social Housing
Commenting on these results Sarah Smith, Chief Financial
Officer, said:
"We forecast lower surplus this year because of sector
headwinds, but we have the financial capacity and flexibility to
keep on delivering great services to our residents, prioritise
safety and keep delivering more affordable housing.
Sales: Shared ownership first tranche sales are slower than
anticipated. Our unsold homes are down by 40 (to 222), of which 170
are more than six months old. Many of these are reserved and we are
converting some to social housing rented tenures. Our liquidity,
and the relatively modest scale of our sales programme, mean we
have comfortably absorbed the working capital impact. We have no
unsold market sales homes at present.
Safety: The Grenfell fire has led directly to fresh thinking
around fire safety. We are seeing higher works costs arising from
Fire Risk Assessments. We anticipate more costs as more information
and guidance come out. We will continue to prioritise resident
safety. We no longer have any ACM cladding on buildings above four
storeys. We are testing other cladding materials. In common with
our peers we expect higher maintenance costs for the medium
term.
Voids: We have experienced higher void rates during this period
compared with our previous experience. This has reduced rental
incomes and increased maintenance costs. We expect to make progress
towards normalising our void re-let times in coming months.
Taken together these three factors - slower first tranche sales,
higher maintenance costs and higher voids and void costs - mean we
now forecast a lower FY 2019/20 surplus than in 2018/19. We can
absorb these impacts within a financial strategy built to be
robust."
Strategic key performance indicators
H1 2019/20 H1 2018/19 FY 2018/19
actual actual actual
Provide sector leading service
- Residents recommend us (NPS*) 55.4 65 62
- Residents online 57.4% 47% 54%
Value our people
- Staff say we are a great
employer 79.5% 77% 77%
- Staff feel proud to work
for us 77.6% 82% 81%
Maximise our social impact
- New homes started 652 274 1,003
- People into jobs and training 748 486 1,122
Ensure a sustainable business
- Operating margin 27.7% 34% 29%
- SHIFT* Gold Gold Gold
--------------------------------- ----------- ----------- -----------
*1 Net Promoter Score
*2 Sustainable Homes for Tomorrow Award
Statement of consolidated income
GBPm H1 2019/20 H1 2018/19 FY 2018/19
unaudited unaudited audited
Turnover excluding sales 148 147 285
Operating costs (107) (100) (204)
Initial sales turnover 14 14 29
Initial sales cost of sales (11) (7) (19)
Other property sales (net) 6 5 12
----------- ----------- -----------
Operating surplus 50 59 103
Interest costs (net) (23) (21) (42)
Fair value property movements - - 29
Other 1 - (2)
----------- ----------- -----------
Surplus before tax 28 38 88
------------------------------- ----------- ----------- -----------
Note: half-year figures exclude movements in the fair value of
investment properties, unhedged instruments and pensions
adjustments. We measure and recognise these at year end.
Core business lettings - General Needs and Housing for Older
People
H1 2019/20 H1 2018/19 FY 2018/19
Void rental losses as a % of
annualised rent debit 1.6% 0.7% 0.8%
Average vacant properties re-let 69.5 days 37 days 39 days
time, excluding voids for major
works
---------------------------------- ----------- ----------- -----------
-- We have had a higher than usual number of voids, nearly half
without any notice, and some Local Authorities have been slower
than expected with nominations. Properties have been returned to us
in poorer condition than prior experience, so needing more work to
re-let.
-- These factors have all contributed to higher re-let times.
We're taking steps with contractors and Local Authority partners to
speed up void works and re-letting. We expect these measures will
help normalise routine new general needs re-let times by early next
year.
-- We have started tenure conversion on some of our 23 sheltered
housing schemes with high voids, where we have assessed underlying
demand patterns have changed.
Rent arrears 30/9/2019 30/9/2018 31/3/2019
0 to 4 weeks 1.4%, GBP2.9m 1.6%, GBP3.3m 1.6%, GBP3.3m
5 to 6 weeks 0.4%, GBP0.8m 0.4%, GBP0.9m 0.3%, GBP0.7m
7 to 12 weeks 0.9%, GBP1.9m 0.9%, GBP1.9m 0.7%, GBP1.5m
13 weeks or more 2.0%, GBP4.3m 1.9%, GBP3.8m 1.7%, GBP3.5m
Total rent arrears of annual 4.7%, GBP9.9m 4.8%, GBP9.9m 4.3%, GBP9.0m
rent debit
----------------------------- -------------- -------------- --------------
-- Arrears performance was in line with expectations and our
financial plan. We continue to support tenants migrating to
Universal Credit where applicable.
Development & sales
Delivery H1 2019/20 H1 2018/19 FY 2018/19
New homes started 652 274 1,003
New homes completed 145 259 985
--------------------- ----------- ----------- -----------
Contractual commitments 30/9/2019 30/9/2018 31/3/2019
(Optivo / Joint Venture)
Homes 2,734 / 46 2,180 2,020 / 76
Number of sites 43 / 1 50 39 / 1
Remaining capital commitments
(GBPm) 366 / 7 380 361 / 19
------------------------------- ----------- ---------- -----------
Unsold homes 30/9/2019 30/9/2018 31/3/2019
First tranche shared ownership
/ over six months 222 / 170 72 / 24 262 / 27
Open market sales 0 0 0
-------------------------------- ---------- ---------- ----------
Funding & liquidity
Treasury portfolio 30/9/2019 30/9/2018 31/3/2019
(GBPm)
Total borrowings 1,366 1,147 1,281
Undrawn committed facilities 515 543 380
Cash and deposits 71 84 60
------------------------------ ---------- ---------- ----------
-- In the half-year we sold our GBP100 million remaining
2048-maturity retained bonds and we arranged three new medium-term
revolving credit facilities totalling GBP200 million.
-- We also arranged GBP25 million near-term loans and retired GBP17.5 million legacy debt.
-- We have enough liquidity to meet our future capital commitments.
Credit rating
In August Moody's updated their outlook on our external credit
rating from A2 (stable outlook) to A2 (negative outlook) in view of
our future planned development-led debt increases. Moody's
reaffirmed the rating in November.
Regulator
The Regulator of Social Housing reconfirmed our G1/V1
judgements, following their annual review and financial stability
check of our business plan.
Next Update
We will publish a full-year financial update after 31 March
2020.
Notes
Optivo is a charitable Housing Association owning and/or
managing 45,000 homes across London, the South East and the
Midlands.
Contact for more information
https://www.optivo.org.uk/about-us/investors.aspx
Tariq Kazi
Head of Treasury
tariq.kazi@optivo.org.uk
020 8036 2293
DISCLAIMER
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.
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
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of this information may apply. For further information, please
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END
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