Incommunities Financial Result March 2023

Incommunities Treasury PLC

09 October 2023

 

9 October 2023

Incommunities Limited Annual Report and Financial Statements 31 March 2023

Incommunities Treasury Plc's parent company, Incommunities Limited ("Group"), announces the release of its audited financial statements for the financial year ended 31 March 2023. 

Incommunities Limited is one of the largest Registered Providers in Yorkshire, owns and manage 22,672 homes (2022: 22,708) properties across Bradford and Huddersfield, of which 22,652 (2022: 22,681) are social housing properties; this highlights our commitment to provide and maintain high-quality affordable housing for our communities. Our priority remains to provide our residents with safe homes where they feel proud to live and a workplace where colleagues feel valued and can flourish. Our investment in FY23 highlights our commitment to delivering this.

The group is taking necessary actions to return to a G1 status and is in open dialogue with the Regulator in addressing the underlying issues.

In August 2023, John Wright joined Incommunities Limited as Executive Director of Finance. John has more than 20 years of experience in the housing sector, with extensive experience in finance, governance, and change management. John's full profile can be seen on our website.

Key financial highlights:  

-     S&P credit rating: 'A' (outlook negative).

-     Social housing rent: up by £4.4m to £100.5m (2022: £96.1m)

-     Group Turnover: up by £2.3m to £104.4m (2022: £102.1m)

-     Operating margin[1] for the year was 11.7% (2022: 14.9%)

-     Operating surplus for the year was £12.2m (2022: £15.2m)

-     Housing properties at cost (before depreciation and impairment) of £640.5m (2022: £598.5m)

-     The Group's reserves at the year-end are £94.3m (2022: £42.0m)

-     Improvements to existing stock: £29.6m (2022: £27.9m) 

-     Covenant condition satisfied with healthy headroom.

[1] The operating margin includes gains on sale of housing properties.

Credit Rating
Our credit rating is 'A' (outlook negative). S&P Global Ratings issued this in March 2023 and highlights "the increasing investment in existing assets, to address enhanced building and safety standards and the push toward energy efficiency, further exacerbated by inflationary pressures". This is born out through the year-end performance reported.

Regulatory Judgement (G2/V1)

The group retained its V1 status and remains committed to regaining a G1 (currently G2). The group is taking necessary actions to return to a G1 status and is in open dialogue with the Regulator in addressing the underlying issues. A Board governance group was established and an action plan was put in place with priority actions on track at year-end. Updated regulatory judgement is due in October 2023.

Financial Commentary

Income from social housing rent of £100.5m increased by £4.4m compared to the prior year (2022: £96.1m). Group Turnover for the year was £104.4m (2022: £102.1m), an increase of £2.3m on the prior year. This movement is mainly due to the increase in the rental income from social housing letting compared to the preceding year.

Inflation led increase in operating costs and increased spend on fire safety and compliance, resulting in a reduction in operating surplus by £3m compared to the prior year to deliver an operating margin of 11.7%.

We remain committed to investing in our housing stock to improve the quality of housing offered to our residents. During the year, the Group invested £29.6m (2022: £27.9m) through routine and planned works and major repairs to existing stock. The capital investment of £18.9m (2022: £8.5m) involved replacing major components.

The Group's reserves at the year-end are £94.3m (2022: £42.0m), reflecting positive pension movements, operating surplus and the results from a review of fixed assets performed by management. 

All financial loan covenants have been met and have significant headroom. Performance against the financial loan covenants is formally tested by the Group on 31st March each year.

We continue to carry out work to improve the EPC ratings of our properties to ensure that we meet our target of a minimum of EPC C in all our homes by 2030 (47% achieving EPC C in 2023). We are committed to achieving Net Zero across the portfolio by 2050.

Customer safety remains paramount. Our accredited gas safety checks and compliant fire risk assessments are at 99.95%. We are committed to delivering risk-based investment and investment plans across our portfolio.

Incommunities' ambitious development plans are a key element of the growth strategy and support customers to find a home they are proud of. Our development spend of over £42m is supported by a £37m grant successfully secured last year through the Affordable Homes Programme.

Our Statement of Comprehensive Income to 31 March 2023 is shown below:

 

The full audited financial statements for Incommunities are available from the Investor Relations section of our website: Investors | Incommunities Website

Please contact our Executive Director of Finance, John Wright for further information at [e-mail]

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