Charts
A selection has been made from the 59 ratio charts to illustrate important features of Bushmead’s financial projections. Issues already covered in discussions of the eight profitability and credit maps or the combined charts have generally been excluded here.
Total Rents Receivable 
Illustrates the steady increase in rents from 19,000 to 74,000 over the
period.
Growth in Income from Social Housing Lettings
This shows the recent strong historical and first year projected growth
in income, followed by a steady 4 to 4.5% annual increase.
Growth in SBIT
The chart illustrates the extreme volatility in the annual rate of growth
in SBIT, with periodic falls.
Growth in Total Assets
This shows the recent strong historical investment in total assets followed
by a dip in the first projected year and then annual growth of 3.8% declining
to 2.0%. The growth in assets, however, is lower than the growth in income,
indicating an improving utilisation of assets.
Growth in Total Capital and Reserves
Growth in reserves is always positive but erratic, reflecting the SBIT
volatility.
Growth in Total Debt
Debt has grown strongly during the recent historical development programme
but is generally forecast to grow more slowly except during the 2011 to
2018 period. Some net reductions are forecast after 2022.
Average Total Repairs and Maintenance Costs/Unit
This shows the main cause of the volatility in operating surplus, cash
flow and debt. Average costs increase four-fold over the period.
Operating Margin
Margins have improved historically but are expected to average around
15% through the forecast but with some years at 5% and others at 27_%.
The difficult mid period is clearly shown.
Finance Income % Financial Assets
This simply illustrates the steady 4% plus assumption regarding the deposit
interest rate.
Scheduled Loan Repayment % Total Debt
This reveals a number of interesting features; the initial reduction from
recent levels; the steady acceleration from 1% to 3%; a nasty refinancing
“spike” in 2023; then a fall off, after 2026, to virtually
no repayments by 2029.
Margins over Cash Cost of Capital
This shows the increasingly familiar pattern of low margins, then high,
low again, high again - with considerable volatility and some deficits
before interest.
Net Working Assets % Turnover
Unless there is some identifiable reason this chart calls into question
the forecast’s assumption regarding the levels of debtors and creditors.
The net effect is that net working liabilities gradually reduce as a percentage
of turnover.
Cash Flow before Funding % Total Assets
Cash flow after capital expenditure is, not surprisingly,for most years
in deficit but by generally reducing amounts. The biggest deficits are
the recent historical ones and even they are less than 5%, therefore “manageable”.
Increase in Debt % Net capital Expenditure
This is almost a mirror image of the previous chart. With a few exceptions
net capital expenditure is partly funded by operating cash flow so the
ratio is generally less than 100%, averaging about 50%, but with peaks
and troughs.
Net Interest Cover
Interest cover is generally very strong and getting stronger, but with
seven years out of 30 below 1.0. especially in the middle period, 2012
to 2016. The improvement from year three of the forecast is dramatic.
Cash Debt Service Cover
With the forecast improvements over recent historical performance only
five years show cash flow before capex not covering loan interest and
repayments, which reflects very strong cash flow performance.
Gearing (Net Debt % Reserves plus SHG)
The recent increase in gearing to support the development activity levels
off then peaks in mid forecast at a comfortable 38%, before falling after
2018, down to 32%.
Net Debt % NPV (30 years constant)
This multi-period measure of capacity shows debt initially at 140% of
the value of the forecast 30 years’ cash flows. This is a consequence
of poor initial profitability on the back of a recent debt-financed development
programme. However, this falls to 100% by 2026 as asset utilisation and
profitability improve over the period.
HALCR
The present value of the 30 year’s forecast cash flows plus the
terminal value of the cash flow in perpetuity gives initial cover of 1.1
times, which is good. This very much depends on the strength of cash flows
in the last few years of the forecast on which the perpetuity is based,
which is also why the cover improves to over 1.3 times by 2032.
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