TIDM94BD
RNS Number : 3043S
Incommunities Treasury PLC
15 November 2021
Incommunities Group Limited
Consolidated Financial Report
for the 6 Months Ended
30(th) September 2021
Incommunities Group Limited
Consolidated Financial Report for the 6 Months Ended 30(th)
September 2021
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 six months
ended 30(th) September 2021.
These results are unaudited and are for information purposes
only.
1. Headlines
The Group's budget and business plan for 2021/22 was fully
revised for the likely impact of the continuing Covid-19 pandemic
and post Brexit economic environment. It was approved by the Board
in May 2021. In the updated budget, the year end 31 March 2022
forecast surplus was reduced, primarily as a result of additional
provisions for void property losses and bad debts and the loss of
income from the sale of social housing properties.
As at 30 September 2021, we have not yet seen an impact on
income collection following the end of the Government support in
relation to Covid-19 pandemic. The void losses and bad debts were
also lower than expected.
The Group has however seen increase in operating costs comparing
to the six months ended 30 September 2020, which is mainly driven
by the increased level of work to address the backlog in repairs
created during the lockdown measures introduced by the Government
last year and the emerging increases in material and staff costs to
deliver this work.
The Group continues to deliver on new development schemes and
set revised 10-year development targets. Details of the Group's
property development activities are set out in Section 5.
2. Financial and Operating Highlights
Income and expenditure amounts are for the six months ended
30(th) September 2021. Comparatives are for the prior year
corresponding period (PYCP) (six months ended 30(th) September
2020). Balances and other information are as at 30(th) September
2021. Comparatives are as at the prior year end (PYE) (31(st) March
2021), unless otherwise stated. Please see Appendix 1 for
details.
The financial and operating highlights are as follows:
Income and Expenditure
-- Turnover for the period is GBP49.7m (PYCP: GBP49.9m)
-- Turnover from social housing lettings for the period is
GBP48.7m (98%) (PYCP: GBP47.9m 96.1%)
-- Operating surplus for the period is GBP10.9m (PYCP: GBP14.1m)
-- Operating margin (including gain on disposal of housing properties) is 22.1% (PYCP: 28.2%)
-- Net interest payable in the period is GBP5.6m (PYCP: GBP5.3m)
-- Surplus for the period is GBP5.4m (PYCP: GBP8.7m)
Balances and Capital Expenditure
-- IGL managed 22,691 units (PYE: 22,651 units), and had a
leasehold interest in 1,117 units (PYE: 1,117 units)
-- Housing properties at cost less accumulated depreciation at
the period-end is GBP434.3m (PYE: GBP431.8m)
-- New homes completed in the period is 70 (PYCP: 32)
-- Net debt at the period-end is GBPGBP281.9m (PYCP: GBP285.3m).
-- Reserves at the period end are GBP27.1m (PYE: GBP21.6m)
Other Information
-- S&P Credit Rating (March 2021) is A+/Negative
-- Regulatory Judgement (23(rd) November 2020) is G2 - Governance, and V1 - Financial Viability
A number of financial performance indicators and measures, based
on the consolidated results for 30(th) September 2021 and the
comparatives, are set out in Appendix 2
3. Results Overview
The Group continues to generate most of its income from social
housing activities. The half year outturn is in line with the
budget, although there is still a backlog of work which needs to be
addressed by the business. In line with the long-term asset
strategy, the Group continues to invest in existing stock and new
developments.
The Group's financial covenants, including Interest Cover,
Gearing (Assets) and Net Debt per Unit, are well within the
funders' requirements.
The annual review of the S&P credit rating was announced in
March 2021 as A+/negative. This is a deterioration to the rating
issued in March 2020 of A+/stable, reflecting the challenges facing
the sector and the Group relating to future investment requirements
for Health and Safety compliance and the push for carbon
reduction.
4. Comments on Results
Francesco Elia, Executive Director of Finance (Interim),
commented:
"Incommunities is pleased to announce a solid set of results for
the six-month period, despite having to deal with the impact of the
ongoing pandemic and external factors such as increased costs in
materials and services. These external factors will no doubt
continue for the remainder of the financial year, and we are taking
steps to monitor the situation. We are strengthening our risk
management framework including horizon scanning as well as
instilling core financial disciplines within the business and
actively engaging with our customers; suppliers and other
stakeholders."
Rachael Dennis, Group Chief Executive, commented:
"We are refreshing our strategic priorities with a renewed focus
on our customers, assets and people, as well as our financial
performance and governance. A key focus in the first six months has
been the simplification of our group structure and in September we
converted to a Community Benefit Society. Our residents' safety
continues to be of utmost importance, and we have also carried out
a comprehensive review of our property compliance data, processes
and systems. We are also embarking on a new build programme in
partnership through the Homes England Strategic Framework which
will ensure we continue to meet the needs of the communities within
our geographical footprint."
5. Property Development Programme
The Group develops its housing properties through a dedicated
subsidiary, BCHT Development Company Limited. Since April 2021
Incommunities have purchased 33 S106 properties directly from
developers, with a further 35 purchased from another Registered
Provider.
On 30th September 2021, the Group has 63 properties in
development over several schemes. These consist of social,
affordable and shared ownership properties.
The Group have been successful as part of the Together Housing
Group Strategic Partnership bid agreed with Homes England to design
and build 600 properties by 2026, which will benefit from Grant
funding to deliver affordable, shared ownership, rent-to-buy and
supported properties.
6. Funding Facilities
Total loans (net of loan issue costs) at 30th September 2021 are
GBP281.9m (PYCP: GBP285.3m). No additional loans have been drawn
during the period and GBP650k of THFC loan has been repaid.
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 Amount Date
GBP'000 GBP'000 GBP'000
Bond Fixed Rate 250,000 225,000 25,000 21-Mar-49
Barclays Fixed Rate 40,000 40,000 0 26-Nov-43
------------ ------------- -------------- ---------- ----------------
Variable
Barclays Rate 55,000 2,000 53,000 20-Feb-26
------------ ------------- -------------- ---------- ----------------
Variable
NatWest Rate 40,000 0 40,000 08-Feb-29
------------ ------------- -------------- ---------- ----------------
Variable
RBS Rate 20,000 10,000 10,000 12-Jul-29
------------ ------------- -------------- ---------- ----------------
Other loans Fixed Rate 276 276 0 30-Sep-51
------------ ------------- -------------- ---------- ----------------
Premium on issue 7,928 (7,928) 21-Mar-49
------------- -------------- ---------- ----------------
Discount on
issue (1,548) 1,548 21-Mar-49
------------- --------------
Loan issue costs (2,803) 2,803 21-Mar-49
------------- ----------------
Fair value adj. 1,140 (1,140) 30-Sep-51
Total 405,276 281,993 123,283
----------------
Interest Cover for the 6-month period is 2.76 (PYE: 3.37) and
Gearing (Assets) at the period-end is 42.1% (PYE: 45.2%). For
definitions, please see Appendix 2.
7. Outlook
7.1 The RSH highlighted in its Sector Risk Profile 2021 that the
UK public health and economic outlook remain unclear, the recovery
remains fragile and operating margins have fallen in the
sector.
During the Group's comprehensive review of risk management and
assurance we have undertaken a detailed assessment of the economic
outlook and associated risk considerations that could impact on the
business through 2021/2022 and remain confident we are financially
resilient.
7.2 As part of Group Chief Executive's review of the corporate
strategy we are developing a 2-year operational plan with an
emphasis on developing core business efficiency and enhancing the
Group's performance culture. The Group recognises the challenge
raised by future stock investment and meeting the challenge of
environmental sustainability but is equally committed to ensuring
the development programme is progressed.
Enquiries: Please contact Mark Wood, Director of Financial
Services on 01274 257 013 or at Mark.Wood@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.
Consolidated Results for the 6 Months Ended 30(th) September
2021 and
Other Financial Information
Consolidated Statement of 6 Months 6 Months
Comprehensive Income* to Sep. to Sep.
21 20 Movement Percentage
GBP000's GBP000's GBP000's %
------------------------------- --------- --------- --------- -----------
Turnover 49,729 49,941 (212) -0.4%
Operating Expenditure:
Operating Costs (41,043) (37,048) -3,995 -10.8%
Cost of Sales 0 0 0 0%
Gain on Disposal of Housing
Properties 2,306 1,195 1,111 93.0%
Operating Surplus 10,992 14,088 -3,096 -22.0%
Interest receivable and
Other Income 9 19 (10) -52.6%
Interest and Financing Costs (5,628) (5,323) (305) -5.7%
Surplus Before Tax 5,373 8,784 -3,411 -38.8%
Taxation 0 0 0 0%
Surplus for the Period 5,373 8,784 -3,411 -38.8%
Actuarial Gain / (Loss)
on Pension Schemes 0 0 0 0%
Total Comprehensive Income
for the Period 5,373 8,784 -3,411 -38.8%
========= ========= ========= ===========
Consolidated Statement 30 Sep. 2021 31 Mar.2021 Movement Change
of Financial Position
GBP000's GBP000's GBP000's %
---------------------------- ------------- ------------ --------- -------
Tangible Fixed Assets 440,788 438,498 2,290 0.5
Current Assets 20,179 26,530 -6,351 -23.9
Current Liabilities (10,666) (14,162) 3,496 24.7
Net Current Assets /
(Liabilities) 9,514 12,368 -2,854 -23.1
Total Assets less Current
Liabilities 450,301 450,866 -565 -0.1
Longer Term Liabilities (359,136) (365,188) -6,052 -1.7
Pension Scheme Liabilities (64,049) (64,049) 0 0
Total Net Assets 27,116 21,629 5,487 25.4%
Income and Expenditure
Reserve 27,116 21,629 5,487 25.4%
Total Reserves 27,116 21,629 5,487 25.4%
---------------------------- ------------- ------------ --------- -------
*The consolidated results for the 6 months ended 30(th)
September 2021 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 information
Other Financial Information 6 M.E 6 M.E Movement Change
30 Sep. 30 Sep.
2021 2020
GBP000's GBP000's GBP000's %
------------------------------ --------- --------- --------- -------
Turnover from social housing
lettings 48,752 47,975 777 1.6%
Surplus on social housing
lettings 11,469 13,776 -2,307 -16.7%
Amortisation of government
grants 422 413 9 2.2%
Depreciation of housing
properties 8,593 8,738 -145 -1.7%
Depreciation of other
assets 311 318 -7 -2.2%
Capitalised major repairs 3,974 4,523 -549 -12.1%
Investment in new build
properties 8,648 4,318 4,330 100.3%
New homes completed 70 32 38 118.8%
------------------------------ --------- --------- --------- -------
Other Financial Information 6 M.E Y.E Movement Change
30 Sep. 31 Mar.
21 21
GBP000's GBP000's GBP000's %
----------------------------------- --------- --------- --------- ---------
Total units owned and
managed 22,691 22,651 40 0.2%
Total units owned 22,320 22,280 40 0.2%
Historic cost of properties
(excl. accumulated depreciation) 629,521 618,436 11,085 1.8%
Cash and Cash Equivalents 16,767 19,570 -2,803 -14.3%
Total loans 281,993 298,868 -16,875 -5.6%
----------------------------------- --------- --------- --------- ---------
Financial Performance and Indicators for the 6 Months Ended
30(th) September 2021
Operating Results 6 M.E 6 M.E.
30 Sep.2021 30 Sep.
2020
Turnover from Social Housing Lettings (1) 98% 96.1%
------------ ---------
Operating Margin on Social Housing Lettings
(2) 23.5% 28.7%
------------ ---------
Social Housing Cost per Unit (GBP) (3) GBP1,818 GBP1,710
------------ ---------
Operating Margin (Incl. Gain on Disposal
of Housing Properties) (4) 22.1% 28.2%
------------ ---------
EBITDA-MRI to Net Interest (5) 2.76 3.43
------------ ---------
Net Margin (6) 10.8% 17.6%
------------ ---------
Return on Capital Employed (7) 2.4% 3.1%
------------ ---------
Financial Covenants 30 Sep. 2021 31 Mar. 2021
Interest Cover (8) 2.70 3.37
------------ ------------
Gearing (Assets) (9) 42.1% 45.2%
------------ ------------
Net Debt per Unit (10) GBP12,510 GBP13,197
------------ ------------
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
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
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