29th Nov 2022 07:00
Anchor Hanover Group
29 November 2022
Anchor Trading Statement for six months to 30 September 2022
Unaudited trading update for the six months to 30 September 2022 for Anchor Hanover Group, trading as Anchor
Anchor, the largest not for profit operator of housing for older people and, following its recent acquisition of 11 care homes, the fourth largest residential care home operator in England, announces its trading highlights and unaudited financial results for the first half of the 2022/23 financial year.
Anchor is working hard to alleviate the cost-of-living crisis for both residents and colleagues with initiatives to support those most in need and continues to be a voice for older people.
Anchor is proud to have gained its Living Wage Employer Accreditation as part of our commitment to our colleagues who continue to work hard to ensure that our residents can love living in later life. We are extremely grateful to our colleagues for all that they do for residents.
Anchor’s reputation for providing high quality services, coupled with strong underlying demand for our services has seen continued high levels of occupancy in rented housing, care occupancy improve close to pre-covid levels, and delivery of both rent and care fee growth.
Anchor engaged positively with the government consultation on social housing rents and is working with local authorities looking at the fair cost of care fees.
The first half of this financial year has seen economic pressures from rising inflation, particularly in energy, and rising interest rates, coupled with political uncertainty both in the UK and abroad. Anchor has been somewhat insulated from interest rate rises and energy price hikes in the period due to having largely fixed interest rate debt and energy contracts in place.
Anchors low gearing, strong liquidity and low-cost fixed rate debt from its sustainability linked public bond issued in July 2021 mean that Anchor is well placed to continue to progress with the Four Mores of the strategic plan – More and better homes, More opportunities for colleagues, More influence for older people and More Efficient.
Inflation across the economy will continue to be challenging for all sectors including social housing and care. Anchor remains committed to improving efficiency within its operations and to meet its long-term objectives of investing in and developing more new homes for older people in a sustainable way.
Peter Haspel, Interim Chief Financial Officer
29 November 2022
Highlights
Continued strong underlying demand and high occupancy in rented housing and care occupancy improvement to near pre-covid levels.Growth in rented housing rental levels and care fees.Margins at 9.8% were marginally below the full year 2022 (10.2%) but down on the half year to September 2021(13.7%) reflecting increased operational costs particularly in staffing and repairs. Operating surplus before exceptional items was £26.2m on turnover of £266.1m (half year to September 2021 operating surplus £34.8m on turnover of £253.8m). Operating cost inflation was an increasing factor during the first half year.Return to a more evenly spread annual programme of capitalised planned major repairs compared to the half year ended 30 September 2021, when covid impacted on works. EBITDA MRI for the six months to September 2022 of £31.5m compared to £46.4m to September 2021. Strong liquidity with £297m of undrawn available loan facilities and cash available to fund the strategic plan.Gearing at a low level for the sector at 22.0% (March 2022: 21.4%).Interest cover including capitalised repairs (EBITDA MRI) strong at 2.9x (March 2022: 3.0x).Anchor maintains an A+ stable rating from S&P and G1/V1 rating from the Regulator of Social Housing.Our second Sustainability Report was published in October 2022, showing the breadth of our positive impact and how we continue to ensure Anchor is a well-governed and sustainable organisation.Financial Highlights
Figures in £m | 6 months to 30 Sept 2022 | 6 months to 30 Sept 2021 | FY to 31 March 2022 |
Turnover | 266.1 | 253.8 | 526.2 |
Operating surplus before exceptional items | 26.2 | 34.8 | 53.8 |
Operating margin before exceptional items % | 9.8% | 13.7% | 10.2% |
EBITDA MRI | 31.5 | 46.4 | 64.8 |
Operational highlights
Anchor’s strong reputation for providing quality services, coupled with robust underlying demand for our services, has seen continued high levels of occupancy in rented housing (Sept 2022: 98.8%, March 2022: 98.5%), and care occupancy improve close to pre-covid levels (Sept 2022: 86.0%, March 2022: 83.9%). Turnover of £266.1m is up £12.3m (4.8%) on the same period in 2021 due to annualised rent and fee uplifts combined with improved occupancy levels.
Operating margins at 9.8% were marginally below full year 2022 (10.2%) although down on the first half year 2022. Anchor aligned all hourly rate roles with Living Wage Foundation rates from 1st December 2021, which combined with higher agency staff usage, higher maintenance activity and higher sales costs of developed property, increased operating costs this half year compared to the first half year last year (September 2022: £239.9m, September 2021: £219.0m).
Anchor‘s commitment to achieve Living Wage Employer Accreditation made us the first large provider of care and housing to pay all our colleagues, whatever their age or wherever they work, at or above the Real Living Wage and is part of a reward and wellbeing offer to attract and retain staff in a competitive marketplace.
Interest charges for the six months to September 2022 of £11m were £5.5m lower than the six months to September 2021, largely reflecting realised losses of £6.2m on interest rate swaps closed out as part of the refinancing in 2021.
EBITDA MRI for the six months to September 2022 of £31.5m (September 2021: £46.4m) having delivered more capitalised major repairs than was possible in the same period last year when there were ongoing effects of covid restrictions (MRI spend Sept 2022: £21.0m, Sept 2021: £14.3m).
Anchor has worked to alleviate the cost-of-living crisis for both residents and colleagues with initiatives to support those most in need. The “Be Wise” support assisting residents to claim the benefits they are entitled to and to get the best deal on their energy has experienced sustained, high demand over the past 18 months, with the team receiving c.900 calls per month. Anchor gained its Living Wage Employer Accreditation as part of our commitment to our colleagues who continue to work hard to ensure that our residents can love living in later life.
Development and Acquisitions
Anchor has plans to build 5,700 new affordable and energy efficient homes for older people, in a balance of tenures. Since 2019 Anchor has completed 305 homes and has a further 852 homes under construction. Our new developments are designed to achieve Energy Performance Certificate rating of B or better as part of Anchor’s ongoing commitment to sustainability.
Anchor contracted to complete the acquisition of 11 care homes during the period and this transaction has recently completed, taking the total care homes that Anchor operates to 125 and over 6,500 care residents, making Anchor the fourth largest residential care home operator in England.
Liquidity
Liquidity remains strong with undrawn available loan facilities and cash of £297m, together with retained bond capacity of £100m nominal value, positions Anchor well to deliver on its strategic objectives.
At 22.0%, gearing remained at a low level for the sector (March 2022: 21.4%). Interest cover including capitalised repairs (EBITDA MRI/Interest) at 2.9x (March 2022: 3.0x) remains strong.
Credit and Regulatory ratings
Anchor has retained its rating of A+ stable from S&P in the March 2022 review (first issued March 2021) and G1/V1 rating from the Regulator of Social Housing (reaffirmed 15 November 2022). These ratings reflect the group’s strong balance sheet position and robust business plans set out within a strong risk control framework.
Unaudited Financial Statements for the Six Months to September 2022
Comparatives are to Anchor’s consolidated audited year end results to 31 March 2022 and unaudited results for the six months ended September 2021.
| Group Statement of Comprehensive Income |
| ||
Figures in £m | Six Months Ended 30 September 2022 | Six Months Ended 30 September 2021 | Year Ended 31 March 2022 | |
Turnover from ongoing operations | 255.0 | 244.0 | 493.5 | |
Turnover from property sales | 11.1 | 9.8 | 32.7 | |
Turnover | 266.1 | 253.8 | 526.2 | |
Operating costs from ongoing operations | (228.5) | (211.9) | (444.0) | |
Cost of Sales – property sales | (11.5) | (9.0) | (28.6) | |
Surplus on disposal of fixed assets | 0.1 | 1.9 | 0.3 | |
Operating Surplus before exceptional items | 26.2 | 34.8 | 53.8 | |
Exceptional items | - | - | (1.8) | |
Operating Surplus after exceptional items | 26.2 | 34.8 | 52.0 | |
Net interest costs | (11.0) | (16.5) | (28.4) | |
Taxation | - | - | 0.8 | |
Surplus for the period | 15.2 | 18.3 | 24.4 | |
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Operating margin excluding property contribution | 10.4% | 13.2% | 10.0% | |
Operating margin before exceptional items | 9.8% | 13.7% | 10.2% | |
Operating margin | 9.8% | 13.7% | 9.9% | |
EBITDA MRI1 | 31.5 | 46.4 | 64.8 | |
EBITDA MRI – Interest cover2 | 2.9x | 4.5x | 3.0x | |
Comparatives are to Anchor’s consolidated audited year end results to 31 March 2022 and unaudited results for the six months ended September 2021.
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| Group Statement of Financial Position |
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Figures in £m | As at 30 September 2022 | As at 30 September 2021 | As at 31 March 2022 | |
Tangible fixed assets | 1,192.8 | 1,206.4 | 1,200.5 | |
Other investments | 0.9 | 1.2 | 0.8 | |
Total long-term assets | 1,193.7 | 1,207.6 | 1,201.3 | |
Properties held for sale | 231.6 | 190.0 | 205.2 | |
Cash | 61.8 | 82.3 | 83.9 | |
Other current assets | 55.8 | 45.2 | 44.4 | |
Total current assets | 349.2 | 317.5 | 333.5 | |
Loans | (500.7) | (502.7) | (501.9) | |
Finance lease obligations | (97.4) | (99.5) | (98.1) | |
Grants | (223.0) | (242.4) | (231.9) | |
Pension liabilities | (8.2) | (12.9) | (8.2) | |
Other liabilities | (124.6) | (101.0) | (122.7) | |
Total Liabilities | (953.9) | (958.5) | (962.8) | |
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Total net assets | 589.0 | 566.6 | 571.9 | |
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Reserves | 589.0 | 566.6 | 571.9 | |
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Gearing3 | 22.0% | 21.9% | 21.4% | |
Anchor Hanover Group
Derya Filiz
Head of External Communications
The Heals Building Suites A & B, 3rd Floor
22-24 Torrington Place
London
WC1E 7HJ
07713 085004
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