Metropolitan Housing Trust Ltd / Metropolitan Funding
PLC
Thames Valley Housing Association (TVHA), trading as MTVH,
announces trading update and unaudited consolidated financial
results for the six months ended 30 September
2024
Continued strong performance
in a challenging environment
Overview and highlights
o Total revenue increased to £227m (H1 24: £209m)
o Revenue from rent and service charges £191m (H1 24: £175m)
driven by the government's social rent increase of 7.7%
o Higher sales of new homes (147 H1 25
vs 116 H1 24) resulted in £4m increase in sales revenue
year-on-year
o Operating surplus £61m (H1 24: £75m) reflecting £20m lower
surplus from fixed asset disposals year on year.
Accordingly:
o Operating margin decreased to 27% (H1 24:
36%)
o Total surplus* was £14m (H1 24:
£35m).
o Increased investment in the safety and quality of our
residents' homes
o We
invested £20m in capitalised improvement works to our estate (H1
24: £16m)
o Gross fire safety spend in H1 was £8m (H1 24: £6m).
o Our
Tenant Satisfaction Measures (TSM) show that we are ahead of peers
in overall satisfaction and treating
customers with fairness and respect.
o We
continue to use our Customer Voice
Framework to provide meaningful opportunities for residents to
engage with us on TSM topics and influence our
decisions.
o Our
development programme is on track to deliver 569 new homes in the
full year through partnership projects such as Clapham
Park.
o In
H1 25 we completed 236 new homes (H1 24: 293)
o Sales of 147 units completed (H1 24: 116)
o Our
financial position remains strong and supports our strategy for
continued sustainable growth.
o £675m (March 24: £846m) of available liquidity.
o Improved S&P Group rating of A- (Stable outlook),
following the MTVH Rating Review in December 2023.
o Fitch Ratings downgraded the rating as A- (Stable outlook) in
September 2024.
o Ritterwald refreshed the Sustainable Housing Certification,
moving MTVH up to Frontrunner for all criteria covering Social and
Governance, and now Environmental criteria.
*As a not-for-profit Registered Provider our
Total Surplus is re-invested to maintain existing homes and build
more new homes
Mel Barrett, Chief Executive,
commented:
"Our half year results reflect our
resilient business model and strong balance sheet which have
allowed us to invest in existing stock, deliver fire safety
remediation, look after our residents, and continue to develop new
homes.
We have provided record levels of
financial support to our customers through our Tenant Welfare Fund
and having launched the Molly Huggins Foundation in July we will do
more by leveraging the support of commercial partners and
charitable donors.
We completed 236 homes in the first
half of the year and are on track to deliver 569 in the full year.
We will also invest a record amount this year in new developments,
to help build the new affordable homes that the country badly
needs.
Our strong first half performance
leaves us confident for the full year outcome and our robust
financial position is underscored by the A- (stable) ratings
awarded by S&P and Fitch Ratings.
We welcome the rent settlement of
CPI+1% confirmed in the Budget and urge the government to increase
direct revenue funding at the Spring Spending Review to allow our
sector to support its homebuilding plans."
Segmental performance
Senior Leadership Changes
Mel Barrett was appointed Chief
Executive Officer, replacing Geeta Nanda OBE, and joined the
organisation at the start of September 2024.
Trading overview
Total revenue including home sales
is c 9% higher than last year as a result of the 7.7% rent
increases and higher sales revenues from First Tranche Sales. Care
& Support income has reduced as we took the strategic decision
to exit CQC-registered contracts to focus
on a new approach to supported housing and living which helps
people in their own homes, and more closely aligns to our core
function as a social landlord.
Turnover from sales was higher as we
sold 147 units in the first six months (compared to 116 in the same
period last year). At 30 September 2024, we had 136 unsold units,
of which only 58 are unsold over 90 days, with a sales value of
£5.8m. While sales are currently in line with expectations, we
remain well-placed if the sales market weakens.
Net surplus from rental operations
(ie net rents less total operating costs) for the first half of
FY25 was 5% higher than last year, reflecting strong cost control
in a high inflation and increasingly challenging service
environment. Gross margin from First Tranche sales more than
doubled compared to the same period last year to £5.1m, achieving a
29% sales margin (H1 24: 15%).
Operating costs in the first six
months were £163m (H1 24: £150m). Year on year inflationary
pressure also increased costs relating to salaries, utilities and
managing agents. Surplus from the disposal of fixed assets was down
£20m compared to the first half of FY24 at £13m. Most of this
reduction is represented by the two bulk disposals we made in H1
24, which together realised £18m surplus. Staircasing surplus was
also down £1.4m compared to H1 last year, although these have
picked up in the second quarter. Total surplus from disposals this
year remains in line with our business plan. Operating margin
(including non-recurring safer building costs) for the first six
months is 9.0 ppts lower at 27.0% (H1 24 36.0%) as a result of the
lower disposal surplus.
Cashflow from operations was £5m
higher than H1 last year. Disposal proceeds are £56m lower
than last year because of the one-off bulk deals in H1 24. Net
investment in new development projects totalled £177m (H1 24: £89m)
due to some significant project spend being delayed from last year
into Q125, including Meridian Water phase 2 and our Shared
Ownership scheme at One Nine Elms. The organisation completed 236 homes
during the first half of the year (H1 24: 293) and remains on track
to deliver around 569 new homes for the full year.
Net interest costs (excluding mark
to market movements on derivatives) are £3m higher than the same
period last year due to higher levels of net debt and higher
variable rates, although interest expense has been mitigated by
used of short term interest rate swaps. At 30 September 2024, we
had £675m of available liquidity (both cash and committed
facilities) (Mar 24: £846m) as we have drawn funds to cover
development spend, resulting in total debt of £2.1bn (Mar 24
£1.9bn). We have agreed commercial terms to secure £150m of
additional facilities with signing expected before the end of the
calendar year. Liquidity management remains a key focus to mitigate
the impact of a wider economic downturn. At the same time, our
relatively low gearing, at 39%, and nearly £610m of available
security, provides further resilience to shock.
Thames Valley Housing Association's
Standard & Poor's credit rating was unchanged in December 2023
at A- with the outlook improving to Stable. Fitch Ratings
downgraded the organisation rating to A- (Stable) in October
2024.
Full-year outlook
This outlook statement is subject to
uncertainty/unforeseen market and business interruption as a result
of uncertainty over the direction of government policy. The
economic and geopolitical environments remain challenging, with
persistently high levels of inflation and interest rates as well as
continuing concerns over energy costs. The recent budget changes to
National Insurance contributions and the Living Wage will increase
our costs next year by around £3m.
Trading
Full year turnover and operating
surplus is expected to be in line with our budget. Surplus from
asset disposals is weighted towards H2, including a significant
land disposal at Clapham Park which completed in
November.
Looking further forward, the rent
regime of CPI+1% effective from April 2025 is expected to result in
an increase of 2.7% to our social rents for FY26. This will boost
revenues, but margins will continue to be under pressure as
operating costs are forecast to rise at a higher rate, along with
the £3m increase in our National Insurance costs. The core housing
business is expected to perform in line with our business plan
expectations.
We expect to invest a record amount
in new homes development as part of our current programme to build
around 1,000 new homes per year, however without an increase in
direct revenue support from the government our capacity to build
new homes will be limited. MTVH remain committed to providing
increased support for those residents who face financial
hardship.
Investment in building
safety
Fire safety and damp and mould works
have increased investment to our existing homes. This is a sector
issue. The longer-term impact of remediation obligations has led to
a reduction in our capacity to develop new homes, particularly
homes for sale.
We are continuing with our Safer
Buildings programme driven by our desire to put customer safety
first. We expect that developers/warranty providers will pick up
the costs of remediation for newer buildings where this relates to
construction defect. We will seek to either accelerate the
remediation or redevelop the at-risk blocks, having confirmed we
would not seek recovery from qualifying leaseholders and the costs
of this has been fully expensed in our 2024 Statutory
Accounts.
TVHA/MHT (trading as MTVH) will
report results for the year ended 31 March 2025, in summer
2025.
Consolidated financials
Statement of comprehensive income
Statement of Financial Position
Cashflow
Enquiries
Please contact Donald McKenzie,
Director of Corporate Finance, on 0203-535-4434/
07738-714126 or at donald.mckenzie@mtvh.co.uk
This information for investors is
also available on our website:
https://www.mtvh.co.uk/about-us/investors/
Notes
1) Operating margin is operating surplus/turnover
2) Thames Valley Housing Association (TVHA) is the parent of the
group trading under the brand of Metropolitan Thames Valley (MTVH).
Metropolitan Housing Trust (MHT) is a wholly owned subsidiary of
TVHA and MHT owns 100% of the shares of Metropolitan Funding
Plc.
Disclaimer
The information in this announcement
of unaudited consolidated interim results has been prepared by the
Thames Valley Housing Association group and is for information
purposes only.
The unaudited results announcement
should not be construed as an offer or solicitation to buy or sell
any securities, or any interest in any such securities, and nothing
herein should be construed as a recommendation or advice to invest
in any such securities.
This unaudited results announcement
contains certain 'forward-looking' statements reflecting, among
other things, our current views on markets, activities and
prospects. By their nature, forward looking statements involve a
number of risks, uncertainties or assumptions that could cause
actual results to differ materially from those expressed or implied
by those statements. Actual outcomes may differ materially. Such
statements are a correct reflection of our views only on the
publication date and no representation or warranty is given in
relation to them, including as to their completeness or accuracy or
the basis on which they were prepared. Financial results quoted are
unaudited. We do not undertake to update or revise such public
statements as our expectations change in response to events.
Accordingly undue reliance should not be placed on forward looking
statements.