TIDM17YE
RNS Number : 5168I
Platform HG Financing PLC
16 August 2021
16 August 2021
Platform HG Financing Plc
Platform Housing Group's Trading Statement for the quarter to June 2021
The following report provides a trading update for Platform
Housing Group, covering our unaudited financial performance,
development and treasury activities.
Highlights
-- The last quarter saw the beginning of Covid-19 restrictions easing. The majority of our services continued to
operate at near to full capacity
-- Shared ownership first tranche sales performed strongly, with 158 sales achieved (Q1 20/21: 46)
-- Strong turnover growth of 18.3% to GBP74.2m (Q1 20/21: GBP62.7m), predominately due to increases to shared
ownership sales income
-- Turnover growth excluding first tranche sales increased by 2.9% to GBP60.8m (Q1 20/21: GBP59.1) supported by
increases to rental income
-- O perating surpluses reduced by 1.4% to GBP27.4m (Q1 20/21: GBP27.8m) driven by pick up in
maintenance expenditures and an increase in voids coming out of lockdown
-- Outlook with Fitch Ratings (Fitch) improved to 'stable' from 'negative'
-- Sustainable Finance Framework in progress to be used with GBP1 billion Euro Medium Term Note Programme
At or for the quarter ended 30 June 2021 2022 Change
--------------------------------------- --------- --------- ----------
Turnover GBP62.7m GBP74.2m 18.3%
Operating surplus(1) GBP27.8m GBP27.4m -1.4%
New homes completed 109 396 263.3%(4)
Investment in new and existing homes GBP51.9m GBP51.7m -0.4%
Share of turnover from social housing
lettings 89.5% 77.9% -11.6ppt
Social housing lettings margin(2) 48.33% 43.90% -4.43ppt
Current tenant arrears(3) 3.01% 2.88% -0.13ppt
Gearing(2) 42.24% 41.41% -0.83ppt
EBITDA-MRI interest cover(2) 212% 218% +6ppt
---------------------------------------- --------- --------- ----------
Notes
(1) Surplus excluding gains on disposal of property, plant and equipment
(2) Regulator for Social Housing Value for Money metric; for more information go to https://www.gov.uk/government/publications/value-for-money-metrics-technical-note/value-for-money-metrics-technical-note-guidance-june-2020
(3) Current tenant arrears includes all general needs tenants
(this excludes shared ownership properties)
(4) Lockdowns impacted lower new home completions in Q1 20/21
Elizabeth Froude, Platform's CEO commented:
"In this last quarter we have begun to experience the end of
Covid-19 restrictions and the first signs that freedoms maybe
returning to normal for our customers, people and partners.
Restrictions and isolations continue to have an impact on
development and major repairs programmes, but we are seeing these
effects fall away, with development completions in the quarter up
significantly on the prior year. We also expect our colleagues to
begin to return to our offices, albeit at a significantly reduced
level as we begin to establish our new ways of working.
It is pleasing to report that our robust model continues to
deliver strong turnover growth, which is expected to continue for
the year ahead. We expect to see some pressure on surpluses and
margins relative to the prior year as maintenance programmes
experience an element of catch up. We have closed this quarter with
higher levels of voids than desirable however we have an active
remediation plan in place. This will not threaten our commitment to
strong financial metrics or our desire to push ahead with both the
provision of more affordable housing for those who need it most
across the Midlands and investment in energy efficiency
improvements to our existing stock.
I thank our investor base for their continued support and look
forward to further engagement in the coming months in line with our
commitment to pro-active and transparent investor relations."
Financial review
Turnover
In the year to 30 June 2021 total turnover grew 18.3% to
GBP74.2m (Q1 20/21: GBP62.7m).
Social housing lettings turnover increased by 3.0% to GBP57.8m
(Q1 20/21: GBP56.1m) as a result of inflationary rental increases
and a year-on-year increase in social housing units.
Shared ownership first tranche sales performed strongly in the
quarter. Turnover from these sales was GBP13.5m in the quarter,
GBP9.8m higher than the prior year (Q1 20/21: GBP3.7m) which was
affected by the first national lockdown.
Turnover from social housing activities of GBP71.7m (Q1 20/21:
GBP60.4m) accounted for 96.6% (Q1 20/21: 96.3%) of Platform's total
turnover in the period.
Surpluses and margins
Operating surpluses excluding fixed assets sales decreased by
1.4% to GBP27.4m (Q1 20/21: GBP27.8m) and operating surpluses
including sales increased by 1.8% to GBP29.5m (Q1 20/21: GBP29.0m).
Growth in surplus excluding sales was lower than turnover growth as
a result of higher maintenance activity during the first quarter
and a higher level of voids following the lockdown period. This
also accounted for the decrease in social housing lettings margins
to 43.9% (Q1 20/21: 48.3%).
Operating margins from all activities decreased by 6.5% to 39.8%
(Q1 20/21: 46.3%). These margins are lower than social housing
lettings as they incorporate a number of lower margin activities.
These include shared ownership sales and maintenance activity
provided to other charitable organisations at cost. Shared
ownership margins of 18.4% were broadly in line with the prior year
(Q1 20/21: 18.8%).
The overall surplus after tax, which takes into account (in
comparison with operating surplus measures) interest costs,
increased by 1.1% to GBP18.6m (Q1 20/21: GBP18.4m). Margins on
surplus after tax decreased by 4.4% to 25.0% (Q1 20/21: 29.4%) due
to the relatively higher maintenance activity and a higher
proportion of sales turnover as outlined above.
Outlook
The projected performance for the year to March 2022 includes
continued turnover growth in line with new units coming into
management, inflationary rental increases (that occur later in the
year for some properties) and further sales activity. Margins are
expected to remain at similar levels, with some downward pressures
caused by further catch up on maintenance expenditures and the end
of Covid-19 related support measures such as the Job Retention
(furlough) Scheme. In addition, active investment into our existing
housing stock will continue and will be supported by public sector
energy grants already confirmed for our use.
Development review
Home building programme
During the quarter our home building programme continued to
recover from the effects of Covid-19, with restrictions and
isolations affecting progress, but not preventing completions
exceeding any of the previous four quarters. A total of 396 new
homes were developed in the quarter ( Q1 20/21 : 109), of which 72
(18%) were social rent, 146 (37%) shared ownership, 165 (42%)
affordable rent, 10 (2%) rent to buy and 3 (1%) commercial
properties. At 30 June 2021, Platform owned a total of 46,488 homes
(30 June 2020: 45,597).
Development expenditure on new homes was GBP48m in the quarter,
GBP13m higher than the prior year ( Q1 20/21 : GBP35m). The market
for shared ownership properties has remained strong in the quarter,
with 158 properties sold on a shared ownership basis ( Q1 20/21 :
46) (no properties for outright sale were developed / available for
sale). Unsold shared ownership units reduced in the quarter from
206 in March 2021 to 194 (June 2020: 228). Of the 194 unsold, 125
(64%) were reserved for purchase.
Outlook
Platform is targeting approximately 1,500 completions for the
year to March 2022 and continues to look towards more land led
housing development sites to support a growing building programme.
We do not invest in speculative land and have no actual or expected
impairment in our development sites.
Covid-19 is expected to have a diminishing impact on development
activity, with some effects felt in the second quarter, before
tapering away. The end of the stamp duty holiday is not expected to
have a material impact on sales, with the majority of shared
ownership purchases coming in below the threshold for Stamp Duty
Land Tax. The changes to shared ownership announced by the
Government as part of the 2021-26 grant funded Affordable Homes
Programme are expected to have a positive impact on demand for the
product.
Treasury review
Recent financing activity
Platform is currently in the process of establishing a
Sustainable Finance Framework, which will enable the Group to issue
green, social and sustainability linked bonds from its GBP1 billion
Euro Medium Term Note ("EMTN") programme. It is expected that the
EMTN programme, rated A+ by S&P and Fitch, will be utilised
during this financial year.
Ratings activity
Platform's outlook provided by Fitch was amended to 'stable'
from 'negative' in the quarter. The outlook is linked to the UK
Sovereign outlook, which was revised to 'stable' as a result of
stronger resilience of the UK economy and public finances to the
pandemic shock (see 'Fitch Revises the United Kingdom's Outlook to
Stable; Affirms at 'AA-' ', dated 18 June 2021 at
www.fitchratings.com).
Debt and liquidity
At 30 June 2021 Platform's net debt was GBP1,095.8m (30 June
2021: GBP1,083.4m). Net debt comprised nominal values of GBP582.1m
in bond issues, GBP80.0m in private placements and GBP530.3m in
term loan and revolving credit facilities, partially offset by
GBP86.7m in cash and cash equivalents and GBP9.9m in unamortised
financing fees and other accounting adjustments.
Platform had sufficient liquidity as at 30 June 2021
(approximately GBP600m including undrawn committed facilities and
cash and cash equivalents) to meet all its forecast needs until
half way through 2023, taking into account projected operating cash
flows, forecast investment in new and existing properties and debt
service and repayment costs.
Financial ratios
Platform monitors its performance against various financial
ratios, including Value for Money metrics reported to the Regulator
of Social Housing and ratios it is required to comply with under
its financing arrangements.
Gearing, measured as the ratio of net debt to the net book value
of housing properties, was 41.4% at June 2021 (June 2020: 42.2%).
Gearing was also comfortably within Platform's target of
maintaining gearing below 50%.
EBITDA-MRI interest cover for the quarter to June 2021 was 218%
(Q1 20/21: 212%). It remains well above Platform's guideline
minimum (120%) and tightest financial covenant in its banking
arrangements.
For more information please contact:
Investor enquiries
Ben Colyer - +44 7918 160990 / +44 1684 579 566
investors@platformhg.com
Media enquiries
media@platformhg.com
Disclaimer
These materials have been prepared by Platform Housing solely
for use in publishing and presenting its results in respect of the
quarter ended 30 June 2021.
These materials do not constitute or form part of and should not
be construed as, an offer to sell or issue, or the solicitation of
an offer to buy or acquire securities of Platform Housing in any
jurisdiction or an inducement to enter into investment activity. No
part of these materials, nor the fact of their distribution, should
form the basis of, or be relied on or in connection with, any
contract or commitment or investment decision whatsoever. Neither
should the materials be construed as legal, tax, financial,
investment or accounting advice. This information presented herein
does not comprise a prospectus for the purposes of Regulation (EU)
2017/1129 as it forms part of domestic law by virtue of the
European Union (withdrawal) Act 2018 (the UK Prospectus regulation)
and/or Part VI of the Financial Services and Markets Act 2000.
These materials contain statements with respect to the financial
condition, results of operations, business and future prospects of
Platform Housing that are forward-looking statements. By their
nature, forward-looking statements involve risk and uncertainty
because they relate to events and depend on circumstances that will
occur in the future. There are a number of factors that could cause
actual results and developments to differ materially from those
expressed or implied by these forward-looking statements, including
many factors outside Platform Housing's control. Among other risks
and uncertainties, the material or principal factors which could
cause actual results to differ materially are: the general
economic, business, political and social conditions in the key
markets in which Platform Housing operates; the ability of Platform
Housing to manage regulatory and legal matters; the reliability of
Platform Housing's technological infrastructure or that of third
parties on which it relies; interruptions in Platform Housing's
supply chain and disruptions to its development activities;
Platform Housing's reputation; and the recruitment and retention of
key management. No representations are made as to the accuracy of
such forward looking statements, estimates or projections or with
respect to any other materials herein. Actual results may vary from
the projected results contained herein.
These materials contain certain information which has been
prepared in reliance on publicly available information (the "Public
Information"). Numerous assumptions may have been used in preparing
the Public Information, which may or may not be reflected herein.
Actual events may differ from those assumed and changes to any
assumptions may have a material impact on the position or results
shown by the Public Information. As such, no assurance can be given
as to the Public Information's accuracy, appropriateness or
completeness in any particular context, or as to whether the Public
Information and/or the assumptions upon which it is based reflect
present market conditions or future market performance. Platform
Housing does not make any representation or warranty as to the
accuracy or completeness of the Public Information.
These materials are believed to be in all material respects
accurate, although it has not been independently verified by
Platform and does not purport to be all-inclusive. The information
and opinions contained in these materials do not purport to be
comprehensive, speak only as of the date of this announcement and
are subject to change without notice. Except as required by any
applicable law or regulation, Platform Housing expressly disclaims
any obligation or undertaking to release publicly any updates or
revisions to any information contained herein to reflect any change
in its expectations with regard thereto or any change in events,
conditions or circumstances on which any such information is
based.
None of Platform Housing, its advisers nor any other person
shall have any liability whatsoever, to the fullest extent
permitted by law, for any loss arising from any use of the
materials or its contents or otherwise arising in connection with
the materials. No representations or warranty is given as to the
achievement or reasonableness of any projections, estimates,
prospects or returns contained in these materials or any other
information. Neither Platform nor any other person connected to it
shall be liable (whether in negligence or otherwise) for any
direct, indirect or consequential loss or damage suffered by any
person as a result of relying on any statement in or omission from
these materials or any other information and any such liability is
expressly disclaimed.
Any reference to "Platform" or "Platform Housing" means Platform
Housing Group Limited and its subsidiaries from time to time and
their respective directors, representatives or employees and/or any
persons connected with them.
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END
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