TIDM38OI
RNS Number : 3682V
Anchor Hanover Group
01 December 2023
Anchor Hanover Group
1 December 2023
Anchor Trading Statement for six months to 30 September 2023
Unaudited trading update for the six months to 30 September 2023
for Anchor Hanover Group, trading as Anchor
Anchor, the largest not-for-profit operator of housing for older
people and the fifth largest residential care home operator in
England, announces its trading highlights and unaudited financial
results for the first half of the 2023/24 financial year.
Anchor's commitment to maintaining a consistent corporate
strategy supports the continued financial strength and resilience
of the Group through on-going economic and political uncertainty,
enabling further progress to be made against the four strategic
themes of the corporate plan: more and better homes; more
opportunities for colleagues; being more efficient; and being more
influential on behalf of older people.
Anchor's low gearing, strong liquidity and low-cost fixed rate
debt from its sustainability bond issued in July 2021 provide both
stability and a strong platform for growth.
Anchor's reputation for providing high quality services, coupled
with strong underlying demand has seen high and improving levels of
occupancy beyond the FY23 year-end and to within 1% of pre-pandemic
levels. This has supported the maintenance of steady operating
margins in the first half of the year compared with the
year-end.
The planned acceleration of investment in existing homes from
capital works that were previously deferred due to restricted
access into resident homes has seen 65% of the annual programme
delivered in the first half of the year, adversely impacting EBITDA
MRI and interest cover levels as at September 2023 compared with
March 2023. Activity is anticipated to slow in the second half of
the year, in line with full-year programme expectations.
Significant growth in care has been achieved through the
acquisition of 14 new care homes (951 beds) since November 2022,
four of which are in a commissioning phase. 2,495 new, energy
efficient affordable homes have been completed, are under
construction or are part of a Board-approved future pipeline to
deliver a total of 5,700 new homes over 10 years.
Anchor continues to work hard to alleviate the impact of the
on-going cost-of-living crisis for both residents and colleagues
with a broad range of initiatives to support those most in need,
and continues to be a powerful voice for older people.
Anchor's commitment to colleagues who work hard to ensure that
residents can love living in later life is recognised through its
continued accreditation as a Living Wage Employer and achieving
Gold Status from Inclusive Employers in March 2023; only the third
employer in England to do so.
Inflation across the economy will continue to be challenging for
all sectors including social housing and care. Anchor remains
committed to improving efficiency within its operations and to meet
its long-term objectives of investing in and developing more new
homes for older people in a sustainable way.
Amanda Holgate, Chief Financial Officer
1 December 2023
Highlights
-- Continued strong underlying demand with high occupancy in
rented housing and lower-than-sector arrears levels.
-- Care occupancy within 1% of pre-Covid levels with fee growth of 10% year-on-year.
-- 14 new care homes (951 beds) acquired between November 2022 and August 2023.
-- Turnover of GBP308.4m up GBP42.3m (15.9%) on the same period
in 2022, of which GBP16.7m (6.3%) relates to turnover from newly
acquired care homes. Underlying turnover up GBP25.6m (9.6%) from
increases in rental and service charge income, rising care fees and
higher occupancy in rented housing and care.
-- Operating margins at 6.5% slightly below full year 2023
(6.8%) and down on the half year to September 2022 (9.8%),
reflecting increased operational costs for newly acquired Halcyon
care homes from non-cash adjustments for depreciation and
amortisation of purchased goodwill. This was alongside rising
inflation and additional costs for corporate programmes that
improve the affordability of services for residents.
-- Accelerated delivery of capitalised major repairs and
compliance works in the first half of the year of GBP28.4m compared
with GBP21.0m for the same period last year, leading to lower
EBITDA MRI of GBP22.5m (GBP31.5m for September 2022).
-- Strong liquidity with GBP155m of undrawn available loan
facilities and cash available to fund the corporate plan.
-- Gearing maintained at a low level for the sector at 30.7% (March 2023: 28.5%).
-- Interest cover including capitalised repairs (EBITDA MRI) at 1.4x (March 2023: 1.8x).
-- A+ stable rating from S&P and G1/V1 rating from the Regulator of Social Housing maintained.
-- Third Sustainability Report published in October 2023,
showing the strength of the Group's sustainability credentials,
positive societal impact and strong governance principles.
Financial highlights
Figures in GBPm 6 months 6 months FY to 31
to 30 Sept to 30 Sept March 2023
2023 2022
====================================== ============ ============ ============
Turnover 308.4 266.1 555.5
Operating surplus before exceptional
items 20.0 26.2 37.5
Operating margin before exceptional
items % 6.5% 9.8% 6.8%
EBITDA MRI 22.5 31.5 46.7
Gearing 30.7% 22.0% 28.5%
Operational highlights
Anchor's strong reputation for providing high quality services,
coupled with robust underlying demand has seen continued high
levels of occupancy in rented housing (Sept 2023: 98.7%, March
2023: 98.7%), and improvements in care occupancy close to pre-Covid
levels (Sept 2023: 88.5%; March 2023: 86.9%).
Turnover of GBP308.4m is up GBP42.3m (15.9%) on the same period
in 2022, of which GBP16.7m (6.3%) relates to turnover from newly
acquired care homes. Underlying turnover is up GBP25.6m (9.6%)
owing to an increase in rental income, increased service charge
income resulting from higher service charge costs, rising care fees
and higher occupancy in both rented housing and care.
Operating margins at 6.5% were marginally below full year 2023
(6.8%) and down on the first half of 2022 (9.8%). Inflation,
particularly impacting repairs and utilities, as well as the expiry
of previously favourable fixed price contracts for the latter, had
a dampening effect on margins. In addition, higher investment in
Anchor's corporate programme to drive efficiencies that improve the
quality and affordability of services, coupled with the cost of
keeping residents safe by upholding fire safety compliance, also
applied downward pressure. In total, operating costs increased
between the two periods by 22.6% (September 2023: GBP280.2m;
September 2022: GBP228.5m). New care homes account for 7.9% of the
increase which relates to the running costs of the homes and
non-cash adjustments for depreciation and the amortisation of
goodwill acquired through the Halcyon Group.
Net interest charges for the six months to September 2023 of
GBP16.1m were GBP5.1m higher than the six months to September 2022.
This is primarily due to higher finance lease interest arising on
the 10 care homes acquired from Halcyon Care Homes Topco Limited
which are operated on 35-year leases, and an underlying increase
from c. 5% of the loan book which is neither fixed nor hedged and
therefore held at variable rates of interest.
EBITDA MRI for the six months to September 2023 of GBP22.5m
(September 2022: GBP31.5m) is comparatively low as a result of
delivering more capitalised major repairs than was possible in the
same period last year (MRI spend September 2023: GBP28.4m;
September 2022: GBP21.0m). Delivering a greater proportion of the
annual programme in the first six months of the year accounts for
the majority of the movement in EBITDA MRI between years.
Development and acquisitions
Anchor has plans to build 5,700 energy efficient homes for older
people over ten years with 45% of the programme designated to
social and affordable rented homes, 45% for sale on a shared
ownership basis and up to 10% for outright sale.
Anchor's new developments are designed to achieve Energy
Performance Certificate (EPC) ratings of B or better as part of
Anchor's ongoing commitment to sustainability. To date, 2,495
affordable homes have been completed, are under construction or are
part of a Board-approved pipeline.
Liquidity
Liquidity remains strong with undrawn available loan facilities
and cash of GBP155m, together with the retained bond capacity of
GBP100m nominal value, positioning Anchor well to deliver on its
strategic objectives.
At 30.7%, gearing remains low relative to the sector (March
2023: 28.5%) but higher than September 2022 (22.0%) due to funding
care growth. Interest cover including capitalised repairs (EBITDA
MRI/Interest) of 1.4x (September 2022: 2.9x) remains strong but is
lower than the comparative period owing to the impact of the
finance leases acquired with the Halcyon transaction as well as the
acceleration of the capital works programme in the first half of
the year. Capital works are anticipated to slow in the second half
of the year, in line with full-year programme expectations, with
interest cover expected to increase accordingly by the end of the
year.
Credit and regulatory ratings
Anchor has retained its credit rating of A+ with a stable
outlook from S&P in the March 2023 review (first issued March
2021) and its G1/V1 rating from the Regulator of Social Housing
(reaffirmed 15 November 2022). These ratings reflect the Group's
strong balance sheet position, strong debt profile, high levels of
liquidity and robust business plans, set within a highly effective
risk control framework and supported by conservative financial
policies.
Unaudited Financial Statements for the six months to September
2023
Comparatives are with Anchor's consolidated, audited year end
results to 31 March 2023 and unaudited results for the six months
ended September 2022.
Group Statement of Comprehensive Income
Figures in GBPm Six months Six months Year ended
ended 30 ended 30 31 March
September September 2023
2023 2022
-------------------------------------------- ----------- ----------- -----------
Turnover from ongoing operations 300.3 255.0 530.8
Turnover from property sales 8.1 11.1 24.7
Turnover 308.4 266.1 555.5
Operating costs from ongoing operations (280.2) (228.5) (496.6)
Cost of sales - property sales (9.0) (11.5) (24.4)
Surplus on disposal of fixed assets 0.8 0.1 3.1
Operating surplus before exceptional
items 20.0 26.2 37.6
Exceptional items - - -
Operating surplus after exceptional
items 20.0 26.2 37.6
Net interest costs (16.1) (11.0) (26.2)
Taxation - - 0.8
Surplus for the period 3.9 15.2 12.2
Operating margin before exceptional
items, goodwill amortisation and
excluding property sales contribution 8.5% 10.4% 7.7%
Operating margin before exceptional
items and goodwill amortisation 8.0% 9.8% 7.4%
Operating margin 6.5% 9.8% 6.8%
EBITDA MRI(1) 22.5 31.5 46.7
EBITDA MRI - Interest cover(2) 1.4x 2.9x 1.8x
1. Group operating surplus including property proceeds, less
amortisation of social housing grant, less Government capital
grants taken to income, add back depreciation and impairment
attributed to retirement housing to let and residential care homes,
add back goodwill amortisation, less improvements to existing
properties capitalised
2. EBITDA MRI including property proceeds, divided by interest
and financing costs less interest receivable
Comparatives are with Anchor's consolidated, audited year end
results to 31 March 2023 and unaudited results for the six months
ended September 2022.
Group Statement of Financial Position
Figures in GBPm As at 30 As at 30 As at 31
September September March 2023
2023 2022
----------------------------------- ----------- ----------- ------------
Goodwill 34.4 - 39.0
Tangible fixed assets 1,400.3 1,192.8 1,413.8
Other investments 0.1 0.9 0.7
Total long-term assets 1,434.7 1,193.7 1,453.5
Properties held for sale 272.1 231.6 192.7
Cash 15.4 61.8 34.3
Other current assets 65.1 55.8 56.8
Total current assets 352.6 349.2 283.8
Loans (595.3) (500.7) (548.6)
Finance lease obligations (242.6) (97.4) (240.7)
Grants (207.4) (223.0) (215.5)
Pension liabilities - (8.2) -
Other liabilities (145.0) (124.6) (140.5)
Total liabilities (1,190.4) (953.9) (1,145.3)
Total net assets 596.9 589.0 592.0
Reserves 596.9 589.0 592.0
Gearing(3) 30.7% 22.0% 28.5%
3. Net debt divided by historical cost of completed properties
Anchor Hanover Group
Derya Filiz
Head of External Communications
The Heals Building Suites A & B, 3(rd) Floor
22-24 Torrington Place
London
WC1E 7HJ
07713 085004
derya.filiz@anchor.org.uk
communications@anchor.org.uk
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IR GIBDDBGGDGXB
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