TIDM60VT
RNS Number : 7484D
Paragon Treasury PLC
03 November 2020
Paragon Treasury Plc
Paragon Asra Housing Limited ('PA') trading update and unaudited
financial results for the period ended 30 September 2020
PA, the parent company of Paragon Treasury Plc and a Registered
Provider owning and managing over 23,000 homes in the East
Midlands, London and Surrey, announces its trading highlights and
unaudited summary financial results for the first half of the
2020/21 financial year.
Trading activities in the year to date have been dominated by
the Covid-19 pandemic, which has had a significant impact on our
service delivery. Around 80 per cent of PA's stock is now in Tier
Two localities, and many residents have been personally affected by
the situation. PA's priority remains to support its residents,
staff and partners, working within the government guidelines to
deliver services in a safe way.
With this in mind, the PA Board has recognised that some short
term disruption to financial results is inevitable. Financial
performance continues to be monitored and scenario tested, and at
this stage the Board expects that overall results for the full
2020/21 will only be moderately affected. The most significant
impact has been on capital expenditure, with work on our estates
and new build sites being suspended altogether at the start of the
year and subsequently resuming at a slower pace due to social
distancing requirements. This has had the effect of deferring
future financing requirements.
Over the first half of the year, PA has delivered an operating
surplus of GBP23.4m from turnover of GBP75.5m, equating to an
operating margin of 31 per cent. The net surplus after interest and
other adjustments is GBP9.5m. Total available liquidity is at
GBP176m, with a further GBP148m of loan facilities expected to
become available in the third quarter following completion of
security charging work. Results on core lettings operations are
broadly in line with budget expectations overall. New build shared
ownership sales completions are behind budget, reflecting the
market disruption caused by Covid-19, but margins on completed
sales remain aligned to budget.
Financial and operational highlights
-- Rent arrears has stabilised after some modest increases in
the early weeks of Covid-19. Gross arrears including benefits
payments timing delays is currently at 4.7 per cent
-- GBP1.3m of additional benefits for residents have been
secured through the work of our Tenancy Sustainment Team
-- Nearly 50 per cent of our residents are now registered on My
PA, our digital services app, with rent payments of over GBP1m per
month being made via the app
-- 33 residents have enrolled on our training scheme for budding
entrepreneurs, through which the strongest candidates will receive
financial backing for their business plan. This scheme delivers a
social return of GBP60 for every GBP1 invested
-- We have launched the Naumann Initiative, our scheme to offer
both a job and a home to people who are registered as homeless.
This is being delivered in partnership with Kingdom Housing
Association, who pioneered the model
-- In response to Covid-19 we made over 6,000 welfare calls to
customers and delivered 330 food parcels. We have also donated
GBP50,000 to food banks working in our neighbourhoods
-- We have successfully transferred our 'Neighbourhoods on Tour'
resident interaction programme to a virtual setting, with nearly
200 online 'tours' having taken place to date
-- We have recruited four new Board members to fill planned
vacancies, including two PA residents. Our Board represents a
diverse range of skills and backgrounds
-- Our new financial business plan recognises our commitment to
sustainability and in particular the drive to achieve carbon
neutral status. We have provided for total additional spend of
GBP230m in the business plan
-- Our average cost of funds has reduced further to 3.3 per
cent, and we continue to engineer value for money savings through
our treasury activities
Areas of focus
-- We are working to deliver as much of the budgeted planned
maintenance programme as we can. Covid-19 has disrupted the
programme and we will end the year underspent against budget. Work
not completed will be carried forward to the next financial
year
-- Similarly, we expect to underspend against our new
development budget but we are working closely with our contractors
to maximise delivery within the national restrictions. Productivity
on site has been reduced by c.30 per cent under the current
circumstances
-- The Board is closely monitoring sales risk, with sales
processes having been delayed by Covid-19. At the end of September
we held 99 unsold new build shared ownership properties, of which
52 were either reserved or under offer. We are not to date
experiencing any significant fall in demand for our properties.
-- Our lettings performance needs to improve and initiatives are
underway to make this happen. Void loss for the year to date stands
at 3.1 per cent but average re-let times have now started to
exhibit a reducing trend
-- Our focus on property health and safety compliance remains
relentless, and we continue to make additional investments as
required to safeguard our residents
Outlook
Despite the nationwide turbulence caused by Covid-19, PA's
financial position remains stable and resilient. Our financial
planning and scenario testing regimes demonstrate ability to
withstand further adverse impacts from macroeconomic factors.
Liquidity is strong and work continues to develop further lines of
liquidity in support of our growth plans. We are working to meet
our financial golden rule targets by the end of the financial year,
although our Board has acknowledged that Covid-19 risks in the
second half of the year may further influence financial
performance.
Statement of Comprehensive Income to 30 September 2020
Actual GBPm Pre-Covid Variance
Budget GBPm GBPm
Rent and service charges income 66.7 68.7 (2.0)
------------ ------------- ---------
Shared ownership first tranche
sales 4.6 18.5 (13.9)
------------ ------------- ---------
Other income 1.5 1.6 (0.1)
------------ ------------- ---------
Amortisation of Social Housing
Grant 2.7 2.8 (0.1)
------------ ------------- ---------
Turnover 75.5 91.6 (16.1)
------------ ------------- ---------
Core operating costs (39.3) (42.4) 3.1
------------ ------------- ---------
Depreciation (10.5) (10.2) (0.3)
------------ ------------- ---------
Cost of first tranche sales (3.2) (13.1) 9.9
------------ ------------- ---------
Surplus on fixed asset disposals 0.9 2.2 (1.3)
------------ ------------- ---------
Operating surplus 23.4 28.1 (4.7)
------------ ------------- ---------
Net interest (14.0) (14.9) 0.9
------------ ------------- ---------
FRS 102 accounting adjustments 0.1 - 0.1
------------ ------------- ---------
Total comprehensive income 9.5 13.2 (3.7)
------------ ------------- ---------
Statement of Financial Position as at 30 September 2020
30 Sep 20 31 Mar 20
GBPm GBPm
Negative goodwill (7) (7)
---------- ----------
Tangible fixed assets and investments 1,812 1,777
---------- ----------
Current assets 200 128
---------- ----------
Current liabilities (129) (62)
---------- ----------
Total assets less current liabilities 1,876 1,836
---------- ----------
Creditors due after more than
one year (1,312) (1,281)
---------- ----------
Pension liabilities and other
provisions (14) (14)
---------- ----------
Total net assets 550 541
---------- ----------
Reserves 550 541
---------- ----------
Enquiries
All enquiries in relation to this trading update should be
directed to:
Simon Hatchman , Executive Director - Resources
Tel: 0116 257 6786
email: simon.hatchman@pahousing.co.uk
Disclaimer
The information in this preliminary announcement of interim
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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END
IR FIFSDIELIVII
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