TIDM42RJ
RNS Number : 9671Y
Aster Treasury PLC
10 May 2023
ASTER GROUP
Trading Update - 31 March 2023
10 May 2023
Aster Group issues its unaudited Group trading update for the
twelve months ended 31 March 2023, with comparatives to the audited
financial statements for the 12 months ended 31 March 2022.
Full Year Highlights
Finance and governance
-- We remain in a stable financial position and ended the year
with a turnover of GBP301.2m, operating profit of GBP68.0m and a
profit before tax of GBP54.8m
-- Standard and Poor's (S&P) affirmed our 'A+ rating' and
'negative' outlook reflecting our new homes programme, our
efficient cost controls and our recent acquisition of Enham
Trust
-- Despite the challenges the sector has faced over the past
year, our strong operational management and financial stability
remain robust and we continue to hold our governance and viability
ratings at the highest levels of G1 / V1 from the Regulator.
Growing our Group and investing in our new entities
-- Our acquisition of Central and Cecil Housing Trust (C&C)
in 2022 has seen us improving services and develop homes including
our first development contract in London
-- In October 2022, we welcomed disability charity Enham Trust
into our Group, allowing Enham to continue to deliver against its
purpose of supporting disabled people to live, work and enjoy life.
The Trust brings more than 350 affordable homes, four specialist
care homes and over 150 acres of land into the Group. The Trust has
retained its name, heritage, and charity status. During the first
six months of the acquisition, we invested GBP0.6m in repairs and
maintenance of Enham's properties and have helped stabilise its
care services. Further investment is planned over the next 12
months.
Providing safe, well-maintained homes and modern, reliable
customer services
-- We're modernising our services to meet the changing landscape
we operate in. Our 'customer first' culture is centred around us
making sure every customer receives a good service, first time,
delivered excellently, with a strong local focus. Crucial to this
is understanding and prioritising what matters most to our
customers and delivering services in the most accessible and
inclusive way possible
-- We're a landlord providing quality, affordable homes to
thousands of people and we're continuing to invest in our
properties. This year we spent GBP80.1m on repairs and maintenance
to make sure our quality, affordable homes continue to be great
places to live
-- We have a good understanding of our homes to make sure they
are up to standard, and so we can target where resources are needed
now, plan for long-term investment and develop our strategy for
responsibly sourcing materials. However, we want the data we hold
on our homes to be deeper, so we've been carrying out a full stock
condition survey, which also includes C&C and Enham Trust
properties, at a total cost of GBP3.1m. We are one of only a few
housing associations that has taken this vital step. We have now
surveyed most of our homes and will continue to survey the rest
throughout the year
-- We listen to what our customers say and use data and insight
to provide services that predict and prevent potential problems.
This allows us to continually improve our customer journeys. Over
50% of our total customers are now registered to our online portal
'MyAster'. Our newly developed Live chat service has been a great
way for our customers to get in touch directly with a member of our
team. Their feedback continues to help us shape and improve our
digital platforms by adding more features and providing accessible
ways for customers to reach us. In October 2022 the success of
MyAster meant we were selected as Finalists for the Institute of
Customer Service's 'Customer Satisfaction Innovation' award and
shortlisted for the UK Housing 'Digital Landlord of the Year'
award
-- Customer voice remains at the heart of our operations. These
two-way conversations are critical to us in providing scrutiny and
bringing customers on our modernisation journey by helping
co-design our services. It also provides them and us with
assurances that we are focusing our efforts in the right places. In
March 2023 we received external accreditation from Tenant
Participation Advisory Service (Tpas) which supports and champions
tenant involvement and empowerment in social housing across
England. This accreditation reflects our commitment to customer
engagement, involvement and influence
-- We're always finding ways to innovate. We're trialling new
technologies to see how we can offer more ways to interact with us
virtually to provide an easier and quicker service for our
customers. During the year, over 7,000 customers shared their views
and experiences via our engaged customer groups, consultations and
complaints and compliments service. We've carried out 92 customer
consultations which have resulted in a number of changes to our
service offer during the year
-- The safety of our customers is our priority. We've introduced
a new dedicated property safety team which instil our 'safety
first' approach across the business. They are focused on making
sure we are responding to the Building Safety Act and keeping our
customers and colleagues safe. With regard to fire safety
specifically, we have surveyed all our blocks, and only have six
which are over 18 metres high and five that require non-urgent
remedial works. We've continued to achieve a high level of
performance on our Gas Servicing Compliance (99.9%), Electrical
Testing Compliance (99.3%), Fire Risk Assessments (99.8%), and
Decent Homes Compliance (99.9%)
-- Further to GBP350,000 funding from Homes England, we have
partnered with Test Valley Borough Council to provide five homes to
help rough sleepers off the streets in Hampshire. All five
properties have now been purchased with four customers now settled
in their home, with the final customer soon moving in. Over the
next 30 years, these five properties will continue to provide homes
for people who are at risk of rough sleeping, or who have been
sleeping rough in the borough
-- We recognise we have a part to play in tackling climate
change. We remain committed to ensuring all our stock is at least
an energy performance certificate (EPC) rating of C or above before
the government's deadline of 2030, lowering our carbon footprint
and protecting the biodiversity of our communities. At 31 March
2023, 84.3% of our properties with an EPC were rated at C or above,
exceeding the national average of EPC D. We're developing a broader
strategy which will include greening our fleet. This year through
Aster Solar and external grant funding from the European Regional
Development Fund (ERDF) via Low Carbon Dorset, we completed a mini
solar panel pilot targeting off mains gas homes in rural Dorset
-- As a member of the South West Net Zero Hub (SWNZH), in March
2023 we were selected by the Government's Social Housing
Decarbonisation Fund Wave 2 (SHDF), to receive over GBP500,000 of
grant funding. This project will see us improve the energy
efficiency of over 100 of our least energy efficient homes over the
next two years to EPC C, helping continue our wider retrofit
activity in Dorset, Somerset, and Wiltshire.
Empowering our colleagues, customers and communities to
thrive
-- We're relentless in our mission to extend our impact in our
communities. This is achieved in a number of ways including through
our day-to-day services and the Aster Foundation, which has now
completed its first year as an official registered charity. During
2022/23, the Aster Foundation helped over 9,200 people through its
programmes including mental wellness, financial wellbeing and
employment. The charity's social incubator, inc., is now in its
third year supporting social entrepreneurs and attracts some of the
brightest minds tackling social challenges
-- We are continuing to evolve our colleague offer so we attract
and retain the best talent. Ultimately, this will ensure our
customers receive the best possible experience from us. As part of
our transformation journey - 'Programme Experience' - we have
continued to find ways to better support our people and nurture a
supportive and inclusive culture
-- We're creating a sustainable employment offer which has
compelling job opportunities across our teams based on what our
customers need. In practice, this includes us developing our people
in our contact centre to better support customers when they first
contact us, through to our trades who are out in our communities so
that at a local level, they are given the flexibility and support
they need so we retain the best talent
-- This year saw us launch our diversity and inclusion (D&I)
principles, and our Board diversity and neurodiversity training
programmes, to help underpin everything we do. We've also
introduced LGBTQ+, gender, race and heritage, disability confident
and carers colleague networks. These groups provide supportive
spaces for colleagues and are critical to inform future plans
-- Our aim is to become the number one employer in our sector.
We're delivering this through our flexible colleague offer which
breaks the mould in items such as women's health, mental wellbeing,
and restorative practice. Further to our menopause-friendly
accreditation last financial year, our menopause support programme
continued this year to receive recognition. We won the 'Best
Benefits to Support Menopause' award and the 'Best Support Group'
at the Menopause Friendly Awards. We were also recognised by the
Restorative Justice Council (RJC) as a Registered Restorative
Organisation for the third year running
-- We're keen to measure the benefits we're bringing to our
communities and this year launched our second Economic Impact
Report in September 2022. Working with research agency, Development
Economics, it found we delivered close to GBP250m in economic value
(up by 13% compared to the last time we did the study in 2019) and
created over 3,000 direct and indirect jobs during 2020/21.
Building as many homes as we can, offering a range of housing
options
-- We are pleased to have achieved our strongest ever result for
development with over 1,300 new homes delivered this year. This has
been a particularly significant achievement given the challenges
faced. 698 of those homes were for affordable rent, 466 were shared
ownership, 17 for market rent and 171 sold on the open market. We
also signed one of our biggest Section 106 deals to date which will
see us deliver just under 300 affordable homes in Fiddington,
Tewkesbury with Persimmon Homes
-- We also released our third Environmental, Social and
Governance (ESG) report covering the 12 months to 31 March 2022;
benchmarking our credentials against the United Nation's
Sustainable Development Goals (UN SDGs) and the newer
Sustainability Reporting Standard (SRS) for social housing.
Fina n ci al and ope r a t i ng p e rfo rman ce
Unaudited profit before tax for the year ended 31 March 2023 was
GBP54.8m and includes a gain on acquisition of GBP12.5m. Excluding
this gain, underlying profit before tax is GBP42.3m. H o using p r
o perties (net of depreciati o n) h a ve increased to GBP 2,220m fr
om GBP2,053m at 31 March 2 0 23.
Consolidated Statement of Comprehensive Income 12 months 12 months
(GBP000) March 2023 March 2022
Turnover 301,217 240,933
Operating costs (253,477) (188,618)
Surplus on sale of housing property, plant and
equipment 20,309 22,609
Operating Profit 68,049 74,924
Profit on disposal of other property, plant,
equipment and intangible assets - 8
(Impairment)/reversal of impairment of housing
assets (87) 137
Share of profit in joint ventures 1,624 2,631
Increase in fair value of investment properties 107 1,153
Net finance expense (27,420) (27,664)
------------- -------------
42,273 51,189
Gain on acquisition 12,549 119,409
Profit before tax for the year 54,822 170,598
Financial indicators 12 months 12 months
March 2023 March 2022
Operating margin (excluding surplus on sale
of housing property, plant and equipment) (1) 15.8% 21.8%
Social housing operating margin(2) 20.5% 25.6%
EBITDA MRI interest cover(3) 177.2% 182.5%
Gearing 51.0% 50.0%
------------ -------------
The Group's revenue continued to be focused on low-risk
affordable housing with 71% related to the provision of affordable
housing, 20% from first tranche shared ownership sales and the
remaining 9% from social housing support services, non-social
housing support services and other sources.
Demand for routine repairs remains high. Further to the backlog
from the pandemic and the February 2022 storms, we managed to meet
these high demands during the first half of the year. Despite these
challenges, we're pleased to report that our overall customer
satisfaction was 77% as at March 2023 (includes our general needs
and HOPS customers across Aster Group and C&C only versus 82%
at March 2022).
This year the focus on the standard of social housing homes has
remained in the spotlight. Addressing any work related to
condensation, damp and mould issues in particular remains a key
priority. We want to be as proactive and preventive as we can and
work with specialists where needed to help us address the root
causes on any problems. As such, we have taken several proactive
steps to address these issues which are making real positive
impact. We have created a dedicated workstream to tackle these
issues, rolled out specialist training to surveyors on diagnosing
damp and mould in properties, and increased our surveying capacity
to ensure we are inspecting homes as soon as possible.
We are targeting investment in our homes in the right places,
informed by data. Our stock condition survey has and will help
inform our investment in major repairs and planned work this year
and into the future.
Our overall operating margin was 15.8%, down from 21.8% in the
comparative period due to significant inflationary increases across
the business, our team managing an increased demand of repair work
and additional investment in our stock following the initial
outcome from our stock condition survey.
Affordable housing rental income continues to grow increasing
GBP18.5m to GBP190.6m reflecting our new developed properties being
let together with properties acquired and annual rent increases.
Rent arrears have been tightly managed and remained strong at 1.8%
(March 2022: 1.8%) against a target of 3% of associated revenue.
Our approach to collecting rent is one based on making sure our
customers are financially included, able to sustain their tenancies
and benefit from a flexible, person-centred service. Our financial
wellbeing team is central to this approach meaning our customers
can manage their finances effectively and feel supported. Void
losses for the Group's general needs and sheltered stock were
improved for the period at 0.7% (March 2022: 0.8%), compared to the
target of 0.8%.
Sales of shared ownership homes and open market sales homes
(predominantly delivered through joint ventures) totalled 556 units
for the year ended 31 March 2023 (March 2022: 540). We continue to
see high demand for shared ownership properties, with first tranche
sales of GBP60.5 m for the year (422 units) at an average sales
percentage of 45%. In the current climate, customers are drawn to
shared ownership due to its lower risk. The average reservation
rate this year was 38 properties per month and average sales time
for such properties was ten weeks, from property handover to
completion against a target of 26 weeks . As at 31 March 2023, the
Group had 94 completed shared ownership homes (March 2022: 50)
available for sale, of which 70 were reserved (March 2022: 49).
Other asset sales continue to perform ahead of budget for the
period due to the continuation of our Void Disposal Programme (VDP)
and an upturn in sales from staircasing of shared ownership homes,
again due to the market conditions.
The gain on acquisition relates to our acquisition of Enham
Trust on 1 October 2022, with the comparative period relating to
Central and Cecil Housing Trust (C&C) which was acquired on 1
January 2022. Both have been recognised as non-exchange
transactions.
Debt and li qu i d i ty
Net debt during the period has increased to GBP1,108m from
GBP1,002m at March 2022. Liquidity at 31 March 2023 was GBP402.6m
(21 months of our net cash spend), consisting of committed and
available undrawn facilities of GBP219.0m, cash and cash
equivalents of GBP93.6m and retained bonds of GBP90.0m. During the
year GBP50m of guaranteed fixed rate secured bonds were sold.
Development
We have performed positively over the year both in terms of new
business and the number of handovers and homes completed. As
mentioned above, we completed 1,312 homes, the highest number of
handovers ever within a financial year. This was comprised of 1,164
affordable homes, 17 market rent units and 131 homes developed with
our joint venture partner. We also acquired a further 82 properties
in Wandsworth. We boosted our forward programme by contracting on
40 schemes which will provide 1,706 homes. This included a number
of land-led developments, a large developer-led scheme of nearly
300 homes with Persimmon and our first schemes in London, since
C&C joined the Group.
As a Homes England Strategic Partner we have secured GBP114
million to deliver 1,550 homes by March 2028. This funding
continues to support the delivery of our land led schemes. GBP10.2m
of grant was drawn down during the year against the expenditure of
nearly GBP12m, across 248 homes. Build cost inflation pressures
continue to be a concern, which although have eased, we don't
expect to return to normal levels of inflation for some time.
However, as the majority of our programme is developer-led (fixed
price) our exposure is limited. The planning system continues to
present challenges for the housing sector and we have experienced
long delays in achieving planning consents and clearing planning
conditions. The issue of nitrate neutrality also continues to delay
the process, but we are working diligently to connect with the
right stakeholders to find ways to speed things up where we
can.
Board and executive team changes
Aster Group Ltd: The members of the Executive Board are Bjorn
Howard, Chris Benn, Rachel Credidio, Dawn Fowler-Stevens, Emma
O'Shea and Amanda Williams.
There were no changes to the Board during the year to 31 March
2023.
Aster Treasury plc: There were no changes to the membership of
the board.
Aster Group credit rat i ng and governance
Aster Treasury plc is rated A+ (negative) by Standard and Poor's
(December 2 022), and G 1/ V1 by t he Regulat or of Social H o
using (January 2022).
Notes:
(1) Demonstrates the profitability of operating assets before
exceptional expenses. Defined as operating profit, excluding
surplus on sale of property, plant and equipment, as a percentage
of total turnover.
(2) Demonstrates the profitability of social housing operating
assets before exceptional expenses. Defined as operating profit
derived from social housing activities, excluding surplus on sale
of property, plant and equipment, as a percentage of total
turnover.
(3) Seeks to measure the level of surplus generated compared to
interest payable. It is a key indicator for liquidity and
investment capacity. EBITDA MRI is Earning before interest, tax,
depreciation, amortisation, excluding profit on disposal of
property, plant and equipment, but including the cost of
capitalised major repairs (major repairs included). Interest
includes the group's interest payable plus interest capitalised
during the year but excluding interest on the net pension
liabilities.
Calculated as net debt (loans less cash) as a proportion of
social housing assets. Shows how much of the social housing assets
are made up of debt, and the degree of dependence on debt finance.
It also sets out the potential capacity for further borrowing which
can be used to fund the future development of new housing.
For m o re i nfo rmation, p l e ase c onta ct:
Chris Benn, Chief financial officer - Chris.benn@aster.co.uk
https://www.aster.co.uk/corporate/about-us/investor-relations
Dis claimer
The information contained herein (the "Trading Update") has been
prepared by Aster Group Limited (the "Parent") and its subsidiaries
(the "Group"), including Aster Treasury plc (the "Issuer") and is
for information purposes only. The information contained in the
Trading Update is unaudited.
The Trading Update should not be construed as an offer or
solicitation to buy or sell any securities issued by the Parent,
the Issuer or any other member of the Group, or any interest in any
such securities, and nothing herein should be construed as a
recommendation or advice to invest in any such securities.
Statements in the Trading Update, including those regarding
possible or assumed future (or other) performance of the Group as a
whole or any member of it, industry growth or other trend
projections may constitute forward-looking statements and as such
involve risks and uncertainties that may cause actual results,
performance or developments to differ materially from those
expressed or implied by such forward-looking statements.
Accordingly, no assurance is given that such forward-looking
statements will prove to have been correct. They speak only as at
the date of the Trading Update and neither the Parent nor any other
member of the Group undertakes any obligation to update or revise
any forward- looking statements, whether as a result of new
information, future developments, occurrence of unanticipated
events or otherwise. The information contained in the Trading
Update is unaudited. Trading Updates may be based on Management
Accounts rather than draft financial statements so may not take
into account all consolidation and other adjustments as required
for the financial statements. These include, but are not limited
to, corporation tax, fair value of investment properties, fair
values relating to business combinations, balance sheet
reclassifications between fixed and current asset housing stock and
defined benefit pension costs such as interest and current service
cost adjustments. The group does not anticipate these adjustments
will have a material effect on the outputs.
None of the Parent, any member of the Group or anyone else is
under any obligation to update or keep current the information
contained in the Trading Update. The information in the Trading
Update is subject to verification, does not purport to be
comprehensive, is provided as at the date of the Trading Update and
is subject to change without notice.
No reliance should be placed on the information or any
projections, targets, estimates or forecasts and nothing in the
Trading Update is or should be relied on as a promise or
representation as to the future. No statement in the Trading Update
is intended to be a profit estimate or forecast. No representation
or warranty, express or implied, is given by or on behalf of the
Parent, any other member of the Group or any of their respective
directors, officers, employees, advisers, agents or any other
persons as to the accuracy or validity of the information or
opinions contained in the Trading Update (and whether any
information has been omitted from the Trading Update). The Trading
Update does not constitute legal, tax, accounting or investment
advice.
END
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