TIDM60VT
RNS Number : 3742W
Paragon Treasury PLC
23 April 2021
Paragon Treasury Plc
Paragon Asra Housing Limited ('PA Housing') trading update and
unaudited financial results for the period ended 31 March 2021
PA Housing, the parent company of Paragon Treasury Plc and a
Registered Provider owning and managing 23,000 homes in the East
Midlands, London and Surrey, announces its trading highlights and
unaudited summary financial results for the 2020/21 financial
year.
Headline results and COVID-19 impacts
Over the year, PA Housing has delivered an operating surplus of
GBP40.3m from turnover of GBP156.8m, equating to an operating
margin of 26 per cent. Total comprehensive income after interest
and other adjustments (including positive movement of GBP14.3m on
fair value of financial instruments as at the reporting date) was
GBP27.7m. Total available liquidity as at 31 March 2021 was
GBP264m.
As noted in our 2019/20 Financial Statements and our 2020/21
half-year trading update, COVID-19 has had some short term impact
on operations. In particular, our re-letting processes, new build
completions and shared ownership sales have been affected, with the
latter also being impacted by the national delays with provision of
EWS1 documents. Largely as a result of these factors, turnover from
lettings and sales ended the year a combined GBP18.1m (11%) behind
budget. Expenditure plans were also disrupted, particularly on
capital investment programmes. New development expenditure was
GBP82.7m (39%) behind budget and capital maintenance was GBP3.4m
(21%) behind.
At the start of the pandemic, the Board assessed these likely
impacts and accepted that the volatile trading conditions would be
likely to present some short-term challenges with full adherence to
our financial golden rules. In fact all golden rules have been met
in the year except for operating margin on social housing lettings,
which ended the year at 24% versus golden rule of 30%. The largely
COVID-19 related impacts on lettings affected this result by 3%.
Excluding additional fire safety works prioritised by the Board,
underlying operating margin on social housing lettings was at
29%.
COVID-19 has enforced some compromises on delivery of
operational plans within individual financial years. The Board
accepts that this will create some short-term volatility to golden
rules and other headline financial metrics, but extensive scenario
testing has given assurance that our financial plans remain robust
and resilient into the longer term. As such, the Board is not
proposing any golden rule adjustments and believes that the current
rules remain appropriate once COVID-19 impacts have been worked
through.
Areas of focus
Our immediate focus is to ensure that full delivery of services
to our residents can continue in line with the prevailing
government guidelines. At the time of this trading update, the
national outlook is becoming more optimistic. As such we have a
greater degree of confidence that our operational plans for the new
financial year can be delivered. However, the Board will continue
to closely monitor the situation and is prepared to adjust plans
should trading conditions move adversely.
More broadly, our refreshed Corporate Plan published in 2020
reaffirmed that our core strategic priorities remain high quality
customer services, growth, and strong underlying business
infrastructure. Investment in our homes, communities and people
remains paramount and there will be no compromise on the work that
is needed to keep our residents safe in homes that they can be
proud of. Alongside this we have an ambition to build 6,000 new
homes by 2030 and the core growth strategy remains focused on
social housing products (rented and home ownership). Most of our
development programme will be undertaken in London and Surrey but
we have also re-established a presence in the East Midlands.
Our activities will be underpinned by some emerging themes. Our
2020 Sustainability Strategy sets out the work we will be doing
within the three pillars of Places, People and Partnerships to
improve the sustainability of our business. COVID-19 has
re-emphasised the importance of our community investment
programmes, and the positive influencing role we can play in
improving peoples' life opportunities through targeted investment
of our resources. We have responded to the Housing White Paper with
a range of new initiatives already implemented. And we will
continue to champion ongoing developments around equality,
diversity and inclusion to ensure that PA Housing continues to make
the most of the benefits these principles can bring.
Outlook
PA Housing's long-term financial outlook is stable, in line with
our business model which focuses on core social housing activities.
There has been some short-term disruption due to COVID-19 but we
have been working to ensure continued delivery of operations. Our
liquidity position remains strong and we continue to pursue
strategic funding opportunities to support our growth plans.
In March 2021 we announced that PA Housing and Accent Group were
exploring partnership opportunities. This work continues and
further announcements will be made at the appropriate time.
ESG
We have published our new Sustainable Finance Framework, with a
Second Party Opinion provided by Sustainalytics. The Framework is
available on the Investor Relations section of our website. It
explains the various ways in which PA Housing works to deliver
positive environmental and social outcomes, and how we will utilise
future financing to further these ambitions. The Framework also
sets out the governance arrangements underpinning our sustainable
finance activities, including internal controls and monitoring, and
reporting to external stakeholders.
Statement of Comprehensive Income to 31 March 2021
(unaudited)
Actual GBPm Budget GBPm Variance
GBPm
Rent and service charges income 135.9 139.1 (3.2)
------------ ------------ ---------
Shared ownership first tranche
sales 12.4 27.3 (14.9)
------------ ------------ ---------
Other income 3.2 3.2 -
------------ ------------ ---------
Amortisation of Social Housing
Grant 5.3 5.4 (0.1)
------------ ------------ ---------
Turnover 156.8 175.0 (18.2)
------------ ------------ ---------
Core operating costs (88.9) (84.6) (4.3)
------------ ------------ ---------
Depreciation and impairment (22.7) (20.5) (2.2)
------------ ------------ ---------
Cost of first tranche sales (8.5) (19.3) 10.8
------------ ------------ ---------
Surplus on fixed asset disposals 4.2 3.8 0.4
------------ ------------ ---------
Change in fair value of investment
properties (0.6) - (0.6)
------------ ------------ ---------
Operating surplus 40.3 54.4 (14.1)
------------ ------------ ---------
Net interest (26.9) (29.6) 2.7
------------ ------------ ---------
Change in fair value of financial
instruments 14.3 - 14.3
------------ ------------ ---------
Gift aid and taxation - - -
------------ ------------ ---------
Total comprehensive income 27.7 24.8 2.9
------------ ------------ ---------
Statement of Financial Position as at 31 March 2021
(unaudited)
31 Mar 21 31 Mar 20
GBPm GBPm
Negative goodwill (6.7) (7.3)
---------- ----------
Tangible fixed assets - housing
properties 1,855.3 1,751.7
---------- ----------
Tangible fixed assets - other 18.9 21.2
---------- ----------
Current assets 128.6 127.4
---------- ----------
Current liabilities (208.1) (62.8)
---------- ----------
Total assets less current liabilities 1,788.0 1,830.2
---------- ----------
Creditors due after more than
one year (1,204.8) (1,281.3)
---------- ----------
Pension liabilities and other
provisions (15.1) (13.6)
---------- ----------
Total net assets 568.1 535.3
---------- ----------
Reserves 568.1 535.3
---------- ----------
Other key metrics and indicators as at 31 March 2021
(unaudited)
Headline financials 31 Mar 21 31 Mar 20
Operating margin (social housing
lettings) 24% 26%
---------- ----------
As above excl. additional fire
safety spend 29% 26%
---------- ----------
Operating margin (all activities) 26% 37%
---------- ----------
EBITDA-MRI interest cover 136% 131%
---------- ----------
Available liquidity GBP264m GBP223m
---------- ----------
Cash GBP41m GBP46m
---------- ----------
Total loans and borrowings GBP877m GBP796m
---------- ----------
Net debt GBP835m GBP749m
---------- ----------
Gearing 43% 43%
---------- ----------
Core lettings business 31 Mar 21 31 Mar 20
---------- ----------
Current resident rent arrears 4.6% 4.4%
---------- ----------
Rent loss through voids 2.9% 2.1%
---------- ----------
Re-let times (general needs properties) 88 days 56 days
---------- ----------
Residents in receipt of Housing
Benefit 28% 30%
---------- ----------
Residents in receipt of Universal
Credit 24% 15%
---------- ----------
Development and sales 31 Mar 21 31 Mar 20
---------- ----------
Completed units: rented social
tenures 182 145
---------- ----------
Completed units: shared ownership 116 88
---------- ----------
Completed units: other 4 16
---------- ----------
Units sold 86 53
---------- ----------
Unsold units total 114 89
---------- ----------
Unsold units > 6 months 40 19
---------- ----------
Average sales margin 31% 42%
---------- ----------
Note: The above figures are based on unaudited management
accounts and are subject to change following audit. In particular,
pension scheme actuarial valuations as at 31 March 2021 are not yet
available and so are not included in the above figures.
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
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