TIDM60VT
RNS Number : 1664K
Paragon Treasury PLC
06 May 2022
Paragon Treasury Plc
Paragon Asra Housing Limited ('PA Housing') trading update and
unaudited financial results for the year ended 31 March 2022
PA Housing, the parent company of Paragon Treasury Plc and a
Registered Provider owning and managing nearly 24,000 homes in the
East Midlands, London and Surrey, announces its trading highlights
and unaudited summary financial results for the 2021/22 financial
year.
Headline results
Over the year, PA Housing has delivered an operating surplus of
GBP46.8m from turnover of GBP169.4m, equating to an operating
margin of 28 per cent. The operating surplus was GBP3.1m (6%) below
budget. Total comprehensive income after interest and other
adjustments was GBP18.4m. Total available liquidity as at 31 March
2022 was GBP362m.
As noted in our 2021 Financial Statements and our 2021/22
half-year trading update, our Board has allocated additional
resources to ensure ongoing full compliance with the evolving
building safety agenda. This has included acceleration of some
testing and inspection programmes, and in respect of fire safety
some projects to remediate estates where historic issues have been
uncovered by intrusive surveys. These projects remain ongoing into
2022/23 and beyond. In the meantime, where necessary we have
installed 24 hour 'waking watch' security (at PA's cost) on certain
estates to ensure that our residents feel safe and protected.
The non-recurring fire safety remediation expenditure had a
significant impact on headline results, with operating margin from
social housing lettings being reduced to 23% versus an underlying
result of 27% excluding the additional spend.
In other areas of core activity:
Ø Rent and service charge losses through vacant properties ended
the year above budget. Average re-let days for our general needs
homes were though 31 days lower than the prior year, giving
encouragement that our work to reduce re-let times is bearing
fruit.
Ø Service costs were above budget, with results heavily impacted
by mid-year renewal of utilities contracts which saw significant
price increases due to the volatile market conditions.
Ø Responsive repair costs were above budget, driven by higher
job volumes as we worked to meet our residents' requirements.
Other areas were broadly in line with budget expectations, with
some savings on overhead costs. On the sales front, new build
shared ownership sales profits ended the year below budget. This
was volume driven but demand for our homes is strong, with results
instead influenced by a range of process-related delays to agreed
sales. The average sales margin on completed sales was 30%,
indicating that prices remain buoyant in our areas of operation.
Similarly, sales of existing homes (primarily through Right to
Acquire or shared ownership staircasing) were much stronger than
budget and we ended the year with profits from such transactions at
GBP7.6m.
Our Board continues to closely review financial plans and risks.
In addition to our ongoing commitment to complete necessary fire
safety remediation works, the current economic climate brings clear
additional short-term pressure to social housing providers and our
residents. We are starting to see price increases on supply
contract renewals at levels significantly in excess of our annual
rent increase, which was set at 4.1% from April 2022. The Board
accepts that these factors will continue to compromise ability to
meet all golden rules in the short term, but extensive scenario
testing gives assurance that our financial plans remain robust and
resilient into the longer term. The Board is not proposing any
golden rule adjustments and believes that the rules remain
appropriate once short-term issues have been worked through. Board
members have though committed to a review of our sales turnover
golden rule, which limits such turnover to a maximum of 25% of
total business turnover, with a view to reducing this limit through
moderation of future sales exposure.
Areas of focus
PA continues to operate a simple business model which reflects
our status as a traditional general needs social housing landlord.
In addition to the immediate issues relating to building safety and
the economic climate noted above, key areas of focus in the year
ahead include the following:
Ø A programme of work to drive up our residents' satisfaction
with the services we provide.
Ø Ensuring full preparedness for the new consumer regulation
regime.
Ø Further development of our plans to navigate the journey
towards net zero carbon status, in line with our Sustainability
Strategy.
Ø Getting on with delivery of our new Equality, Diversity and
Inclusion Strategy which aims to place PA at the forefront of
sector thinking about this important strand of activity.
Ø Recruitment of a new Board Chair and additional Board
members.
Outlook
PA Housing's long-term financial outlook remains positive. Our
liquidity position is strong and we continue to pursue further
funding opportunities to support our growth plans. The current high
inflation environment is introducing uncertainty and volatility
across the UK economy. PA and the wider social housing sector will
not be immune to this, but we have the resilience to withstand
these pressures and ensure that our residents are supported as much
as possible.
ESG
In 2021 we produced our first annual ESG outturn report,
incorporating the sector-wide Sustainability Reporting Standard for
Social Housing. Our 2022 report will again be made available around
the time that we publish our 2022 Financial Statements, planned for
shortly after our July 2022 Board meeting.
Statement of Comprehensive Income to 31 March 2022
(unaudited)
2021/22 GBPm 2020/21 GBPm Variance
GBPm
Rent and service charges income 140.8 136.4 4.4
------------- ------------- ---------
Shared ownership first tranche
sales 19.5 12.5 7.0
------------- ------------- ---------
Other income 3.7 2.7 1.0
------------- ------------- ---------
Amortisation of Social Housing
Grant 5.4 5.3 0.1
------------- ------------- ---------
Turnover 169.4 156.9 12.5
------------- ------------- ---------
Core operating costs (96.8) (86.2) (10.6)
------------- ------------- ---------
Depreciation and impairment (19.7) (24.7) 5.0
------------- ------------- ---------
Cost of first tranche sales (13.7) (8.5) (5.2)
------------- ------------- ---------
Surplus on fixed asset disposals 7.6 4.1 3.5
------------- ------------- ---------
Operating surplus 46.8 41.6 5.2
------------- ------------- ---------
Net interest (29.7) (27.2) (2.5)
------------- ------------- ---------
Gift aid, taxation and other adjustments 1.3 2.2 (0.9)
------------- ------------- ---------
Total comprehensive income 18.4 16.6 1.8
------------- ------------- ---------
Statement of Financial Position as at 31 March 2022
(unaudited)
31 Mar 22 31 Mar 21
GBPm GBPm
Negative goodwill (6.1) (6.7)
---------- ----------
Tangible fixed assets - housing
properties 1,971.8 1,855.3
---------- ----------
Tangible fixed assets - other 23.5 18.9
---------- ----------
Current assets 129.0 128.6
---------- ----------
Current liabilities (52.3) (208.1)
---------- ----------
Total assets less current liabilities 2,065.9 1,788.0
---------- ----------
Creditors due after more than
one year (1,466.9) (1,204.8)
---------- ----------
Pension liabilities and other
provisions (23.5) (15.1)
---------- ----------
Total net assets 575.5 568.1
---------- ----------
Reserves 575.5 568.1
---------- ----------
Other key metrics and indicators as at 31 March 2022
(unaudited)
Headline financials 31 Mar 22 31 Mar 21
Operating margin (social housing
lettings) 23% 24%
---------- ----------
As above excluding fire safety
remediation spend 27% 29%
---------- ----------
Operating margin (all activities) 28% 26%
---------- ----------
EBITDA-MRI interest cover (loan
covenant basis) 146% 136%
---------- ----------
Available liquidity GBP362m GBP264m
---------- ----------
Cash GBP29m GBP41m
---------- ----------
Total loans and borrowings GBP994m GBP877m
---------- ----------
Net debt GBP965m GBP835m
---------- ----------
Gearing (loan covenant basis) 52% 48%
---------- ----------
Core lettings business 31 Mar 22 31 Mar 21
---------- ----------
Current resident rent arrears 4.0% 4.6%
---------- ----------
Rent loss through voids 2.6% 2.9%
---------- ----------
Re-let times (general needs properties) 57 days 88 days
---------- ----------
Development and sales 31 Mar 22 31 Mar 21
---------- ----------
Completed homes: rented social
tenures 132 182
---------- ----------
Completed homes: shared ownership 185 116
---------- ----------
Completed homes: other 1 4
---------- ----------
New build shared ownership homes
sold 127 86
---------- ----------
Unsold homes total 174 114
---------- ----------
Unsold homes > 6 months 71 40
---------- ----------
Average sales margin 30% 31%
---------- ----------
Note: The above 2021/22 figures are based on unaudited
management accounts and are subject to change following audit. In
particular, pension scheme actuarial valuations as at 31 March 2022
are not yet available and so are not included in these figures.
Enquiries
All enquiries in relation to this trading update should be
directed to:
Simon Hatchman , Executive Director - Resources
Tel: 07720 087108
email: simon.hatchman@pahousing.co.uk
Disclaimer
The information in this preliminary announcement of results has
been prepared by Paragon Asra Housing Limited and is for
information purposes only. The announcement should not be construed
as an offer or solicitation to buy or sell any securities issued by
Paragon Treasury Plc or any other member of the Group, or any
interest in such securities, and nothing herein should be construed
as a recommendation or advice to invest in any such securities.
This unaudited announcement contains certain forward looking
statements reflecting, among other things, our current views on
markets, activities and prospects. By their nature, forward looking
statements involve a number of risks, uncertainties or assumptions
that could cause actual results to differ materially from those
expressed or implied by those statements. Actual and audited
outcomes may differ materially. Such statements are a correct
reflection of our views only on the publication date and no
representation or warranty is given in relation to them, including
as to their completeness or accuracy or the basis on which they
were prepared. Financial results quoted are unaudited. We do not
undertake to update or revise such public statements as our
expectations change in response to events. Accordingly, undue
reliance should not be placed on forward looking statements.
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