2017 Interim Results
Revenue of £470.8m (2016: £466.2m), growth of 1%.
o The Housing division, which accounts for 85% of Group revenues, reported revenues increasing to £402.1m (2016: £389.6m), organic growth of 3%, reflecting the full year impact of a busy period of new contract mobilisations in 2016.
o The Care division, which accounts for 15% of Group revenues, reported revenues of £68.7m (2016: £76.6m). The reduction of only 10% reflects significant progress in securing new contracts to replace the lost revenues following the previously announced closure of sub-optimal branches accounting for around 30% of Care revenues. Our blended hourly fee rate as at 30 June 2017 was £16.10 (30 June 2016: £14.12).
Operating margin before the amortisation of acquisition intangibles of 4.1% (2016: 4.2%).
o The Housing operating margin increased to 5.2% (2016: 4.8%), reflecting fewer new contract mobilisations in the period.
o As previously announced, the Care division reported an operating loss of £1.0m (2016: profit £1.0m) reflecting the lost productivity and additional costs incurred in restructuring our Care activities.
The recent tragic events at Grenfell Tower will impact the Housing division later this year as clients review the commissioning and safety practices at their properties. These unexpected events will inevitably impact the timing of our planned workloads as clients' attentions have naturally been diverted towards ensuring their housing portfolios are safe and fully compliant. Consequently, we expect to see delays in planned works orders this year and therefore anticipate Housing revenues of circa £800m in 2017 against an original expectation of circa £830m with a resulting loss of profit and lower overhead recovery. These delays in procurement decisions are expected to be temporary given the contractual nature of the work and the Housing order book is not affected.
Net debt at 30 June 2017 was £19.6m (2016: £14.1m) reflecting the increase in working capital required to support the new contract mobilisations in 2016. This is also reflected in the cash conversion of 70% of EBITDA from continuing operations over the rolling twelve-month period to June 2017 (2016: 91%). Cash generation for the full year is expected to be in line with historic norms in the 90-100% range.
The Board remains confident in the Group's long-term prospects and is declaring an interim dividend of 3.45p per share (2016: 3.30p), an increase of 5%.
