TIDM60VT
RNS Number : 8601R
Paragon Treasury PLC
02 November 2023
Paragon Treasury Plc
Paragon Asra Housing Limited ('PA') trading update and unaudited
financial results for the period ended 30 September 2023
PA, the parent company of Paragon Treasury Plc and a Registered
Provider owning and managing over 24,000 homes in the East
Midlands, London and Surrey, announces its trading highlights and
unaudited summary financial results for the first half of the
2023/24 financial year.
Results for the year to date are ahead of the approved budget,
reflecting a combination of strong sales performance and
underspends on operating costs. Expenditure is expected to
accelerate to an extent in the second half of the year, but at this
stage the Board anticipates an outturn performance which at least
meets budget expectations.
Property sales results have exceeded budget, both in terms of
sales volumes and margin levels. Our full year budget surplus from
sales activities has already been achieved.
Over the first half of the year, PA has delivered an operating
surplus of GBP30.2m from turnover of GBP104.1m, equating to an
operating margin of 29% (2022 half year: 22%). The net surplus
after interest and other adjustments is GBP11.6m. Total available
liquidity as at the period end date was GBP252m, with a further
GBP100m (nominal value) of retained bonds.
Financial and operational highlights
-- The year to date operating margin from social housing lettings is 26%.
-- 107 new build shared ownership homes have been sold,
generating proceeds of GBP16.0m and surplus of GBP4.7m at a margin
of 29%.
-- Rent arrears has remained stable to date in the face of
ongoing cost of living headwinds for residents, sitting at 4.5% at
the end of September.
-- In June 2023 we transitioned our London and Surrey repairs
service, covering two thirds of our homes, to a new contractor.
Costs have been contained within the approved budget to date, and
the new contractor is working to achieve improved performance
levels for our residents.
-- Salaries and overheads are underspent by GBP1.5m in the year
to date as we work to enhance capacity for investment into our
homes and services.
-- We have reprocured our utilities contracts and this has seen
a return to more normal cost levels, compared to the significant
price hikes experienced 12 months ago at the height of global
uncertainty. These cost savings will be passed on to our residents
through the service charge.
-- 261 new build homes have been completed and handed over for
occupancy in the first half of the year.
Areas of focus
-- Average re-let days have been above target and are averaging
45 days in the year to date, reflecting the time taken to complete
repair and improvement works to homes before releasing them for
letting. This is impacting on the financial results, with rent loss
due to vacant homes being GBP0.4m adverse to budget.
-- Some of our planned maintenance work programmes are behind
schedule due to procurement delays at the start of the year, and we
are targeting catch up through the second half of the year. There
is a risk that some work will slip into the next financial year,
but all Decent Homes and building safety commitments will be
met.
-- We continue to progress negotiations with contractors on our
key fire safety remediation projects. The direction of travel here
is positive, with the majority of cost now expected to be borne by
contractors without impacting on PA's financial results. Net costs
for PA's account are estimated at GBP26m.
-- Work to drive up service standards and resident satisfaction
levels remains our top focus. In the first quarter of the year we
completed an organisation-wide restructure in order to enhance
resources within key customer-facing teams and improve service
responsiveness.
Outlook
The UK economy is now starting to stabilise after a year of
extreme uncertainty. Inflation currently remains well above
government target but is expected to reduce to more normal levels
over the coming months. Interest rates are expected to remain at
their more elevated position for the foreseeable future.
Within PA, we have taken measures to improve the stability and
resilience of our financial planning. This includes a detuning of
our organic growth ambitions, with target new build completions in
the decade through to 2030 reduced from 6,000 to 5,000 homes. We
have concluded negotiations with our funding agencies Homes England
and the GLA to support this downgrading of growth plans and this
has resulted in an enhanced level of grant subsidy per unit. We
have also recalibrated our target tenure mix and we now expect 70%
of our new homes to be rented tenure with the shared ownership
proportion reduced to 30%. Our core financial plans take a cautious
view on sales activity and we place no reliance on profits from
sales to meet loan covenants. Any outperformance through the year
is then utilised to increase investment in homes and services
against identified priority areas.
As such, PA faces the next few years from a stable base having
successfully navigated the difficult economic headwinds over the
past 12 months. We will continue our focus on various workstreams
to drive up service standards and improve the quality of our homes
and estates. Enhanced capacity to invest in our planned maintenance
programmes is key to this and will be central to our financial
planning going forward.
Statement of Comprehensive Income to 30 September 2023
Actual GBPm Budget GBPm Variance
GBPm
Rent and service charges income 83.7 84.9 (1.2)
------------ ------------ ---------
Shared ownership first tranche
sales 16.0 10.7 5.3
------------ ------------ ---------
Other income 1.6 1.2 0.4
------------ ------------ ---------
Amortisation of Social Housing
Grant 2.8 2.9 (0.1)
------------ ------------ ---------
Turnover 104.1 99.7 4.4
------------ ------------ ---------
Core operating costs (54.4) (57.0) 2.6
------------ ------------ ---------
Depreciation (10.9) (11.3) 0.4
------------ ------------ ---------
Cost of first tranche sales (11.3) (8.9) (2.4)
------------ ------------ ---------
Surplus on fixed asset disposals 2.7 2.1 0.6
------------ ------------ ---------
Operating surplus 30.2 24.6 5.6
------------ ------------ ---------
Net interest (18.6) (20.5) 1.9
------------ ------------ ---------
Total comprehensive income 11.6 4.1 7.5
------------ ------------ ---------
Statement of Financial Position as at 30 September 2023
30 Sep 23 31 Mar 23
GBPm GBPm
Negative goodwill (5) (5)
---------- ----------
Tangible fixed assets and investments 2,238 2,158
---------- ----------
Current assets 100 117
---------- ----------
Current liabilities (82) (121)
---------- ----------
Total assets less current liabilities 2,251 2,149
---------- ----------
Creditors due after more than
one year (1,595) (1,513)
---------- ----------
Pension liabilities and other
provisions (15) (16)
---------- ----------
Total net assets 641 620
---------- ----------
Reserves 641 620
---------- ----------
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 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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