TIDM94BD
RNS Number : 7845T
Incommunities Treasury PLC
19 November 2019
Incommunities Group Limited
Consolidated Financial Report
for the 6 Months Ended
30(th) September 2019
Incommunities Group Limited
Consolidated Financial Report for the 6 Months Ended 30(th)
September 2019
Incommunities Group Limited ('Incommunities', 'the Group') is
one of the leading providers of affordable housing in the UK and is
pleased to announce its consolidated results for the 6 months ended
30(th) September 2019.
These results are unaudited and are for information purposes
only.
1. Headlines
1.1 During the period, the Group completed its loan
restructuring (of which the Own Name Public Issue Bond in March
2019 formed a key part) with the restatement of an existing GBP20m
bank loan. The loan restructuring exercise has significantly
reduced interest payable, provided funds for an accelerated
development programme, and reduced the Group's funding risk.
1.2 During the period, the Group also completed the
implementation of its Dynamic Repairs Scheduling system. This will
significantly increase the efficiency with which our repairs
service is delivered and have a corresponding beneficial effect on
the future cost of that service.
1.3 Throughout the period, the Group has continued to focus and
improve its Active Asset Management systems, streamlining its void
management processes and reducing its void turnaround times leading
to a significant reduction in voids rent losses. The programmed
decommissioning of a number of the Group's 'tower blocks' continues
and forms a key part of the asset management being undertaken.
1.4 During the period, the Group also delivered several new
development schemes and sold all of its properties for sale.
Details of the Group's property development activities are set out
in Section 5.
2. Financial and Operating Highlights
2.1 Income and expenditure amounts are for the 6 months ended
30(th) September 2019. Comparatives are for the prior year
corresponding period (PYCP) (6 months ended 30(th) September 2018).
Balances and other information are as at 30(th) September 2019.
Comparatives are as at the prior year end (PYE) (31(st) March
2019), unless otherwise stated.
2.2 The Statement of Comprehensive Income for the 6 months ended
30(th) September 2019 and the Statement of Financial Position as at
30(th) September 2019, plus the comparatives, are set out in
Appendix 1.
2.3 A number of financial performance indicators and measures,
based on the consolidated results for 30(th) September 2019 and the
comparatives, are set out in Appendix 2.
2.4 The financial and operating highlights are as follows:
Income and Expenditure
-- Turnover for the period is GBP49,141k (PYCP: GBP48,447k)
-- Turnover from social housing lettings for the period is 95.7% (PYCP: 98.1%)
-- Operating surplus for the period is GBP9,774k (PYCP: GBP11,329k)
-- Operating margin (including gain on disposal of housing properties) is 25.7% (PYCP: 26.4%)
-- Net interest payable in the period is GBP5,386k (PYCP: GBP7,651k)
-- Surplus for the financial period is GBP7,231k (PYCP: GBP5,145k)
-- Interest cover is 3.06 (PYCP: 2.27)
Balances and Capital Expenditure
-- IGL managed 22,088 units at the beginning of the financial
year (2018: 21,897 units), and had a leasehold interest in 1,112
units (2018: 1,036 units)
-- Housing properties at cost (excluding accumulated
depreciation) at the period-end is GBP610,866k (PYE:
GBP600,196k)
-- Investment in existing and new housing properties during the
period is GBP12,463k (PYCP: GBP12,059k)
-- New homes completed in the period is 76 (PYCP: 61)
-- Net debt at the period-end is GBP287,135k (PYE: GBP294,390k)
-- Gearing (Assets) is 47.0% (PYE: 49.0%)
-- Net debt per unit is GBP13,000 (PYE: GBP13,444)
-- Reserves at the period end are GBP36,009k (PYE: GBP28,778k)
Other Information
-- S&P Credit Rating (26(th) September 2018) is A+ (negative)
-- Regulatory Judgement (24(th) April 2019) is G1 - Governance, and V1 - Financial Viability
3. Results Overview
3.1 The Group continues to generate the majority of its income
from social housing activities. As such, the results have been
impacted by the statutory reduction in rents of 1% for the
financial year 2019/20. This is the fourth and final year of the
current rent reduction regime and results are expected to improve
on a like-for-like basis going forward.
3.2 The loan restructuring exercise has resulted in a
significant reduction in interest payable. This has contributed
towards a significant improvement in the surplus for the financial
period in comparison to the prior period. This surplus is
significantly ahead of budget.
3.3 The Group's financial covenants, including Interest Cover,
Gearing (Assets) and Net Debt per Unit, all show improvement in
comparison with the prior period.
3.4 The annual review of the S&P credit rating is currently
taking place and an announcement will be made on this in due
course. The Group's Regulatory Judgement was reconfirmed at the
highest available rating during the current financial year.
4. Comments on Results
4.1 Greg Robinson, Assistant Chief Executive - Resources, commented:
"Incommunities is delighted to announce a solid set of results,
improving our 'bottom line' and outperforming our half year budget.
It is particularly pleasing to note a significant reduction in
interest payable as a result of the loan restructuring exercise
carried out over the past year. Not only has this exercise reduced
interest payable, it has also provided funds for an accelerated
development programme, and reduced the Group's funding risk."
4.2 Geraldine Howley, Group Chief Executive, commented:
"We continue to improve our social housing services and the
'offer' we make to our customers. Most recently, this has been
through such initiatives as the implementation of a Dynamic Repairs
Scheduling system and an Active Asset Management system. These
innovative advances will not only improve our services and the
'offer' we make to our customers, but should also have a beneficial
effect on our financial performance. I am pleased to report that we
are already experiencing this improvement with a significant
reduction in our voids turnaround times and a resultant reduction
in voids rent losses."
5. Property Development Programme
5.1 The Group develops its housing properties through a
dedicated subsidiary, BCHT Development Company Limited. During the
6 months ended 30(th) September 2019, the Group delivered 76 new
housing properties over six schemes. Of these properties, 41 are
affordable housing, 19 rent-to-buy, 12 shared ownership and four
for sale.
5.2 At 30(th) September 2019, the Group has some 200 units in
development over a number of schemes. These are made up of
affordable housing, rent-to-buy, and shared ownership units.
5.3 Following the loan restructuring exercise, the Group is
seeking to accelerate its future property development programme.
Further announcements on the Group's proposed future programme will
be made in due course.
6. Funding Facilities
6.1 During the 6 months ended 30th September 2019, the Group,
through its subsidiary Sadeh Lok Limited, signed off a restated
facility agreement for GBP20m with Royal Bank of Scotland. This
represents the final stage of the Group-wide debt restructuring
exercise, which included the issue of the GBP250m own name, public
issue bond on 21(st) March 2019.
6.2 The debt at 30(th) September 2019 is GBP305,832k (PYE:
GBP305,890k). No additional loans have been drawn during the
period. The reduction in debt of GBP58k during the period is made
up of a repayment of GBP2k against other loans, a discount on issue
of GBP27k re-credited to the bond, and a write-off of GBP83k made
to the fair value adjustment on consolidation.
6.3 At the period end, the Group's consolidated loan portfolio is made up of the following:
Funder Facility Facility Debt Amount Available Final Repayment
Type Amount GBP'000 Amount Date
GBP'000 GBP'000
Bond Fixed Rate 250,000 198,397 50,000 21 Mar 2049
------------ --------- ------------ ---------- ----------------
Barclays Fixed Rate 40,000 40,000 0 26 Nov 2043
------------ --------- ------------ ---------- ----------------
Variable
Barclays Rate 55,000 14,932 40,068 20 Feb 2026
------------ --------- ------------ ---------- ----------------
Variable
NatWest Rate 40,000 40,000 0 8 Feb 2029
------------ --------- ------------ ---------- ----------------
Variable
RBS Rate 20,000 10,000 10,000 12 Jul 2029
------------ --------- ------------ ---------- ----------------
THFC Fixed Rate 650 650 0 31 Oct 2023
------------ --------- ------------ ---------- ----------------
Other loans Fixed Rate 280 280 0 30 Sep 2051
------------ --------- ------------ ---------- ----------------
Fair value
adj. 0 1,573 0 30 Sep 2051
--------- ------------ ---------- ----------------
Total 405,930 305,832 100,068
--------- ------------ ---------- ----------------
6.4 Interest Cover for the 6 month period is 3.06 (PYCP: 2.27)
and Gearing (Assets) at the period-end is 47.0% (PYE: 49.0%).
7. Outlook
7.1 The business outlook remains positive with continuing
opportunities for growth and development and the Group's improved
operational and financial capacity to take advantage of these
opportunities.
7.2 The external environment remains relatively benign with low
interest rates and low inflation. We anticipate that there will be
some pressure going forward on wage increases, which form a
significant element of our operating expenditure, but this should
be manageable.
Enquiries: Please contact Greg Robinson, Assistant Chief
Executive - Resources, on 01274 257 013 or at
Greg.Robinson@Incommunities.co.uk
Disclaimer
The information in this announcement has been prepared by
Incommunities Group Limited and is for information purposes only.
The Results Announcement should not be construed as an offer or
solicitation to buy or sell any securities issued by the Parent,
the Issuer or any other member of 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.
This unaudited announcement contains certain 'forward-looking'
statements reflecting, among other things, our current views on
markets, activities and prospects. Actual and audited 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.
Appendix 1
Consolidated Results for the 6 Months Ended 30(th) September
2019 and
Other Financial Information
Consolidated Statement of Comprehensive 6 M.E. 6 M.E. Movement Change
Income*
30 Sep 30 Sep
2019 2018
GBP'000 GBP'000 GBP'000 %
Turnover 49,141 48,447 694 1.4%
--------- --------- --------- -------
Operating Expenditure:
--------- --------- --------- -------
Operating Costs (38,354) (37,118) (1,236) (3.3%)
--------- --------- --------- -------
Cost of Sales (1,013) - (1,013) N/A
--------- --------- --------- -------
Operating Surplus 9,774 11,329 (1,555) (13.7%)
--------- --------- --------- -------
Gain on Disposal of Housing
Properties 2,843 1,467 1,376 93.8%
--------- --------- --------- -------
Net Interest Payable and Finance
Costs (5,386) (7,651) 2,265 29.6%
--------- --------- --------- -------
Surplus Before Tax 7,231 5,145 2,086 40.5%
--------- --------- --------- -------
Taxation - - - N/A
--------- --------- --------- -------
Surplus for the Period 7,231 5,145 2,086 40.5%
--------- --------- --------- -------
Actuarial Gain/(Loss) on Pension - - - N/A
Schemes
--------- --------- --------- -------
Total Comprehensive Income for
the Period 7,231 5,145 2,086 40.5%
--------- --------- --------- -------
Consolidated Statement of Financial 30 Sep 2019 31 Mar 2019 Movement Change
Position GBP'000 GBP'000 GBP'000 %
Fixed Assets 439,775 438,059 1,716 0.4%
----------- ----------- -------- ------
Current Assets 23,359 17,754 5,605 31.6%
----------- ----------- -------- ------
Current Liabilities (20,121) (20,256) 135 0.7%
----------- ----------- -------- ------
Net Current Assets / (Liabilities) 3,238 (2,502) 5,740 229.4%
----------- ----------- -------- ------
Total Assets Less Current Liabilities 443,013 435,557 7,456 1.7%
----------- ----------- -------- ------
Longer Term Liabilities (378,615) (378,390) 225 0.1%
----------- ----------- -------- ------
Pension Scheme Liabilities (28,389) (28,389) - N/A
----------- ----------- -------- ------
Total Net Assets 36,009 28,778 7,231 25.1%
----------- ----------- -------- ------
Income and Expenditure Reserve 36,009 28,778 7,231 25.1%
----------- ----------- -------- ------
Total Reserves 36,009 28,778 7,231 25.1%
----------- ----------- -------- ------
*The consolidated results for the 6 months ended 30(th)
September 2019 and the corresponding prior period do not include a
provision for corporation tax payable or receivable in the period,
or any movements on pension schemes liabilities, both of which form
part of year-end adjustments.
Other Financial Information 6 M.E. 6 M.E. Movement Change
30 Sep 30 Sep
2019 2018
GBP'000 GBP'000 GBP'000 %
Turnover from Social Housing
Lettings 47,040 47,529 (489) (1.0%)
--------- --------- --------- -------
Surplus on Social Housing Lettings 11,193 12,657 (1,464) (11.6%)
--------- --------- --------- -------
Amortisation of Government Grants 412 398 14 3.5%
--------- --------- --------- -------
Depreciation of Housing Properties (8,698) (8,691) (7) (0.1%)
--------- --------- --------- -------
Depreciation of Other Assets (387) (401) 14 3.5%
--------- --------- --------- -------
Capitalised Major Repairs 4,434 3,706 728 19.6%
--------- --------- --------- -------
Investment in New Build Properties 8,029 8,353 (324) (3.9%)
--------- --------- --------- -------
New Homes Completed 76 61 15 24.6%
--------- --------- --------- -------
Other Financial Information 30 Sep 2019 31 Mar 2019 Movement Change
GBP'000 GBP'000 GBP'000 %
Total Units in Management (at
beginning of financial period) 22,088 21,897 191 0.9%
----------- ----------- -------- ------
Historic Cost of Properties
(excl. Accumulated Depreciation) 610,866 600,196 10,670 1.8%
----------- ----------- -------- ------
Cash and Cash Equivalents 18,697 11,500 7,197 62.6%
----------- ----------- -------- ------
Total loans (305,832) (305,890) 58 0.0%
----------- ----------- -------- ------
Appendix 2
Financial Performance and Indicators for the 6 Months Ended
30(th) September 2019
Operating Results 6 M.E. 6 M.E.
30 Sep. 30 Sep.
2019 2018
Turnover from Social Housing Lettings (1) 95.7% 98.1%
--------- ---------
Operating Margin on Social Housing Lettings
(2) 23.8% 26.6%
--------- ---------
Social Housing Cost per Unit (GBP) (3) GBP1,824 GBP1,762
--------- ---------
Operating Margin (Incl. Gain on Disposal
of Housing Properties) (4) 25.7% 26.4%
--------- ---------
EBITDA-MRI to Net Interest (5) 3.13 2.32
--------- ---------
Net Margin (6) 14.7% 10.6%
--------- ---------
Return on Capital Employed (7) 2.8% 2.9%
--------- ---------
Financial Covenants 30 Sep. 2019 31 Mar. 2019
Interest Cover (8) 3.06 2.27
------------ ------------
Gearing (Assets) (9) 47.0% 49.0%
------------ ------------
Net Debt per Unit (10) GBP13,000 GBP13,444
------------ ------------
Notes
1 Turnover from social housing lettings / Turnover
2 Operating surplus on social housing lettings / Turnover from social housing lettings
3 Revenue and capital social housing costs / Total units in
management (at beginning of financial period
4 Operating surplus (incl. gain on disposal of housing properties) / Turnover
5 Adjusted operating surplus / Net interest payable
(Adjusted operating surplus = operating surplus (incl. gain on
disposal of housing properties) + depreciation of housing
properties + depreciation of other assets - capitalised major
repairs - amortisation of government grants)
6 Surplus for the period / Turnover
7 Operating surplus (incl. gain on disposal of housing
properties) / Total assets less current liabilities
8 Adjusted operating surplus / Net interest payable
(Adjusted operating surplus = operating surplus (incl. gain on
disposal of housing properties) + depreciation of housing
properties - capitalised major repairs - amortisation of government
grants)
9 Net financial indebtedness / Historic cost of properties (excl. accumulated depreciation)
(Net financial indebtedness equals total loans - cash and cash
equivalents)
10 Net financial indebtedness / Total units in management (at beginning of financial period)
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END
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