Karbon Homes Limited Trading Statement (5547Q)

TIDM46GV

RNS Number : 5547Q

Karbon Homes Limited

19 June 2020

 
 Karbon Homes Group 
 19th June 2020 
 
 Karbon Homes Group trading update for the period ending 31 March 2020 
 -- Karbon Homes Group (KHG) is today issuing its consolidated trading update for the 
 period 
 ended 31 March 2020. 
 -- These figures are unaudited and for information purposes only. 
 
 Highlights for the period ending 31 March 2020 
 -- KHG owns and manages 27,197 homes 
 -- Karbon Homes Limited maintained its G1/V1 status from the Regulator for Social 
 Housing, following 
 a stability check in Nov 2019 
 -- Turnover for the period was GBP135.6m (2019: GBP129.4m) 
 -- Operating surplus (including asset sales) for the period was GBP38.6m (2019: 
 GBP33.5m) 
 -- Operating surplus (excluding asset sales) for the period was GBP34.3m (2019: 
 GBP31.8m) 
 -- Overall operating margin (including asset sales) was 28.5% (2019: 25.9%) 
 -- Overall operating margin (excluding asset sales) was 25.3% (2019: 24.6%) 
 -- The surplus before tax for the period was GBP22.2m (2019: GBP6.2m) 
 -- Gearing as at 31 March 2020 was 41.6% (2019: 43.8%) 
 -- Return on capital employed for the period was 4.0% (2019: 3.6%) 
 
 Commenting on the results, Scott Martin, Executive Director of Resources, said: 
 "We are pleased to publish our draft 2019/20 results. This is the second year of our 5-year 
 strategy which includes 
 our aim to build more than 500 new 
 affordable homes per annum. 
 We are excited to have delivered 534 new affordable homes in this financial year, 
 surpassing 
 our target. 
 During the year we have continued our focus on delivering excellent customer experience and 
 are proud of the recent 
 survey results which gave us a 
 +50 net promoter score. 
 Finally, we continue to invest in our communities, expanding our services and focussing on 
 those who need our help most. This 
 has been increasingly 
 important in the context of the Covid-19 pandemic. 
 
 'All of this means we are well on track to continue to deliver against our three 
 strategic 
 aims of Homes, Customer and Place." 
 
 'Nevertheless, we know that the impacts of Covid-19 are going to be felt within our communities 
 for some time. On the 27th May 2020, 
 S&P Global 
 revised our credit rating from A+ (negative) to A (stable), citing their assumptions around the 
 potential economic downturn in the 
 North East of England as a 
 major factor in their decision. 
 Whilst we are disappointed with the rating change, this does not impact our 30 year business 
 plan or strategy. 
 S&P recognises KHG's continuing strengths, including 'low industry risk', low 'exposure to market 
 sales', a 'management team with extensive experience 
 in the 
 social housing sector', and a 'very strong liquidity position'. 
 We have run various stress test scenarios and are confident that we have the financial strength 
 to sustain our business operations throughout 
 lockdown and 
 recovery, despite the on-going uncertainty as a result of the pandemic. 
 This, combined with a very strong liquidity position, allows us to continue with our 
 mission to provide 
 a strong foundation for life." 
 
 
 Unaudited Financial Metrics 
                                                       31-Mar    31-Mar 
                                                         2020      2019 
 
                                                       Actual    Actual 
                                                      GBP'000   GBP'000 
 Statement of Comprehensive Income 
 
 Turnover                                             135,559   129,426 
 
 Operating Surplus (including asset sales)             38,622    33,538 
 Surplus before tax                                    22,161     6,152 
 
 Margins                                                    %         % 
 
 Overall operating margin (incl.asset sales) (Note 
  1)                                                     28.5      25.9 
 Overall operating margin (excl.asset sales) (Note 
  2)                                                     25.3      24.6 
 
 
   Key Financial Ratios 
 
 EBITDA MRI Interest cover (Note 3)                     229.0     206.2 
 Gearing (Note 4)                                        41.6      43.8 
 ROCE (Note 5)                                            4.0       3.6 
 
 
                                                                31-Mar 
                                                                  2020 
 
 Liquidity 
 24 month liquidity requirement (GBP'000) (Note 6)             102,271 
 Cash and undrawn facilities (GBP'000) (Note 7)                186,396 
 Unencumbered stock (no of properties)                           5,111 
 Value of unencmbered stock (average of EUV and MV, 
  GBP'000) (Note 8)                                            181,389 
 Loan security excesses (average of EUV and MV, GBP'000) 
  (Note 9)                                                     211,539 
 
 Credit Rating 
 
 S & P                                                      A (stable) 
 
 
  Notes: 
 
 1) Operating margin including asset sales includes all activity 
 2) Operating margin excluding assets removes gain or loss on disposal of assets 
 3) Earnings before interest, tax, depreciation and amortisation, major repairs included is defined 
 as: (Operating surplus - Disposal of assets 
 + Depreciation - Amortisation - Capitalised major repairs + interest received) / Interest paid 
 4) Gearing is defined as: Group Net Debt / Group Housing assets at historic cost less 
 depreciation (RSH VFM Gearing definition), 
 differs to 
 Karbon's banking gearing calculation which is defined as Net Debt/Housing assets at historic 
 cost, and informs our internal 
 Golden Rules 
 5) Return on capital employed is defined as Operating Surplus (incl asset sales) / Total 
  Assets less current liabilities 
 6) 24 month cashflow requirements 
 7) Group Cash and Deposits of GBP50.8m and undrawn Revolving Credit Facilities of 
 GBP135.5m 
 8) Value of stock not held by a lender or security trustee, at average GBP35k per unit 
 9) Value of excess security held with current lenders or Prudential Trustees 
 10) Further unaudited operational performance and financial metrics are available at 
 https://www.karbonhomes.co.uk/corporate/ 
 
 
 This trading update contains certain forward looking statements about the future outlook 
  for Karbon Homes Group. These have been prepared and reviewed 
  by Karbon 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 Karbon's 
 bonds 
 
 For further information, please contact: 
 Andrew Thompson, Assistant Director: Treasury 
 07917 642957 
 
 https://www.karbonhomes.co.uk/corporate/ 
 END

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