Yorkshire Housing Finance plc Annual trading update for 18/19 (1039H)

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RNS Number : 1039H

Yorkshire Housing Finance plc

29 July 2019

Yorkshire Housing Group trading update for the year ending 31 March 2019

-- Yorkshire Housing Group (YH) is today issuing its consolidated trading update for the year ended 31 March 2019.

   --    These figures are unaudited and for information purposes only. 

Highlights for the year ended 31 March 2019

   --    YH owns and manages 16,697 homes (2018: 16,606 homes) 
   --    Turnover for the period was GBP113m (2018: GBP101m) 
   --    Social housing lettings contributed 75% of total turnover (2018: 86%) 
   --    Operating surplus was GBP35m (2018: GBP33m) 
   --    Overall operating margin (including asset sales) was 31% (2018: 33%) 
   --    Net margin on sales programme was 25% (2018:21%) 
   --    Social housing lettings interest cover was 1.3x (2018: 1.7x) 
   --    Gearing was 47% (2018: 45%) 
   --    283 new homes were delivered during the year and a further 917 on site 
   --    And we are on track towards our strategic priority to deliver 3,120 new homes by 2021 

-- YH also successfully secured GBP62m of government grant during the year to provide an additional 1,300 homes for social and affordable rent and shared ownership after 2021

   --    Moody's rating maintained at A3 

Commenting on the results, Guy Millichamp, Director of Finance, said:

We are pleased to present another year of strong financial performance with our operating surplus increasing 6% per cent and turnover and profits rising by 12% despite a third year of rent cuts. All our surpluses are reinvested in our business of providing homes and support for our customers.

We have built and completed 283 new homes in the year, and have a further 917 new homes on site to be completed in the next year or two. Of these, 23% are for outright sale, with the rest to be let at social or affordable rents, or for shared ownership. Outright and shared ownership sales have been strong, with 29 outright sales and 124 shared ownership first tranche sales during the year.

While our underlying social housing letting margin has again been impacted by the rent cut (29% vs 32% in 2018), the business continues to deliver a margin of 31% overall.

We continue to improve our efficiency which means that our headline social housing cost per unit has reduced by 4%. Further investment in new technology will deliver greater efficiency and improved metrics in the medium term though will incur short term cost

Our balance sheet remains strong, with increases of GBP50m in fixed assets and stock available for shared ownership or sale funded from cash reserves and operating surpluses.

Just after the year end we were pleased to welcome our new chief executive Nick Atkin who brings a wealth of experience and track record of driving performance in the housing sector.

Yorkshire Housing is committed to improving the sustainability of our portfolio and the wellbeing of our customers. Through our community based tenancy support teams we have met our plan targets early, specifically generating GBP10m of social value and helping over a thousand people into work or training.

We continue to offer opportunities to apprentices directly (101 since the programme started) on top of partner programmes, and we were highly commended in the national employer of the year awards for our work on this scheme.

Since the year end, we have announced the development of 46 new homes on a brownfield site in Halifax which will be developed by energy and regeneration specialist, ENGIE. We have diversified our form of delivery, using timber frames on two new sites (345 homes in total). On average this non-traditional approach reduces build times by a third and saves 0.8 tonnes of CO(2) for every cubic metre of wood used.

Unaudited Financial Metrics

 
                                               31 Mar          31 Mar 
                                                 2019            2018 
   Statement of comprehensive income           Actual          Actual 
-----------------------------------------  ----------  -------------- 
 
   Turnover from social housing lettings       GBP85m          GBP87m 
   Turnover                                   GBP113m         GBP101m 
   Operating surplus (including asset          GBP35m          GBP33m 
   sales)                                      GBP18m          GBP16m 
   Surplus after tax 
-----------------------------------------  ----------  -------------- 
 
                                               31 Mar          31 Mar 
                                                 2019            2018 
   Margins                                     Actual          Actual 
-----------------------------------------  ----------  -------------- 
 
  Operating margin (1) on social housing 
   lettings (2)                                   29%             32% 
   Overall operating margin (3) (inc 
    asset sales)                                  31%             33% 
   Overall operating margin (3) (exc 
    asset sales)                                  29%             31% 
   Operating margin on operating sales 
    (4)                                           26%             21% 
-----------------------------------------  ----------  -------------- 
 
 
                                               31 Mar          31 Mar 
                                                 2019            2018 
   Key financial ratios                        Actual          Actual 
-----------------------------------------  ----------  -------------- 
 
  EBITDA MRI / Interest cover (5)                178%            156% 
   Gearing (6)                                    47%             45% 
   Social housing interest cover (7)            1.3 x           1.7 x 
-----------------------------------------  ----------  -------------- 
 
 
                                                               31 Mar 
                                                                 2019 
   Liquidity                                                   Actual 
-----------------------------------------  ----------  -------------- 
 
   18 month liquidity requirement (8)                         GBP102m 
   Cash and undrawn facilities (9)                            GBP133m 
   Unencumbered stock                                     1,931 homes 
-----------------------------------------  -------------------------- 
 
 
   Credit rating 
-----------------------------------------  ----------  -------------- 
 
   Moody's                                                A3 (stable) 
 
 

Notes:

   1     Operating surplus / turnover 
   2     General needs, supported housing, affordable rent and low cost home ownership tenures 

3 Operating margin including asset sales includes all activity; operating margin excluding assets removes gain or loss on disposal of assets including shared ownership staircasing profits

4 Operating surplus on first tranche shared ownership and open market sales / turnover from first tranche shared ownership and open market sales

5 (Operating surplus + depreciation + amortisation - capitalised major repairs) / net interest paid

   6     Net debt / housing assets at historic cost 
   7     Operating surplus on social housing lettings / net interest paid 
   8     18 month cash flow requirement 
   9     Cash and undrawn facilities 

This trading update contains certain forward looking statements about the future outlook for YH. These have been prepared and reviewed by YH 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 the statement should not be construed as solicitation/recommendation to invest in YH's bonds.

For further information, please contact:

Guy Millichamp, Director of Finance:

   tel [phone]   [e-mail] 

https://www.yorkshirehousing.co.uk

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July 29, 2019 13:09 ET (17:09 GMT)