TIDM42RA
RNS Number : 8244G
Bromford Housing Group Ltd
08 November 2018
Bromford Housing Group
8 November 2018
Bromford Housing Group trading update for the period ending
30(th) September 2018.
o Bromford Housing Group (BHG) is today issuing its consolidated
trading update for the six months ended 30 September 2018 (2018
HY).
o Merlin Housing Society Limited (Merlin), became a Registered
Provider subsidiary of BHG on 2 July 2018.
o The consolidated performance measures set out in this document
are inclusive of the full six months of Merlin's performance to 30
September 2018, as the year end results will be consolidated on a
full twelve-month basis under merger accounting rules. Comparative
metrics for 30 September 2017 (2017 HY) are also shown on a
consolidated basis in the same manner.
o These figures are unaudited and for information purposes
only
Highlights (Bromford Housing Group for the period ending 30th
September 2018)
o BHG own and manage 37,274 units (as at 31 Mar 2018)
o Turnover for the period was GBP124m (2017 HY: GBP108m)
o Social housing turnover contributed to c.80% of total
turnover
o Operating surplus for the period was GBP46m (2017 HY:
GBP50m)
o Operating margin on social housing lettings was 41% (2017 HY:
42%)
o Overall operating margin was 37% (2017 HY: 46%)
o Net margin on shared ownership (first tranche) was 21% (2017
HY: 35%)
o Net margin on outright sales was 20% (2017 HY: n/a)
o The surplus for the period was GBP28m (2017 HY: GBP35m)
o Asset gearing as at 30 Sep 2018 was 33%
o Interest cover as at 30 Sep 2018 was 2.73x
Commenting on the results, Lee Gibson, Chief Financial Officer,
said:
"Bromford are delighted to announce another set of solid
results, out-performing the consolidated Group budget on a number
of key metrics including our operating surplus and operating
margin. The surplus has reduced slightly year-on-year, reflecting
the ongoing investment we are making in our business transformation
programme and neighbourhood coaching model which will ultimately
drive an improved customer experience and longer term operational
efficiencies and financial savings.
The performance of the core social housing business has been
further enhanced by the addition of Merlin to the Group. The
year-on-year increase in turnover reflects the successful
completion of almost 600 new residential homes and we are on course
to meet our target of 1,300 for the financial year. We continue to
develop a modest number of homes for open market sale in line with
regional demand in the Midlands and South West geography.
The Group continues to benefit from low leverage (asset gearing
33%) and significant headroom against key funding covenants,
demonstrating our capacity for additional borrowing to fund our New
Homes Plan aspiration of 14,000 homes over a ten-year period.
We were delighted to see the strength of our financial
performance reflected in the issue of our GBP300m debut public
bond. We were also pleased to retain our sector leading credit
ratings (Moody's A1, S&P A+) which were assessed again
following the merger with Merlin."
In a joint statement, CEO Philippa Jones and CEO designate
Robert Nettleton, said:
"The new organisation allows us to combine our financial
strength to make an even bigger impact in the communities where we
work.
The newly-shaped Bromford will enable us to build the crucial
homes to help solve the UK's housing crisis and, even more
importantly, allow us to extend the benefits and expertise of our
newly-combined teams, including our neighbourhood coaching
approach, to even more people and communities.
Against the backdrop of this organisational change, we are
pleased to have out-performed budget for the first half of the
year. We look forward to continued strong performance as we
approach the financial year end in 2019 which will hopefully see
the addition of Severn Vale into the group as we grow to managing
over 40,000 homes."
Development: housing completions (2018 HY)
Unit type Housing completions
2018 HY
Social rent 98
Affordable rent 259
Shared ownership 207
Open market sales 33
------------------- --------------------
Total 597
o BHG expect to complete more than 1,300 new residential units
for the financial year ending 31 March 2019; having completed 597
residential units in the financial year to date (564 of which
represent social housing tenure and 33 open market sale).
o BHG expect to commence a total of c.1,100 new residential
units in the financial year ending 31 March 2019, with 387 new
residential units having already commenced in the six months to 30
September 2018.
o BHG are pleased to confirm that customers have taken up
residency in our inaugural retirement living scheme School Gardens,
Tan Lane, Stourport.
Development: pipeline
o BHG plan to deliver c. 14,000 new homes over a ten-year period
under its New Homes Programme. In the pursuit of this development
strategy, BHG are engaging in discussion to explore joint venture
arrangements with third parties to optimise commercial return with
risk mitigation.
Unaudited Financial Metrics
30 Sep
30 Sep 2018 30 Sep 2018 2017
Statement of comprehensive income Actual Budget Actual
---------------------------------- ------------ ------------ --------
Turnover from social housing
lettings GBP97m GBP96m GBP95m
Turnover GBP124m GBP120m GBP108m
Operating surplus GBP46m GBP43m GBP50m
Surplus after tax GBP28m GBP25m GBP35m
30 Sep
30 Sep 2018 30 Sep 2018 2017
Margins Actual Budget Actual
---------------------------------------- ------------ ------------ --------
Operating margin(1) on social
housing lettings(2) 41% 40% 42%
Overall operating margin(3) (including
asset sales) 37% 36% 46%
Operating margin on shared ownership
(first tranche) (4) 21% 21% 35%
Operating margin on outright
sales(5) 20% 14% N/A
---------------------------------------- ------------ ------------ --------
30 Sep 2018
Key covenants Actual
------------------------------------ ------------
EBITDA MRI / net interest paid(6) 2.73
Social housing interest cover(7) 2.39
Asset gearing(8) 33%
Net debt per unit(9) GBP20k
------------------------------------ ------------
30 Sep 2018
Liquidity Actual
------------------------------------ ------------
18 month liquidity requirement(10) GBP234m
Cash and undrawn facilities(11) GBP515m
Unencumbered stock 9,783 units
------------------------------------ ------------
Credit ratings
--------------- --------------
Moody's A1 (negative)
S&P A+ (negative)
--------------- --------------
Notes:
(1) Operating surplus / Turnover
(2) General Needs, Supported housing, Affordable rent and Low
cost home ownership tenures
(3) All activity
(4) Operating surplus on First tranche shared ownership sales /
Turnover from first tranche shared ownership sales
(5) Operating surplus on outright sales / Turnover from outright
sales
(6) (Operating surplus + Depreciation + Amortisation +
Capitalised major repairs) / Net interest paid(6)
(7) (Operating surplus on Social housing lettings + Depreciation
+ Amortisation + Capitalised major repairs) / Net interest
paid(6)
(8) Net Debt / Housing assets at historic cost
(9) Net debt / Total units owned & managed
(10) 18 month cashflow requirement + 20% of sales income +
GBP25m
(11) Cash and undrawn RCF
This trading update contains certain forward looking statements
about the future outlook for BHG. These have been prepared and
reviewed by Bromford only and are unaudited. Forward looking
statements inherently involve a number of uncertainties and
assumptions. Although the Directors believe that these statements
are based upon reasonable assumptions on the publication date, any
such statements should be treated with caution as future outlook
may be influenced by factors that could cause actual and audited
outcomes and results to be materially different. Additionally, the
info in this statement should not be construed as
solicitation/recommendation to invest in Bromford's bonds
For further information, please contact:
Imran Mubeen, Head of Treasury
07711 221464
https://www.bromford.co.uk/investorrelations/
END
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END
IR FKFDDPBDDKDK
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