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Name | Symbol | Market | Type |
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Incommun.tr.49 | LSE:94BD | London | Bond |
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TIDM94BD
Incommunities Treasury PLC
27 December 2023
Incommunities Limited trading update and unaudited financial results for the period ended 30 September 2023
Incommunities Treasury Plc's parent company, Incommunities Limited (IC), is pleased to announce the release of its unaudited half-year financial statements for the period ended 30 September 2023.
Incommunities Limited is one of the largest Registered Providers in Yorkshire owning and managing 22,672 homes properties mainly across Bradford and Huddersfield, of which 22,652 are social housing properties, highlighting our commitment to provide and maintain high-quality affordable housing for our communities.
The YTD financial performance to September delivered a net surplus of GBP7.8m compared to the budget of GBP6.1m. This is a 28% (GBP1.7m) better-than-expected result. For comparison purposes, this is approx. GBP0.4m (6%) higher than the same period last year. YTD Interest cover is strong at 151% .
The strong YTD position is mainly driven by;
- lower salary cost (GBP0.4m)
- lower depreciation (GBP0.1m)
- increased surplus from property sales (GBP0.5m 1(st) tranche, GBP0.5m fixed asset)
KPI performance:
September (6 monthly) ------------------------ Budget Actual ----------- ----------- Metrics 23/24 22/23 ----------- Regulatory Reinvestment 7.97% 7.57% New Supply Delivered - Social Housing 0.69% 0.40% New Supply Delivered - Non-Social Housing 0.00% 0.00% Gearing (Net Debt / Housing Assets) 65.08% 60.08% EBITDA-MRI Interest Cover 104.26% 109.35% Headline Social Housing CPU GBP2,168 GBP2,226 Operating Margin - Social Housing Lettings 14.08% 17.74% Operating Margin - Overall 13.54% 18.42% Return on Capital Employed 3.04% 2.57% September (6 monthly) ------------------------ Minimum Actual ----------- ----------- Covenants 23/24 23/24 ----------- Interest Cover* 1.10% 1.51%* Gearing 70.00% 44.00% Net debt per unit GBP23,000 GBP13,096 ------------------------------------------- ----------- ----------- *based on interest payable for this purpose - interest paid varies over the year and would distort
-- Investment programme - YTD spend of GBP12.0m. IC remains committed to improving the lives of our tenants through investment in their homes.
-- Development programme - YTD spend of GBP22.7m. IC generated GBP0.5m from first tranche sales and received GBP0.8m in grant income.
-- Liquidity - Remains strong, the cash position at the period was GBP16.7m, with further undrawn facilities of GBP112m (including GBP25m retained bond).
-- Funder Covenants - All funder covenants have been met
Business Outlook
IC is committed to putting customers at the heart of what we do. We have continued to enhance the visibility and management performance across the business in support of the journey back to G1. The figures presented demonstrate a real turning point for us as we look to ramp up investment across our stock portfolio (underpinned by stock condition surveys and associated strategies) whilst continuing to deliver on our development ambition.
Some of the expectations for the 2(nd) half of the year (forecasted outturn)
- 218 new homes delivered with a spend of GBP56.0m in the year - Damp and mould investment of GBP1.7m
- Sustainability (grant funded) program worth net GBP2.1m (GBP4.9 Capex, GBP2.8m grant)
- 2,905 component replacements worth approx. GBP16.1m
As with previous years, we continue to monitor all potential risks the group could face. Risk management a core component of our wider governance and internal control framework. We continue to operate under challenging market conditions with the potential to impact sales and prices and we are seeing emerging themes not too dissimilar to those impacting the housing sector and industry more widely including cyber threats and pressures on the supply chain. The Board continue to monitor the potential impact and remains well-placed to navigate the current economic volatility through regular stress testing of the business plan and relevant mitigation plans.
Inflation - CPI inflation had dropped to 4.6% in October 23 (from a high of 11.1% in October 22). This remains above the Bank of England's 2.0% inflationary target. Inflationary pressures have been factored into our future financial performance both for the remainder of the current year as well as future years through stress testing of the financial plan.
Interest Rates - The base rate has been gradually increasing over the past 12 months and has plateaued at 5.25% since August 2023. Incommunities protects its loan portfolio against the impact of base rate increases on financing costs. The debt portfolio is 92% fixed, against a minimum limit of 60% fixed in our Treasury Management Policy (TMP). This gives a strong degree of mitigation against interest rate risk.
Cost, Material and Labour Availability - Cost pressures and scarcity of materials and labour in the repairs markets have been flagged as issues facing the delivery of the day-to-day repairs, investment and new build programmes. Volatility in the energy market and other global markets linked to the conflict in Ukraine and Gaza will add to these pressures. The cost pressure around utilities has been reflected in the half year financial position.
Executive Appointments
Anthony Brown left Incommunities and his role as Interim Executive Director of Assets in November 2023. We wish him well for the future and thank him for the contribution he made to reshape the Assets team at Incommunities.
Appendix
Statement of Comprehensive Income
September (6 monthly) March (Annual) -------------------- ---------------------- Actual Actual Budget Actual --------- ---------- ---------- 23/24 22/23 23/24 22/23 --------- ---------- ---------- Income Rent & Service Charges 52,817 49,529 106,327 99,589 Other Income 947 1,124 2,076 2,406 Amortised Grants 417 416 886 898 54,181 51,069 109,288 102,893 Expenditure Core Operating Costs (36,890) (34,050) (76,261) (81,399) Depreciation (8,205) (8,274) (18,013) (16,554) Net interest (3,455) (5,202) (10,214) (11,254) Surplus on disposal (current & fixed) 3,015 3,821 4,117 7,257 (45,535) (43,705) (100,370) (101,950) Net Surplus 8,646 7,364 8,918 943 FRS102 Pension - Actuarial gain (858) 0 0 51,324 Gift Aid 0 0 0 14 Corporation tax 19 0 0 0 Total Comprehensive Income 7,807 7,364 8,918 52,281 ----------------------------------------- --------- --------- ---------- ----------
Statement of Financial Position
September (6 monthly) March (Annual) ---------------------- ---------------------- Actual Actual Budget Actual ---------- ---------- ---------- 23/24 22/23 23/24 22/23 ---------- ---------- ---------- Fixed Assets 482,903 436,461 511,662 456,808 Current Assets 27,270 27,999 12,650 13,813 Current Liabilities (23,915) (13,361) (18,970) (20,391) Net Current (Liabilities) / Assets 3,355 14,638 (6,320) (6,578) Total Assets Less Current Liabilities 486,258 451,099 505,342 450,230 Creditor: Amounts Falling Due After More Than One Year (380,844) (356,059) (400,460) (352,623) Provisions For Liabilities: 0 0 0 0 Pension Scheme - Defined Benefit Liability (1,421) (44,478) (1,421) (1,421) Other Provisions (1,816) (913) (173) (1,816)
Total Net Assets 102,177 49,648 103,288 94,370 Income And Expenditure Reserve 102,177 49,648 103,288 94,370 Total Reserves 102,177 49,648 103,288 94,370 --------------------------------------- ---------- ---------- ---------- ----------
Disclaimer
These materials have been prepared by Incommunities solely for use in publishing and presenting its results for the six months ending 30 September 2023.
These materials do not constitute or form part of and should not be construed as, an offer to sell or issue, or the solicitation of an offer to buy or acquire securities of Incommunities in any jurisdiction or an inducement to enter into investment activity. No part of these materials, nor the fact of their distribution, should form the basis of, or be relied on or in connection with, any contract or commitment or investment decision whatsoever. Neither should the materials be construed as legal, tax, financial, investment or accounting advice.
These materials contain statements with respect to the financial condition, results of operations, business and future prospects of Incommunities that are forward-looking statements. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements, including many factors outside Incommunities' control.
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END
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(END) Dow Jones Newswires
December 27, 2023 11:36 ET (16:36 GMT)
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