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Peabody Capital No 2 (41LI)

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Thursday 14 November, 2019

Peabody Capital No 2

Half-year Report

RNS Number : 4223T
Peabody Capital No 2 PLC
14 November 2019
 

Peabody Trust Trading Update for the period ending 30 September 2019

This is an unaudited, consolidated trading update for Peabody for the six months ending 30 September 2019.

Highlights

On 9 May 2019, Town & Country Housing (TCH) joined the group as a subsidiary of Peabody Trust. The  results for the period are shown both for the group excluding TCH, and with it consolidated from 1 April 2019.


Including TCH

Excluding TCH


6 months to September
 2019

6 months to September
 2019

6 months to September
 2018

Homes in Management

65,255

                56,274

                56,187

Homes completed in the period

                     447

                     411

                     470

Unit starts in the period

442

                     386

286

Turnover (£m)

318.3

284.7

                  261.1

Operating Surplus (£m)

104.8

89.4

                    78.7

Operating margin

33%

31%

30%

Sales margin

23%

23%

23%

Surplus for the period (£m)

67.2

59.2

                    53.6

Drawn debt (£m)

2,661

2,309

               2,267

Available facilities (£m)

1,245

1,210

                  574

Cash (£m)

156

141

                  316

 

As a result of the merger with TCH, a gift on acquisition of £0.3bn (subject to audit) is expected to be included in Peabody Trust's statutory accounts for the year ended 31 March 2020,  but is not reflected within this trading update.

Commenting on the results Susan Hickey, CFO, said:

"This is a strong performance in the prevailing environment, with increased turnover and surplus. Operating margins have improved compared to the equivalent period in 2018 on a like for like basis with a further improvement when TCH is included.  Sales margin of 23% reflects a performance on price and volume which is in line with expectations. Liquidity is strong, with £1.4 billion in available facilities and cash. Interest cover including capitalised repairs (EBITDA-MRI) is strong at 234% "

Development Programme

We continue to progress with our development programme using a prudent, risk-based approach, including entering into new commitments in accordance with our plans.

The number of unsold dwellings at 30 September 2019 for the group (including TCH) were as follows: 

 

 

Reserved or exchanged 

Available 

Total 

Under 3 months 

8 

23 

31 

3-6 months 

19 

37 

56 

Over 6 months 

30 

33 

63 

 

Group Strategy

The strategy for 2019 - 2022 reaffirms Peabody's commitment to:

• Develop and deliver reliably good modern services

• Build and maintain the best quality developments

• Work with local communities and build long term partnerships

• Grow and use our position of influence to create positive change

Fire Safety

Peabody continues to put resident safety first, prioritising fire safety improvements and remedial measures in the property management programme. We are proactively reviewing the composition of our taller buildings, developing a system of prioritisation which combines, among other things, storey height, building complexity, specific building elements and the vulnerability of residents. All of these factors help us categorise the risk of each building. Any necessary actions following from this are prioritised, and a programme of works is being planned. In the meantime, interim measures are in place where necessary, including "waking watch" fire wardens, which has had an impact on operating surpluses.

Peabody is a member of the post Hackitt 'early adopters' group in order to:

·    work through the recommendations within the report

·    understand how to deliver these within our organisation, and

·    use our experience to support the development of policy in this crucial area.

Liquidity

Over the last six months Peabody has strengthened its funding and liquidity position, completing a number of new funding arrangements. These include funding from the EIB and a facility arrangement which recognises social value, incentivising Peabody  to deliver training to provide childcare places. As a result, as at 30 September 2019 Peabody had £3.9 billion of total funding, of which £1.2 billion was available to draw, subject in some instances to the completion of the security charging process.

Key Updates

On 8 July 2019, Standard & Poor's (S&P) confirmed a rating for both Peabody Trust and TCH of A stable. On 30 September 2019, Moody's reaffirmed Peabody's credit rating as A3 stable. On 8 November 2019, Moody's changed the outlook on the UK's Aa2 sovereign rating from stable to negative, but Peabody's rating and outlook is unchanged. Both ratings reflect the group's strong balance sheet, modest debt burden, and interest coverage in the future compared to the forecast increasing exposure to market sales. Peabody remains G1/V2 compliant under the Regulator of Social Housing's Governance and Viability assessments.

On 14 August 2019, Peabody announced that the current Chief Financial Officer, Susan Hickey, will leave Peabody after 10 successful years. Susan will leave in early 2020 and the process for recruiting a replacement is well underway with an announcement to be made in due course.

On 23 October 2019, Peabody formed a joint venture partnership with international property and infrastructure group Lendlease, for long term delivery of a significant development at Thamesmead waterfront in south-east London.



 

Unaudited Financial Statements and key metrics for the six months to September 2019

Statement of Comprehensive Income


Including TCH

Excluding TCH


6 months to September
 2019
£m

6 months to September
 2019
£m

6 months to September
 2018
£m

Turnover

                  318.3

                  284.7

                  261.1

Operating costs & cost of sales

                  233.5

                  214.0

                  191.6

Surplus on disposals of fixed assets

                    20.0

                    18.7

                       9.2

Operating Surplus

                  104.8

                    89.4

                    78.7

Net interest costs

                    37.5

                    30.2

                    25.1

Taxation

                      0.1

                         -  

                           -  

Surplus for the period1

                    67.2

                    59.2

                    53.6





Operating margin

33%

31%

30%

Sales Turnover £m

75.4

68.8

47.9

Sales margin £m

17.6

15.9

10.8

Sales margin %

23%

23%

23%

EBITDA - MRI2

234%

236%

315%

 

Statement of Financial Position


Including TCH

Excluding TCH


September
 2019
£m

September
 2019
£m

March
 2019
£m

Housing Properties

               6,302.5

               5,513.9

               5,426.0

Other tangible fixed assets1

                  555.9

                  539.8

                  510.5

Other investments

                    65.7

                    65.7

                    67.5

Net current assets

                  682.9

                  674.7

                  579.7

Total assets less current liabilities

               7,607.0

               6,794.1

               6,583.7

Capital and reserves

               3,290.9

               2,876.2

               2,816.9

Loans > one year

               2,720.9

               2,337.6

               2,183.1

Other long term liabilities

               1,595.2

               1,580.3

1,583.7

Reserves and long term liabilities

               7,607.0

               6,794.1

               6,583.7





Gearing3

37%

36%

34%

 

 

 

1.      Revaluations of investment properties are performed at year end only

2.      Operating surplus excluding depreciation and amortisation, less capitalised repairs / interest expense

3.      Net debt / non-current assets



 

 

Disclaimer

The information set out above ("the Update") contains certain forward-looking statements about the future outlook for Peabody Trust and its subsidiaries (together "the Peabody Group"). Statements in the Update, including those regarding possible or assumed future performance of the Peabody Group, or the sectors in which Peabody operates, should be treated with caution, as although based on reasonable assumptions, they 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. Further, the information is provided as at the date of this Update and no obligation is accepted to update the information, except as required by law or regulation. The Update should not be construed as an offer or solicitation to buy or sell any securities issued by Peabody Capital PLC or Peabody Capital No.2 PLC, and nothing in this Update should be construed as a recommendation or advice to invest in any such securities

For more information, contact: Benjamin Blades, Senior Corporate Affairs Manager, Peabody on 07875020950 or [email protected]

 


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