REG - Peabody Capital PLC - Half-year Report

Marriott InternationalAnnouncement

04/12/2023 10:15

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RNS Number : 4788V  Peabody Capital PLC  04 December 2023

Peabody Group (incorporating Peabody Trust, Peabody Capital PLC, Peabody
Capital No.2 PLC and TCHG Capital PLC).

This is an unaudited consolidated trading update for Peabody Group for the six
months ending 30 September 2023.

Highlights for Peabody Group

                                Six months to September 2023  Six months to September 2022

 Homes in management            108,289                       104,540
 Homes completed in the period  654                           1,004
 Investment in existing homes   100                           65
 Turnover (£m)                  489                           515
 Operating surplus (£m)         131                           137
 Operating margin               27%                           27%
 Surplus for the period (£m)    41                            79
 Drawn debt (£m)                4,680                         4,445
 Available Facilities (£m)      1,313                         1,722
 Accessible Cash (£m)           71                            113

 

Despite the economic challenges, we've increased capital investment in
residents' homes by over 50%, spending £39m more than in the same period last
year. In total we spent £184m in the six-month period, including on building
safety, improving insulation and proactively managing damp, mould and
condensation, repairs and maintenance as well as surveys of the condition of
6,560 residents' homes.

Commenting on the results, Peabody's Chief Financial Officer, Eamonn Hughes
said: "We continue to invest in getting closer to residents through a renewed
local focus, with more neighbourhood teams, proactive condition surveys and a
plan for a more effective and efficient repairs service. We continue to make
progress with our substantial change programme and this trading update
demonstrates that we are prioritising investment."

Financial performance

Peabody's operating surplus held up in the first six months of the year
compared to 2022. Net surplus has reduced principally due to a) higher
interest rates which had yet to fully feed through in the 2022-23 half year,
and b) fewer completions and reduced surplus on joint ventures in the
half-year. This is a function of transactions and completions happening
outside of the reporting period. Our financing costs, including £6m incurred
in break fees, remain within budget, with 77% of our borrowing at fixed-rate
levels.

Turnover on Peabody's core operations has increased and our year-to-date
collection rate has held at 98%, but overall revenues have reduced due to a
planned lower level of sales in the current year. To the end of September our
Financial Inclusion team had received over 1,100 referrals and helped
residents to increase their household income by over £1m. Joint Venture
surpluses and further sales are expected to generate substantial income for
reinvestment later in the year.  The number of unsold homes is substantially
lower than in previous years with many of these either reserved or exchanged
already:

 Unsold new homes - Peabody Group at 30 September       Reserved /
                                                        exchanged       Available   Total
 3 - 6 months                                          3               6            9
 Over 6 months                                         73              90           163

 

Investment in sustainable homes

We now have around 108,000 homes under management within the Peabody Group. In
the six months to 30 September 2023, we invested £100m in our existing homes
compared to £65m in the same period last year, including £43m on our
building safety programme. A further £84m was spent on repairs and
maintenance, compared to £80m in the same period last year. In total
therefore £184m was spent on residents' homes in the last 6 months, which is
consistent with our overall aim to spend £2bn over the next 5 years.

 

78% of our homes are currently rated EPC C or above. In September 2023 we
published our updated Environmental Sustainability Strategy
https://www.peabodygroup.org.uk/media/3v4p0yhh/peabody-sustainability-strategy-23-26.pdf
(https://www.peabodygroup.org.uk/media/3v4p0yhh/peabody-sustainability-strategy-23-26.pdf)
.  This sets out our detailed plans for the next three years, providing the
foundations for our journey to net zero. In October we published our latest
ESG report under the Sustainable Reporting Standard for Social Housing:
https://www.peabodygroup.org.uk/media/a3vdsywd/peabody-esg-report-22-2023.pdf
(https://www.peabodygroup.org.uk/media/a3vdsywd/peabody-esg-report-22-2023.pdf)

We aim to have 82% achieving at least EPC C or above by 2026. To do this we're
installing insulation, improving ventilation and replacing inefficient boilers
and windows in thousands of our existing homes. All our new homes are being
built to at least EPC B.

 

New homes, Development and Sales

 

We invested £268m in our new homes programme over the last six months,
completing 654 new homes and with 470 starts on site in the period. The sales
programme depends on the timing of practical completion and whilst currently
behind schedule we have a strong level of exchanges and reservations in
addition to completed sales. Due to the build programme, there is no
expectation that sales will achieve 2022-23 levels but by 30 September we had
completed £75m in sales, with improved margins at 17%. We're continuing to
carefully manage our development programme and maintaining appropriate
flexibility on the level of future spend and commitments.

Liquidity

We retain very strong access to liquidity, with £1.4 billion of cash and
undrawn facilities to ensure that we can continue to operate and deliver for
the benefit of our residents in challenging times. Our gearing remains low and
77% of our borrowing is on fixed rates. We retain over 42,000 unallocated or
unencumbered properties across the Group with a security value of around
£4bn.

Ratings and certification

We are rated G1, V2 by the Regulator of Social Housing, which was reaffirmed
in September this year following an In-Depth Assessment. We were pleased to
see our A3 rating from Moody's return to a stable outlook in October,
reflecting Peabody's financial resilience and management's response to the
current economic environment, and we continue to hold an A- negative outlook
rating from S&P Global following a recent review.

Transfer of engagements

The transfer of engagements of Catalyst Housing Limited into Peabody Trust
completed on 3 April 2023 followed by a similar exercise for Rosebery Housing
Association Limited into Town & Country Housing on 4 April. This
consolidation of our structure has allowed us to move into the next phase of
transformation, getting closer to residents through a focused approach to
service delivery, with more locally based teams alongside better use of data
and technology across our operations.

Statement of Comprehensive Income - Peabody Group

 £ million                                     Six months to September 2023  Six months to September 2022

 Turnover - from core operations               414                           383
 Turnover - from sales                         75                            132

 Total turnover                                489                           515

 Operating Costs                               332                           299

 Cost of Sales                                 62                            121

 Surplus staircasing/disposal of fixed assets  36                            42

 Operating Surplus                             131                           137

 Net Interest Costs - inc loan break costs     90                            72

 JV Surplus                                    -                             14

 Surplus for the period                        41                            79

 Operating margin                              27%                           27%
 Sales margin                                  17%                           8%

 

Note: Figures quoted in the update are based on unaudited management accounts,
which are subject to review and further adjustments.

Loan break costs £6 million (corresponding period in 2022: £6m)

Contact: Anthony Marriott, Director of Treasury & Corporate Finance or Ben
Blades, Assistant Director Corporate Affairs.

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