42RA Bromford 48

TIDM42RA

RNS Number : 0933Z

Bromford Housing Group Ltd

15 May 2019

RNS Number: 0933Z

Bromford Housing Group

15 May 2019

Bromford Housing Group trading update for the year ending 31 March 2019

o Bromford Housing Group (BHG) is today issuing its consolidated trading update for the year ended ended 31 March 2019 (2019).

o Merlin Housing Society Limited (Merlin), became a Registered Provider subsidiary of BHG on 2 July 2018. Severn Vale Housing Society (Severn Vale) joined BHG on 2 January 2019 as transfer of engagements into Merlin.

o The consolidated year end performance measures set out in this document are provided for BHG inclusive of Merlin and Severn Vale. Merlin performance reflects the full twelve month period to 31 March 2019 under merger accounting rules. Severn Vale is accounted for under acquisition accounting rules with a fair value determination of assets and liabilities at 2 January 2019. Comparative metrics for 31 March 2018 (2018) are provided on the same basis of consolidation.

o These figures are unaudited and for information purposes only.

Highlights (BHG for the period ending 31 March 2019)

o BHG own and manage 42,735 homes

o Turnover for the period was GBP257m (2018: GBP221m)

o Social housing lettings turnover contributed to 76% of total turnover (2018: 85%)

o Operating surplus (including asset sales) for the period was GBP85m (2018: GBP89m)

o Operating margin on social housing lettings was 35% (2018: 40%)

o Overall operating margin (including asset sales) was 33% (2018: 40%)

o Overall operating margin (excluding asset sales) was 31% (2018: 35%)

o Net margin on shared ownership (first tranche) was 22% (2018: 22%)

o Net margin on outright sales was 19% (2018: n/a)

o The surplus after tax for the period was GBP56m (2018: GBP64m)

o Asset gearing as at 31 March 2019 was 39%

o Interest cover as at 31 March 2019 was 2.0x

Commenting on the results, Lee Gibson, Chief Financial Officer, said:

"It has been a busy and successful year for the Bromford Housing Group. Merlin and Severn Vale are now fully integrated into the Group and we are pleased to now deliver the Bromford proposition to over 40,000 households. We are proud of our customer advocacy results which remain high at 89%.

We are delighted with our preliminary year end results. We have out-performed the consolidated Group budget on a number of key metrics including turnover, operating surplus and overall margin. The operating 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.

We have refreshed our New Homes Plan and are now targeting c.13,100 new homes by 2028, with a greater focus on social and affordable homes than in the previous plan. We delivered over 1,200 homes in the financial year and have been appointed as one of Homes England's strategic partners with a grant award of GBP66m. This, combined with our continuing financial strength, will help us to make an even bigger impact in the communities where we work."

Imran Mubeen, Head of Treasury, added:

"The Group now benefits from strong levels of liquidity, having successfully raised over GBP0.5bn of new funding in the financial year. We followed our GBP300m debut public bond with our inaugural GBP100m private placement in the US market and a new GBP100m RCF. We were delighted to bring new investors to Bromford.

The Group's low leverage with significant headroom against key funding covenants, and the strength of our financial performance present effective capacity for future borrowings. We are delighted to have maintained our leading dual sector credit ratings following the recent mergers (Moody's A1, S&P A+) and remain committed to maintain two credit ratings moving forwards."

Development: housing completions (31 March 2019)

 
 Unit type            Housing completions 
                            31 March 2019 
 Social rent                          270 
 Affordable rent                      490 
 Shared ownership                     442 
 Open market sales                     34 
-------------------  -------------------- 
 Total                              1,236 
 

o BHG completed 1,236 new homes in the full year ending 31 March 2019. We expect to complete over 1,000 new homes for the financial year ending 31 March 2020.

Development: pipeline

o BHG plan to deliver c. 13,100 new homes by 2028 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

 
                                     31 Mar 2019   31 Mar 2019     31 Mar 2018 
 Statement of comprehensive income        Actual        Budget          Actual 
----------------------------------  ------------  ------------  -------------- 
 Turnover from social housing 
  lettings                               GBP196m       GBP190m         GBP187m 
 Turnover                                GBP257m       GBP251m         GBP221m 
 Operating surplus (including 
  asset sales)                            GBP85m        GBP82m          GBP89m 
 Surplus after tax                        GBP56m        GBP44m          GBP64m 
 
 
 
 
                                         31 Mar 2019   31 Mar 2019   31 Mar 2018 
 Margins                                      Actual        Budget        Actual 
--------------------------------------  ------------  ------------  ------------ 
 Operating margin(1) on social 
  housing lettings(2)                            35%           36%           40% 
 Overall operating margin(3) 
  (exc asset sales)                              31%           30%           35% 
 Overall operating margin(3) 
  (inc asset sales)                              33%           33%           40% 
 Operating margin on shared ownership 
  (first tranche) (4)                            22%           20%           22% 
 Operating margin on outright 
  sales(5)                                       19%           17%           n/a 
--------------------------------------  ------------  ------------  ------------ 
 
 
                                        31 Mar 2019 
 Key financial ratios                        Actual 
------------------------------------  ------------- 
 EBITDA MRI / net interest paid(6)             2.0x 
 Social housing interest cover(7)              1.8x 
 Asset gearing(8)                               39% 
 Net debt per unit(9)                        GBP22k 
------------------------------------  ------------- 
 
                                        31 Mar 2019 
   Liquidity                                 Actual 
------------------------------------  ------------- 
 18 month liquidity requirement(10)         GBP249m 
 Cash and undrawn facilities(11)            GBP545m 
 Unencumbered stock                    11,177 homes 
------------------------------------  ------------- 
 
 
 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) Operating margin including asset sales includes all activity; operating margin excluding assets removes gain or loss on disposal of assets

(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) / 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 information 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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