Correction: Interim Financial Results
Correction to announcement number 5052N made at 10:00 on 25/11/2024 (Half-year Report): That RNS announcement, in one section, included the incorrect number of new home completions and starts on site. All other information was correct:
Interim Financial Results for the 6 months ending 30 September 2024
The Guinness Partnership is pleased to report our results for the six months to 30 September 2024. These results are based on unaudited management accounts and operational performance reports.
Group Highlights
· Turnover of £261m (£224m in September 2023).
· Investment in and maintenance of existing homes totalling £99m.
· Investment of £98m on new homes with 567 new homes completed including 497 affordable homes, and 347 homes starting on site.
· Liquidity comprising cash and undrawn loan facilities of £915m.
· Current tenant arrears reduced to 3.97% for TGPL and 4.02% for SBHA.
· Significant progress on integrating Shepherd's Bush Housing Association into the Group - working towards a full transfer of engagement on, or around, 1 April 2025.
· Commenced exit from delivery of regulated Care activities. Full exit expected December 2024, improving operating surplus by £1.2m (annualised).
· Retained credit rating of A3/Stable from Moody's, confirmed 6 November 2024.
Financial Indicators
|
Group Performance |
Q2 2024/25 |
Q2 2023/24* |
|
Operating Surplus |
£55.1m |
£50.0m |
|
Operating Margin (overall) |
18.9% |
21.2% |
|
Total Surplus |
£16.4m |
£20.6m |
|
Net Margin |
6.3% |
9.2% |
|
EBITDA-MRI Interest Cover RSH measure |
111.5%
|
121.9% |
|
EBITDA-MRI Interest Cover (adjusted from one off items)
|
111.5% |
124.7% |
|
Interest cover (TGPL tightest lender covenant) |
197.5% |
179% |
|
Gearing |
43% |
41% |
|
Available Liquidity |
£915m |
£740m |
|
Cash and cash equivalents |
£57.0m |
£62.2m |
* excludes results of Shepherd's Bush Housing Association, who joined the Group on 4 December 2023
Whilst the operating environment for Registered Providers remains challenging, The Guinness Partnership remains financially resilient and continues to deliver effective core services and additional support to our tenants. In the six months to 30 September 2024 the Group invested £99m on maintaining and improving our existing homes, and spent a further £98m on developing new homes.
In common with others in the social housing sector, we are delivering fewer new homes than we had originally set out to do, due to the need to invest in our existing homes and the broader economic environment. Contractor failure within the construction sector has also impacted our new homes delivery programme and capacity to invest. However, we remain committed to developing new homes and during the six months to 30 September 2024, we completed 567 new homes (of which 497 were affordable) with a further 347 homes starting on site. We continue to monitor and manage the risks associated with delivering new homes to ensure that our exposure is at an appropriate level.
Operating performance - The Guinness Partnership Limited (TGPL)
TGPL is reporting an operating surplus of £51.6m at the end of September 2024 and an operating margin of 15.8%.
Turnover has increased to £232.9m (2023/24: £217.7m) primarily driven by the 2024 rent increase of 7.7%. Operating costs have increased to £184.5m (2023/24: £169.0m). We continue to experience cost and demand pressures within our responsive repairs service.
Net financing costs of £36.4m were incurred in the period. Financing costs have increased due to additional borrowing of £70m to fund our development programme. 71% of our drawn debt is at fixed rates of interest, providing some protection against interest rate increases.
For the half year, TGPL is reporting a total surplus of £18.1m (2023/24: £20.9m), with the year-on-year reduction caused primarily by increased net interest costs.
£92.7m has been spent on our development programme with a further £80.4m invested in our existing homes. This includes building safety related expenditure of £6.6m.
The sale of 138 shared ownership homes completed in the first half of the year, generating a surplus of £0.4m. Shared ownership staircasing has generated an additional surplus of £1.8m. We had 223 shared ownership and outright sale properties unsold at 30 September 2024, 176 of which had been unsold for less than three months and 98 of which were reserved by buyers.
Current tenant arrears have decreased to 3.97% (March 2024: 4.05%). We focus on proactive debt management using a data led approach to identify customers at risk of arrears, and then take appropriate preventative measures.
Our building safety programme is progressing to plan. During the year we have continued to deliver our comprehensive Building Safety Action Plan to ensure we are meeting our obligations under the Building Safety Act 2022. We have 41 buildings that meet the definition of Higher Risk Residential Buildings (HRRBs) under the Building Safety Act 2022. All of these have been assessed and some form of remediation work is required to seven of these.
We have a further 446 medium and low rise buildings identified as requiring an external wall investigation. All medium rise properties are scheduled to be investigated by March 2025, with 73% of this programme complete at the half year. All low rise properties are scheduled for inspection in 2025/26.
Compliance performance remains strong with 100% compliance on asbestos surveys, 99.1% on water safety assessments, 99.8% communal electrical testing and 100% on lift servicing. At September, one property did not have an in-date gas safety certificate due to access issues.
Operating Performance - Shepherds Bush Housing Association
In the six months to 30 September 2024, SBHA generated an operating surplus of £1.2m against turnover of £23.5m, delivering an operating margin of 5.2% and an overall surplus after fixed asset disposals of £0.9m. All loan covenants have been met for the period.
The respective Boards of SBHA and TGPL are proposing to move forward with full merger through a Transfer of Engagements from SBHA to TGPL, and are commencing a programme of engagement and consultation with residents, staff, and other significant stakeholders. Subject to consideration of the consultation responses and securing all necessary consents, we are targeting completion of the Transfer of Engagements on or around 1 April 2025.
Credit and regulatory ratings
Our credit ratings with Standard & Poor's and Moody's are A- (stable) and A3 (stable) respectively.
Moody's affirmed our A3 (stable) rating on 6 November 2024 following completion of their annual rating review for 2024.
On 27 March 2024, following a stability check, the Regulator of Social Housing confirmed our regulatory ratings were unchanged at G1 for Governance and V2 for Viability.
Contact details
Rob Elliott, Director of Corporate Finance robert.elliott@guinness.org.uk
www.guinnesspartnership.com/about-us/for-investors
Disclaimer
The information contained herein (the "Trading Update") has been prepared by The Guinness Partnership Limited ("TGPL") and is for information purposes only. The Trading Update should not be construed as an offer or solicitation to buy or sell any securities issued by TGPL or any of its subsidiaries ("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.
Statements in the Trading Update, including those regarding possible or assumed future or other performance of the Group as a whole or any member of it, industry growth or other trend projections may constitute forward-looking statements and as such involve risks and uncertainties that may cause actual results, performance or developments to differ materially from those expressed or implied by such forward-looking statements. Accordingly, no assurance is given that such forward-looking statements will prove to have been correct. They speak only as at the date of the Trading Update and neither TGPL nor any other member of the Group undertakes any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments, occurrence of unanticipated events or otherwise.
None of TGPL, any member of the Group or anyone else is under any obligation to update or keep current the information contained in the Trading Update. The information in the Trading Update is subject to verification, does not purport to be comprehensive, is provided as at the date of the Trading Update and is subject to change without notice. Financial results quoted are unaudited. No reliance should be placed on the information or any projections, targets, estimates or forecasts and nothing in the Trading Update is or should be relied on as a promise or representation as to the future. No statement in the Trading Update is intended to be an estimate or forecast. No representation or warranty, express or implied, is given by or on behalf of TGPL, any other member of the Group or any of their respective directors, officers, employees, advisers, agents or any other persons as to the accuracy or validity of the information or opinions contained in the Trading Update (and whether any information has been omitted from the Trading Update). The Trading Update does not constitute a recommendation, nor is it legal, tax, accounting or investment advice.
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