TIDM42RA
RNS Number : 9882K
Bromford Housing Group Ltd
10 May 2022
Bromford Housing Group
10 May 2022
Bromford Housing Group trading update for the period ending 31
March 2022
-- Bromford Housing Group (BHG) is today issuing its
consolidated trading update for the year ending 31 March 2022 (2022
FY).
-- The preliminary 2022 FY outturn is unaudited and is provided
for information purposes only. The year-end audit is currently
being undertaken and will reflect fair value adjustments for
properties, derivatives and pensions, which are not included in the
unaudited figures, but are included in the 2021 FY audited
comparators.
-- A reforecast was approved by Board in November 2021 to
reflect the revised annual projections for the business. Actual
performance is set out against this reforecast as well as prior
year comparators where appropriate.
Highlights (Bromford Housing Group for the period ending 31
March 2022)
-- BHG owns and manages 45,658 homes (44,962 at 31 March 2021)
having built 1,224 new homes in the year (2021 FY: 902)
-- BHG continues to benefit from a G1 / V1 rating
-- BHG has maintained its S&P A+ rating with its outlook
upgraded from negative to stable in January 2022
-- BHG has maintained its Moody's A2 (stable) rating
-- BHG has disposed of 368 homes across three local authority
areas outside of its core geographies, removing its presence from
these local authority areas as part of its strategic focus on core
operating area
-- Turnover for the period was GBP284m (2021 FY: GBP266m)
-- Social housing lettings turnover contributed to 79% of total turnover (2021 FY: 82%)
-- Operating surplus for the period was GBP113m (2021 FY: GBP99m)
-- Operating margin on social housing lettings was 36% (2021 FY: 35%)
-- Overall operating margin (excluding asset sales) was 32% (2021 FY: 31%)
-- Net margin on shared ownership (first tranche) was 21% (2021 FY: 22%)
-- Net margin on outright sales was 19% (2021 FY: 16%)
-- The surplus after tax for the period was GBP69m (2021 FY: GBP62m)
-- Net arrears as at 31 March 2022 was 1.9% (2021 FY: 1.9%)
-- Asset gearing as at 31 March 2022 was 37% (2021 FY: 39%)
-- Interest cover as at 31 March 2022 was 1.7x (2021 FY: 1.9x)
Robert Nettleton, Chief Executive Officer, commented:
"We're pleased to report a strong set of financial results in a
year when the Covid pandemic continued to provide many challenges
for our customers, colleagues and stakeholders. Our primary focus
throughout the year continued to be the safety and wellbeing of our
customers and colleagues.
Despite the challenging environment we substantially increased
our development programme delivering 1,224 new homes enabling even
more customers to thrive (2021 FY: 902 new homes). 1,201 of these
homes were at social and affordable tenures and we are particularly
pleased to have delivered even more homes for social rent with 444
completions (2021 FY: 377).
We have been working hard to reduce the backlog of repairs which
had been caused by the restrictions of the pandemic. The backlog
reduced significantly at the end of the year and we expect to be
back to normal levels of service by the end of June. This backlog
is the predominant factor in the reduction in our customer advocacy
which, on a like for like basis reduced to 81% (2021 FY: 85%).
Our sustainability agenda remains at the heart of our strategy
and business plan. During the year we progressed our net zero
carbon targets bringing forward our target to have all homes to EPC
C by two years to 2028. In addition, our long term financial plan
now includes the full cost of achieving our net zero carbon target
by 2050, and remains fully compliant with our funder covenants and
Financial Framework. We delivered on our year one targets set out
in our two sustainability linked loans and have invested the
savings into further community projects to add even more social
value for our customers.
As we emerge from Covid we look forward to a future in which we
continue to deliver our investment programme in new and existing
homes, complete our catch-up repairs and retain our unwavering
focus on enabling our customers to thrive."
Paul Walsh, Chief Finance Officer, added:
"Against the backdrop of an increasingly difficult operating
environment with rising inflation, significant volatility in the
supply and cost of materials, and growing challenges around the
supply of labour, we continue to deliver a strong set of financial
results within the parameters of our Financial Framework.
Our social housing and operating margins have improved to 36%
and 32% respectively (2021 FY: 35% and 31%) as a result of rent
growth and pro-active management of our operating costs. Our net
surplus remains strong at GBP69m (2021 FY: GBP62m) boosted by the
strategic disposal of 368 homes which completed our withdrawal from
three local authorities as we continue to rationalise our
operations to focus on core geographical areas. Our strong surplus
allows us to self fund a significant proportion of the investment
in our new and existing homes. We maintained net arrears of less
than 2% through the close working with our customers from our
unique neighbourhood coach and income management teams.
We have drawn GBP200m of new funding in the year from our
deferred funding programme and we end the year with over twice the
required level of liquidity; significant headroom continuing in our
gearing and interest cover covenants for future borrowing; and
affirmation of our dual credit rating platform across Moody's and
S&P (A2/ A+) with both ratings now on a stable outlook."
Development: housing completions (31 March 2022)
Unit Type Housing completions
31 March 2022
--------------------- --------------------
Social rent 444
Affordable rent 350
Shared ownership 392
Open market sales 23
MyPlace (supported) 15
Total 1,224
-- We completed 1,224 new homes in the full year ending 31 March
2022 (1,201 affordable housing tenure and 23 open market sale).
Pleasingly, one in five of those new homes (253) were completed by
our internal construction company Bromford Developments Limited
meaning we now build more new homes ourselves for our customers
than ever before. In the Board approved budget for the financial
year ending 31 March 2023, we expect to complete over 1,250 new
homes.
-- We achieved 392 new home sales in the full year ending 31
March 2022 (350 shared ownership first tranche sales and 42 open
market sales). In the Board approved budget for the financial year
ending 31 March 2023, we expect to achieve over 380 sales.
Development: pipeline
-- In our latest Board approved business plan, we have outlined
our ongoing plan to deliver a further c.12,000 new homes by 2030
under the remaining period of our New Homes Programme. A
significant proportion of these homes will be built by our in-house
construction team. In support of our development strategy, Bromford
Housing Group Investments Limited has been established to deliver
joint ventures with private developers on large, mixed tenure
development to optimise commercial return with risk mitigation. In
the year, we continued our strategic partnership with Homes England
securing grant funding of GBP240m which will support the building
of 4,000 homes by 2029.
Unaudited Financial Metrics
Statement of comprehensive income 31 Mar 2022 31 Mar 2022 31 Mar 2021
Actual Forecast Actual
-------------------------------------- ------------ ------------ ------------
Turnover from social housing lettings GBP225m GBP225m GBP219m
Turnover GBP284m GBP281m GBP266m
Operating surplus (including asset GBP113m GBP109m GBP99m
sales)
Surplus after tax GBP69m GBP65m GBP62m
-------------------------------------- ------------ ------------ ------------
Margins 31 Mar 2022 31 Mar 2022 31 Mar 2021
Actual Forecast Actual
---------------------------------------- ------------ ------------ ------------
Operating margin(1) on social housing
lettings(2) 36% 35% 35%
Overall operating margin(3) (excluding
asset sales) 32% 31% 31%
Overall operating margin(3) (including
asset sales) 40% 39% 37%
Operating margin on shared ownership
(first tranche)(4) 21% 22% 22%
Operating margin on outright sales(5) 19% 15% 16%
---------------------------------------- ------------ ------------ ------------
Key financial ratios 31 Mar 31 Mar 31 Mar
2022 2022 2021
Actual Forecast Actual
---------------------------------- ------- --------- -------
EBITDA MRI/ net interest paid(6) 1.7x 1.7x 1.9x
Social housing interest cover(7) 1.8 1.8 1.8
Asset gearing(8) 37% 38% 39%
Net debt per unit(9) GBP25k GBP26k GBP24k
---------------------------------- ------- --------- -------
Liquidity 31 Mar 2022
Actual
------------------------------------ ------------
18 month liquidity requirement(10) GBP248m
Cash and undrawn facilities(11) GBP583m
Liquidity ratio(12) 2.3x
Unencumbered stock 9,586 homes
-------------------------------------- ------------
Credit ratings
--------------- ------------
Moody's A2 (stable)
S&P A+ (stable)
--------------- ------------
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 asset sales 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
(7) Operating surplus on Social housing lettings / Net interest
paid
(8) Net debt / Housing assets at historic cost
(9) Net debt / Total units owned and managed
(10) 18 month cashflow requirement - 20% of sales income +
GBP25m
(11) Cash and undrawn RCF
(12) Cash and undrawn facilities / 18 month liquidity
requirement
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 or recommendation to invest in Bromford's bonds.
For further information, please contact:
Imran Mubeen, Director of Treasury
07711 221464
https://www.bromford.co.uk/investorrelations/
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