BB26 Guin.ptnr.7h%37

TIDMBB26

RNS Number : 6737K

Guinness Partnership (The) Limited

22 December 2022

Half Year Performance Update

for the six months to 30 September 2022

Our Performance in 2022/23

The Guinness Partnership Limited (TGPL) is pleased to report our results for the six months to 30 September 2022. These results are based upon unaudited management accounts and operational performance reports.

Our Annual Financial Statements, our ESG report, and our Annual Report for the year to 31 March 2022,

are available on our website.

Summary

In the six months to 30 September we have continued to deliver services and build new homes against a backdrop of economic uncertainty, rising interest rates, energy prices and high levels of inflation that have the potential to impact both our residents and our organisation. We continue to monitor and manage these risks as appropriate in order to maintain appropriate levels of financial resilience.

Performance highlights for The Guinness Partnership Limited for the six months to 30 September

2022 include:

   --      Turnover of GBP197.7m compared to GBP187.1m at September 2021. 
   --      Total surplus of GBP36.5m - GBP8.3m higher than at September 2021 
   --      Operating surplus of GBP49.2 - GBP1.6m higher than at September 2021 
   --      Operating margin of 24.9% 

-- Proceeds from sale of first tranche shared ownership homes of GBP17.7m, with a margin of 12% resulting in a surplus of GBP2.2m.

   --      Surplus on sales of empty homes and shared ownership staircasing of GBP5.9m 
   --      High levels of liquidity retained - GBP740m of undrawn loan facilities and cash 
   --      Current tenant arrears of 4.00% 
   --      249 new affordable homes completed 
   --      693 homes started on site 

Key Financial Results

Half Year Performance Update for the 6 months to 30 September 2022

 
                                              Year Ending 
 Financial Indicators           Q2 2022/23    31 March 2022   Q2 2021/22 
                               -----------  --------------- 
 Operating Surplus                GBP49.2m         GBP98.5m     GBP46.9m 
                               -----------  ---------------  ----------- 
 Operating Margin                    24.9%            21.5%        25.1% 
                               -----------  ---------------  ----------- 
 Total Surplus                    GBP36.5m         GBP47.1m     GBP26.3m 
                               -----------  ---------------  ----------- 
 Net Margin                          17.3%            20.4%        14.1% 
                               -----------  ---------------  ----------- 
 EBITDA-MRI Interest Cover 
  (tightest lender covenant)        179.8%           122.8%       165.2% 
                               -----------  ---------------  ----------- 
 Gearing                             40.8%            42.6%        42.8% 
                               -----------  ---------------  ----------- 
 Available Liquidity               GBP740m          GBP892m      GBP987m 
                               -----------  ---------------  ----------- 
 

Detailed Performance update

TGPL's reported operating surplus of GBP49.2m at the end of September is higher than that reported in 2021/22, whilst operating margin is slightly lower. Turnover has increased due to higher sales of first tranche shared ownership properties. Operating costs have also increased particularly in repairs and maintenance.

Net financing costs of GBP30.9m were incurred in the period on total drawn debt of GBP1.47bn.

There have been 139 shared ownership first tranche sales completing in the first six months of the year which have generated a surplus of GBP2.2m. Shared ownership staircasing has generated an additional surplus of GBP4.1m. We had 170 shared ownership and outright sale properties unsold at 30 September 2022, 112 of these had been unsold for less than three months.

Current tenant arrears have increased to 4.00% during the year from 3.67% as at 31 March 2022 but we have seen month-on-month reductions over the last three months. We are focusing on proactive debt management using a data led approach to identify customers at risk of arrears, and taking appropriate preventative measures. At the end of September 79% of our social rent tenants were in receipt of some form of welfare benefit.

During the period GBP163.5m has been invested in our development programme with a further GBP28m invested in existing homes. This includes building safety related expenditure of GBP8.6m.

Closing cash balances at the end of September were GBP36.9m. Our liquidity position remains strong with total available funds (undrawn loans and cash) of GBP740m which covers 48 months of projected cash flow.

Development and business update

Our Corporate Strategy targets delivery of 5,500 new homes by March 2025 with a significant proportion delivered with the support of Homes England and GLA funding through Strategic Partnerships.

We are currently on site or in contract for over 4,500 of these homes with 324 (249 of these affordable homes) having been completed in the first six months of the year.

Under the GLA Strategic Partnership agreements, we have committed to deliver 1,750 homes under SP1 and have been allocated funding for a further 300 homes under SP2. Good progress is being made delivering our SP1 commitments.

Under the Homes England Strategic Partnership agreements, we have committed to deliver 2,800 homes under SP1 and have been allocated funding for a further 1,500 homes under SP2. At the end of September approximately 70% of the SP1 programme delivery was completed, on site or in contract.

In August we completed the transfer of our domiciliary care services from Guinness Care to City & County Healthcare Group. This included the TUPE transfer of 170 employees. In order to further simplify the Group and realise operational efficiencies it is planned to transfer the remaining Guinness Care operations into TGPL through a Transfer of Engagements in the second half of the year.

Credit and regulatory ratings

Our credit ratings with Standard & Poors and Moody's remained unchanged during the six month period at A- (stable) and A3 (stable) respectively.

However, subsequent to the reporting period, on 25 October 2022, Moody's changed the outlook of TGPL's A3 credit rating from stable to negative. This was within a rating action taken by Moody's in respect of 64 sub-sovereign entities on 25 October 2022 and followed its UK sovereign action on 21 October 2022 which changed the outlook of the Government of the United Kingdom's sovereign bond rating from stable to negative.

On the 26 October 2022 the Regulator of Social Housing confirmed our regulatory ratings were

unchanged at G1 for Governance and V2 for Viability.

Contact details

Rob Elliott, Director of Corporate Finance robert.elliott@guinness.org.uk

https://www.guinnesspartnership.com/about-us/for-investors/

Disclaimer

The information contained herein (the "Trading Update") has been prepared by The Guinness Partnership

Limited ("TGPL") and is for information purposes only. The Trading Update should not be construed as

an offer or solicitation to buy or sell any securities issued by TGPL or any of its subsidiaries ("the Group"),

or any interest in any such securities, and nothing herein should be construed as a recommendation or

advice to invest in any such securities.

Statements in the Trading Update, including those regarding possible or assumed future or other

performance of the Group as a whole or any member of it, industry growth or other trend projections

may constitute forward-looking statements and as such involve risks and uncertainties that may cause

actual results, performance or developments to differ materially from those expressed or implied by such

forward-looking statements. Accordingly, no assurance is given that such forward-looking statements will

prove to have been correct. They speak only as at the date of the Trading Update and neither TGPL nor

any other member of the Group undertakes any obligation to update or revise any forward-looking

statements, whether as a result of new information, future developments, occurrence of unanticipated

events or otherwise.

None of TGPL, any member of the Group or anyone else is under any obligation to update or keep

current the information contained in the Trading Update. The information in the Trading Update is subject

to verification, does not purport to be comprehensive, is provided as at the date of the Trading Update

and is subject to change without notice. Financial results quoted are unaudited.

No reliance should be placed on the information or any projections, targets, estimates or forecasts and

nothing in the Trading Update is or should be relied on as a promise or representation as to the future.

No statement in the Trading Update is intended to be an estimate or forecast. No representation or

warranty, express or implied, is given by or on behalf of TGPL, any other member of the Group or any of

their respective directors, officers, employees, advisers, agents or any other persons as to the accuracy

or validity of the information or opinions contained in the Trading Update (and whether any information

has been omitted from the Trading Update). The Trading Update does not constitute a recommendation,

nor is it legal, tax, accounting or investment advice.

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December 22, 2022 10:47 ET (15:47 GMT)