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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