46GV Karbon 3.375%

TIDM46GV

RNS Number : 0339R

Karbon Homes Limited

01 July 2022

 
 Karbon Homes Group 
 01/07/2022 
 
 Karbon Homes Group trading update for the period ending 
  31 March 2022 
 -- Karbon Homes Group (KHG) is today issuing its consolidated trading update for 
  the period ended 31 March 2022. 
 -- These figures are unaudited and for information 
  purposes only. 
 
 
 Highlights for the period ending 31 March 2022 
 -- KHG own and manage 29,000 homes 
 -- Karbon Homes Limited maintained its G1/V1 status from the Regulator for Social Housing 
  on 29th June 2022, following an In-Depth Assessment. 
 -- Turnover (excl. asset sales) for the period was GBP155.2m (2021: GBP142.4m) 
 -- Operating surplus (excl. asset sales) for the period was GBP40.2m (2021: GBP37.1m) 
 -- Overall operating margin (excl. asset sales) was 25.9% (2021: 26.1%) 
 -- The surplus after tax for the period was GBP35.6m (2021: GBP22.1m) 
 -- Gearing as at 31 March 2022 was 34.6% (2021: 35.9%) 
 -- Return on capital employed for the period was 3.9% (2021: 3.5%) 
 
 
 Commenting on the results, Scott Martin, Executive Director of Resources, said: 
 'Despite the challenges of 2021/22, we believe we can look back over the last year and celebrate 
  all that we've achieved at Karbon. We've maintained a positive performance and are proud to 
  present our draft financial results to 31st March 2022 in this release. 
 Karbon has continued to invest and push forward with a number of new and exciting projects 
  which will help us deliver on our strategic aims. During 2021, we refreshed our strategy and 
  published our 'Stronger Foundations Strategy 2021-26', outlining our direction and priorities 
  around Homes, Customer and Place over the next five years. Our colleagues were key in shaping 
  our strategy, and we look forward to seeing it come to life through their passion and commitment. 
 
 We had a strong year in terms of the provision of high quality affordable new homes, and delivered 
  458 new homes across a variety of tenures and geographies. This was despite ongoing supply 
  chain and labour shortages following the COVID-19 pandemic and Brexit. 
 
 Our commitment to playing our part in tackling the UK's housing crisis is unwavering. To help 
  support our ambitious plans to develop over 4,000 homes in the next six years, we were pleased 
  to achieve Strategic Partnership status with Homes England. Our aim to deliver 2,200 mixed 
  tenure homes across the North East and Yorkshire will be supported by GBP131.5m in grant funding, 
  and we are pleased to say that at least 50% of these schemes are already either underway or 
  in the pipeline. 
 
 The net zero challenge also continues to sit at the forefront of our plans. We've piloted 
  more energy efficient building techniques through our new build programme and prioritised 
  using renewable energy heating systems that achieve EPC A ratings. We've also continued to 
  invest heavily in our existing homes, spending GBP30m during the year to, both, keep us on 
  track to achieve EPC C rating across all our homes by 2030, as well as ensuring that our customers 
  are as safe and secure. 
 
 Our customers are at the heart of what we do every day. We're very pleased that our customer 
  satisfaction scores continue to remain high, with a Net Promoter Score of +49.9 for the year, 
  meaning that our customers' willingness to recommend Karbon to others is at a level considered 
  to be 'excellent'. The Institute of Customer Service also awarded us with their 'ServiceMark' 
  accreditation recently, making us one of only five housing associations to have achieved this, 
  and the only one to do so in the North East. 
 
 Our money, debt and benefits advice services have continued to be successful at Karbon with 
  over GBP4.5m in income gains achieved for our customers during the year. This is more important 
  than ever as we see our customers and communities affected by the increasing cost of living. 
 
 In terms of our strategic aim around 'place', we've also begun work on a number of deeper 
  place-based interventions in areas where we have a large concentration of homes. In Stanley 
  (County Durham) we've worked closely with customers, stakeholders and community organisations 
  to help us understand what we can do to develop opportunities for the economy of the town 
  to grow and to help residents live more prosperous lives. Furthermore, in the North of Tyne 
  region we secured GBP700k of funding from the UK Governments Community Renewal Fund to launch 
  an employability programme. 
 
 Finally, following a rigorous In-Depth Assessment (IDA) from the Regulator of Social Housing, 
  we have recently retained the highest rating for both the governance and viability standard 
  (G1/V1), showing we're in a strong position for the future. Our strong investment grade credit 
  rating of 'A' Stable was also retained in May 2022 as well by our rating agency Standard & 
  Poor's (S&P). S&P praised our experienced management team, solid risk management policies 
  and highlighted our focus towards improving the quality of our assets. They also considered 
  Karbon to have very strong liquidity to support our future plans. 
 
 We look forward to updating the investor community further during the course of 2022-23." 
 
 
  Unaudited Financial Metrics 
                                                             31-Mar         31-Mar 
                                                             2022           2021 
 
                                                             Actual         Actual 
                                                             GBP'000        GBP'000 
   Statement of Comprehensive Income 
 
   Turnover (excl. asset sales)                              155,186        142,400 
   Turnover (incl. asset sales)                              163,186        146,355 
 
   Operating surplus (excl. asset sales)                     40,180         37,140 
   Operating surplus (incl. asset sales)                     43,989         38,757 
   Surplus after tax                                         35,646         22,096 
 
   Margins                                                   %              % 
 
   Overall operating margin (excl. asset sales) (Note 
    1)                                                       25.9%          26.1% 
   Overall operating margin (incl. asset sales) (Note 
    2)                                                       27.0%          26.5% 
 
   Key Financial Ratios 
 
   EBITDA MRI interest cover (Note 3)                        192.8%         212.4% 
   Gearing (Note 4)                                          34.6%          35.9% 
   ROCE (Note 5)                                             3.9%           3.5% 
 
                                                             31-Mar         31-Mar 
                                                             2022           2021 
 
   Liquidity 
   24 month liquidity requirement (GBP'000) (Note 6)         126,359        82,457 
   Cash and undrawn facilities (GBP'000) (Note 7)            247,070        282,389 
   Unencumbered stock (no of properties)                     7,067          4,736 
   Value of unencumbered stock (average of EUV and MV, 
    GBP'000) (Note 8)                                        258,915        170,729 
   Loan security excesses (average of EUV and MV, GBP'000) 
    (Note 9)                                                 157,151        112,341 
 
   Credit Rating 
 
                                                             'A'; Outlook Stable - May 
   S & P                                                      2022 
   Notes: 
 
    1) Operating margin excluding asset sales removes the gain or loss on disposal of 
    housing 
    properties. 
    2) Operating margin including asset sales includes all activity 
    3) Earnings before interest, tax, depreciation and amortisation, major repairs included 
    is 
    defined as: (Operating surplus - Disposal of assets - Outright sales and first tranche 
    SO 
    surpluses + Depreciation & impairment - Amortisation - Capitalised major repairs) / 
    Interest 
    paid 
    (reflecting the 'S&P Global methodology for rating public and non profit social housing 
    providers', 
    published 1st June 2021) 
    4) Gearing is defined as: Group Net Debt / Group Housing assets at historic cost less 
    depreciation 
    (RSH VFM Gearing definition). 
    Karbon have chosen to include cash held in non ring-fenced investment accounts as 
    available 
    cash, 2022: GBP92.3m (2021: GBP83.3m). Removing this would result in the gearing 
    calculations 
    being 2022: 43.9% (2021: 45.0%). 
    5) Return on capital employed is defined as Operating Surplus (incl asset sales) / 
    Total Assets 
    less current liabilities 
    6) 24 month cashflow requirements 
    7) Cash, investments and undrawn revolving credit facilities 
    8) Value of stock not held by a lender or security trustee, at average GBP36k per unit 
    9) Value of excess security held with current lenders or security trustees 
 
    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/ 
 

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