REG - Anchor Hanover Group - Trading Statement

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27/11/2024 10:15

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RNS Number : 6833N  Anchor Hanover Group  27 November 2024

Anchor Hanover Group

27 November 2024

 

Anchor Trading Statement for six months to 30 September 2024

Unaudited trading update for the six months to 30 September 2024 for Anchor
Hanover Group, trading as Anchor

Anchor, England's largest provider of specialist housing and care for people
in later life, announces its trading highlights and unaudited financial
results for the first half of the 2024/25 financial year.

Highlights

·  Turnover was £332.5m (September 2023: £308.4m, 7.8% increase), with
higher rental income, care fees and occupancy levels driving the year-on-year
increase.

·    EBITDA was £64.7m (September 2023: £50.9m, 27.1% increase).

·    EBITDA margin (excluding property sales) was 20.0% (September
2023:17.0%).

·   EBITDA MRI was £39.9m (September 2023: £22.5m, 77.3% increase),
reflecting stronger EBITDA and a slower pace of planned works delivery in the
first half year compared with the same period in FY24.  Delivery is set to
accelerate in the final six months, in line with full year expectations.

·   Operating margin was 9.3% (September 2023: 6.5%), with lower utility
costs combining with higher income to offset pay and property-related costs
that remain exposed to higher inflation.

·    Gearing was 28.6% (September 2023: 30.7%), comparatively low for the
social housing sector.

·    Liquidity remains strong with undrawn facilities and cash of
£283.1m.

·    EBITDA MRI Interest Cover was 2.3x (September 2023: 1.4x),
attributable to higher income and lower capitalised repairs.

·    A+ stable rating from Standard & Poor's ("S&P") affirmed in
March 2024 (first issued March 2021).

·   G1/V1 governance and viability rating from the Regulator of Social
Housing reaffirmed in November 2023.

 

The consistency of Anchor's corporate strategy and the financial strength and
resilience of the Group through economic uncertainty and political change have
enabled continuing progress to be made against the four strategic themes of
the corporate plan: more and better homes; more opportunities for colleagues;
being more efficient; and being more influential on behalf of older people.

Anchor's low gearing, carefully managed debt profile and strong liquidity
position provide both stability and a strong platform for growth, with our
investment activities and business operations managed within a highly
effective risk control framework and in line with conservative fiscal
policies.

Our on-going change programme sustains our focus on margin improvement and
advances the transformation of our service offer so that residents continue to
live in safe, affordable and well-maintained homes, and have better, more
efficient ways to interact with us.  In addition, our new Care Strategy -
with its focus on care quality outcomes, financial sustainability, resident
satisfaction and the colleague experience - is expected to unlock significant
and lasting benefits.

We welcome the direction of travel signalled by the government in the Autumn
Budget to bring more financial stability to the sector. The commitment to
consult on a new, five-year social housing rent settlement, £500m of
investment into the existing Affordable Homes Programme and £3.4bn made
available to fund decarbonisation will help support our commitment to increase
the number of new, affordable homes and make improvements to our existing
homes. However, in common with others in the sector, we are mindful of the
challenges posed by changes to employer National Insurance thresholds and
rates.  The impacts of all these changes will be reflected in our updated
long-range plans.

Operational highlights

Anchor's strong reputation for providing high quality services, coupled with
robust underlying demand, has seen continued high levels of occupancy in both
rented housing (September 2024: 98.9%, March 2024: 98.7%), and in care
(September 2024: 90.1%, March 2024: 88.9%).

Operating costs have benefited from a continued focus on efficiency to drive
margin improvement and derive best value for money for the Group and its
residents.

A targeted reduction in agency usage across the care portfolio has seen agency
spend as a percentage of total care staffing costs come down year-on-year
(September 2024: 7.1%, September 2023: 14.0%), benefiting financial margins
and service delivery.

The successful forward purchasing of gas and electricity on a flexible basis
continues to provide benefits both to Anchor and to our residents, reducing
the energy-related component of our service charges and improving the
affordability of our homes.

Such measures have provided a partial offset to inflation-linked increases to
pay and property-related costs, and contributed to an operating margin of
9.3%, which is up year-on-year (September 2023: 6.5%) and when compared with
the annualised result to 31 March 2024 (5.8%).

Property sales have been lower than expectations in the first half of the year
and are expected to remain so for the remainder of FY25 while revised sales
and marketing strategies take effect.

EBITDA MRI to September 2024 of £39.9m (September 2023: £22.5m) is
comparatively better due principally to stronger EBITDA performance as well as
the slower pace of delivery of capitalised major repairs (MRI) in the current
year. MRI spend to September 2024 was £24.8m compared with £28.4m for the
six months to September 2023, where the delivery for the same period last year
was a greater proportion of the annual programme. As planned, MRI spend is
accelerating in the second half of FY25 to meet full year programme
expectations.

Net debt and liquidity

As at 30 September 2024, net debt was £801.8m (September 2023: £822.6m) with
net cash inflows before loan drawdowns of £16.0m reducing net debt.

In July 2024, Anchor made further drawdowns totalling £100m from its private
placement shelf facilities with Legal & General Investment Management and
Sunlife Capital Management.  This takes the total drawings on these
facilities to £125m as we continue to increase our provision of affordable
and energy-efficient homes for people in later life.

Liquidity headroom increased following these drawdowns and overall liquidity
remains strong with undrawn available loan facilities and cash of £283.1m
(September 2023: £155.0m). Together with the retained bond capacity of £100m
nominal value, we remain well-positioned to deliver on our strategic
objectives.

Acquisitions and development

The growth in Anchor's care portfolio has continued with the acquisition of a
65-bed, luxury care home in Roundhay, Leeds, in October 2024. Anchor now owns
and manages 121 care homes across England.

In our housing portfolio, 96 new homes were completed, and 395 homes started
on site in the six months to 30 September 2024, as part of a larger current
Board-approved pipeline of ca. 1,400 homes.

Our core aim is to deliver an average of at least 500 new homes per year over
a rolling 10-year period. The programme will be split with an approximate mix
of 70% for social or affordable rent and up to 30% of older people's shared
ownership (OPSO) homes. Our developments will mostly be mixed tenure
independent living schemes, predominantly apartments for older people with a
local mix of low rent and shared ownership homes. Some schemes will be
delivered for 100% social or affordable rent, where appropriate and supported
by our Local Authority partners. This mix of tenures will deliver a positive
contribution to Anchor's long-term financial plan.

Our new homes will be environmentally sustainable, meeting a minimum average
SAP rating of 87 and increasing in line with our Environmental Sustainability
and Net Zero Carbon Strategy to achieve net zero readiness by 2050.

Residents and colleagues

We welcome the new Consumer Standards set by the Regulator of Social Housing
that came into effect on 1 April 2024 and in due course we will attract a
rating that will sit alongside our G1/V1 regulatory ratings. The benefit of
new regulation is greater scrutiny and transparency over the ways in which we
ensure our residents are safe in their homes and are listened to.

We continue to place an emphasis on tangible resident engagement, safety, and
inclusion. Our change programme centres around service and technology
improvements that deliver an efficient, affordable service that meets the
diverse needs of our residents.

We acknowledge that our colleagues and customers continue to feel the effects
of rising costs and we continue to provide a broad range of initiatives to
support those who need it most. In the past six months our BeWise team has
secured £5.6m additional cash for residents by way of access to additional
benefits; up 60% from September 2023 (£3.5m).

We have ringfenced £0.3m into a hardship fund that supports residents and
colleagues with household bills. The issuance of vouchers under this scheme
was up 20% year-on-year.

Our continued accreditation as a Living Wage Employer means we are committed
to paying colleagues the new Real Living Wage rate announced in October 2024.
Anchor was the first large provider of care and housing to pay all colleagues
at or above the Real Living Wage. It continues to be part of a reward and
wellbeing offer to attract and retain staff in a competitive marketplace. We
are also proud to have the prestigious Gold status accreditation from
Inclusive Employers for our approach to colleague diversity and inclusion.

Thank you

The Board is pleased to present these half year results which evidence the
continuing dedication and commitment of our colleagues to deliver the services
on which our residents depend.  We are similarly very grateful to the many
partners and stakeholders who work with us for the benefit of our residents.

 

Amanda Holgate, Chief Financial Officer

27 November 2024

 

Unaudited Financial Statements for the six months to September 2024

Comparatives are with Anchor's consolidated, audited year end results to 31
March 2024 and unaudited results for the six months ended September 2023.

                                         Group Statement of Comprehensive Income
 Figures in £m                                                                   Six months to 30 September 2024  Six months to 30 September 2023  Year ended 31 March 2024
 Turnover from ongoing operations                                                325.7                            300.3                            614.5
 Turnover from property sales                                                    6.8                              8.1                              14.2
 Turnover                                                                        332.5                            308.4                            628.7
 Operating costs from ongoing operations                                         (294.4)                          (280.2)                          (572.1)
 Cost of sales - property sales                                                  (7.4)                            (9.0)                            (22.3)
 Surplus on disposal of fixed assets                                             0.1                              0.8                              2.4
 Operating surplus                                                               30.8                             20.0                             36.7
 Net interest costs                                                              (17.4)                           (16.1)                           (35.6)
 Taxation                                                                        -                                -                                -
 Surplus for the period                                                          13.4                             3.9                              1.1

 Operating margin before goodwill amortisation and excluding property sales      11.0%                            8.5%                             8.7%
 contribution
 Operating margin before goodwill amortisation                                   10.6%                            8.0%                             7.3%
 Operating margin                                                                9.3%                             6.5%                             5.8%
 EBITDA MRI(1)                                                                   39.9                             22.5                             54.4
 EBITDA MRI - Interest cover(2)                                                  2.3x                             1.4x                             1.5x

1.     Group operating surplus including property proceeds, less
amortisation of social housing grant, less Government capital grants taken to
income, add back depreciation and impairment attributed to retirement housing
to let and residential care homes, add back goodwill amortisation, less
improvements to existing properties capitalised

2.     EBITDA MRI including property proceeds, divided by interest and
financing costs less interest receivable

 

                Group Statement of Financial Position
 Figures in £m                 As at 30 September 2024  As at 30 September 2023  As at 31 March 2024
 Goodwill                      26.2                     34.4                     30.5
 Tangible fixed assets         1,524.0                  1,400.3                  1,525.6
 Other investments             0.1                      0.1                      0.2
 Total long-term assets        1,550.3                  1,434.7                  1,556.2
 Properties held for sale      217.9                    272.1                    171.5
 Cash                          54.5                     15.4                     55.8
 Other current assets          46.9                     65.1                     56.4
 Total current assets          319.3                    352.6                    283.7
 Loans                         (618.4)                  (595.3)                  (618.6)
 Finance lease obligations     (237.9)                  (242.6)                  (239.0)
 Grants                        (223.5)                  (207.4)                  (211.7)
 Pension liabilities           -                        -                        -
 Other liabilities             (184.2)                  (145.0)                  (178.3)
 Total liabilities             (1,264.0)                (1,190.4)                (1,247.6)

 Total net assets              605.6                    596.9                    592.3

 Reserves                      605.6                    596.9                    592.3

 Gearing(3)                    28.6%                    30.7%                    28.9%

3.     Net debt divided by historical cost of completed properties

 

 

Anchor Hanover
Group

Derya Filiz

Head of External Communications

2 Godwin Street

Bradford

BD1 2ST

07713 085004

derya.filiz@anchor.org.uk

communications@anchor.org.uk

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