TIDM60VT
RNS Number : 1658B
Paragon Treasury PLC
02 June 2023
Paragon Treasury Plc
Paragon Asra Housing Limited ('PA Housing') trading update and
unaudited financial results for the year ended 31 March 2023
PA Housing, the parent company of Paragon Treasury Plc and a
Registered Provider owning and managing 24,000 homes in the East
Midlands, London and Surrey, announces its trading highlights and
unaudited summary financial results for the 2022/23 financial
year.
Headline results
Over the year, PA Housing has delivered an operating surplus of
GBP39.6m from turnover of GBP181.1m, equating to an operating
margin of 22 per cent. Total comprehensive income after loan
interest and other adjustments was GBP36.1m; this included a
positive movement in the fair value of hedged financial instruments
and investment properties of GBP28.8m. Total available liquidity as
at 31 March 2023 was GBP299m.
As noted in our 2022 Financial Statements and our 2022/23
half-year trading update, the social housing sector has been
affected by the adverse economic conditions within the wider UK
economy. Through the course of the year, our Board made appropriate
decisions to mitigate these impacts and ensure retention of
adequate financial capacity. Within this context, the unaudited
results reflect an acceptable outcome and are in line with the
revised forecast monitored by the Board through the year.
Our non-recurring fire safety remediation expenditure to address
historic defects at a small number of high rise blocks has
continued to have a significant impact on headline results. Total
expenditure on these activities in the year was GBP6.2m. Our
underlying operating margin excluding these additional costs was 24
per cent.
Property sales
During the year we completed 148 new build shared ownership
sales, delivering a surplus of GBP5.0m at an average sales margin
of 23 per cent. As at the year end date we had 130 unsold
homes.
Asset disposals activities, comprising a mix of shared ownership
staircasing, Right to Acquire sales, and ad hoc vacant possession
sales in line with our asset management strategy, delivered a
surplus of GBP5.4m.
Other highlights
In other areas of core activity:
Ø Rent and service charge losses through vacant properties ended
the year materially in line with budget, reflecting success in
significantly driving down our average re-let times for vacant
homes.
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 and
additional resources deployed to improve turnaround times for empty
homes.
Ø Overhead costs ended the year GBP2m below budget, with savings
generated to maintain capacity for asset investment in the wake of
the UK economic turmoil.
Areas of focus
Our Board continues to closely review financial plans and risks.
In the short term, our 2023/24 operating budget reflects the more
constrained environment created by prevailing economic conditions.
We continue though to ensure full investment so as to meet Decent
Homes and building safety compliance standards, and to drive up the
energy efficiency of our homes. We are working to strengthen
financial capacity in the longer term, so that enhanced investment
into our estates can be accommodated.
The Board accepts that the current economic compromises our
ability to meet all golden rules, but extensive scenario testing
gives assurance that our financial plans remain robust and
resilient. Work is ongoing to further strengthen our financial
resilience, and the Board will review future investment capacity in
relation to our golden rules.
Our exposure to new build property sales has already been
adjusted downwards. Accordingly, our golden rule governing how much
of planned turnover arises from this sales activity is now reduced
from 25% to 20%, and we plan to reduce this further to 15% once the
current sales pipeline has been worked through.
Beyond the financials, we are completely focused on driving up
the standards of our services to residents. A number of workstreams
are in progress to achieve this, including a simplified and more
responsive operating model, changes to our repairs service delivery
models, and investment in new technology to better support our
customer facing teams. In the year ahead we will take opportunities
to share details of this work with investors and stakeholders.
ESG
Our 2023 ESG report will be released around the time that we
publish our 2023 Financial Statements, planned for September 2023.
Headline results for the year in certain key areas are as
follows:
Ø 74% of our homes achieved at least an Energy Performance
Certificate C rating, with 21% achieving at least a B rating.
(2022: 62% at least C and 11% at least B)
Ø Our tenancy sustainment team supported 2,377 residents through
the year, delivering income gains of GBP4.3m through additional
benefits and grants. (2022: 2,100 residents and GBP4.4m of
gains)
Damp and mould
Our work on damp and mould risks in our homes continues, and we
have a number of control measures in place to manage the
position:
Ø Our approach to tackling damp and mould aligns with the
recommendations made by the Housing Ombudsman.
Ø We are recruiting additional dedicated resources in both of
our regional offices to support diagnosis and resolution of damp
and mould issues.
Ø We conduct full stock condition surveys of all our homes on a
five-yearly cycle, covering 170 internal and external data
components.
Ø Any damp and mould found during a survey is risk-assessed in
accordance with the Housing Health and Safety Rating System
guidance, with these ratings in turn aligned to the Decent Homes
Standard to ensure appropriate action.
Ø We have carried out historical review of all repair requests
and other data sources over the past 12 months where damp and / or
mould are mentioned in the commentary, with similar reviews to be
performed at regular intervals going forward.
Ø For issues of condensation, damp, or mould, we assess, treat,
and remove the mould as quickly as we can. We then identify what
has caused it and where we need to, arrange to carry out works to
stop it returning.
Ø We continue to review and update the information we provide to
our residents on condensation, damp, and mould on our website and
through other media.
Ø Our Board is receiving regular updates on our management of
damp and mould cases.
Statement of Comprehensive Income to 31 March 2023
(unaudited)
2022/23 2021/22 Variance
GBPm GBPm GBPm
Rent and service charges income 151.3 140.8 10.5
-------- -------- ---------
Shared ownership first tranche
sales 21.5 19.5 2.0
-------- -------- ---------
Other income 2.8 3.2 (0.4)
-------- -------- ---------
Amortisation of Social Housing
Grant 5.5 5.4 0.1
-------- -------- ---------
Turnover 181.1 168.9 11.2
-------- -------- ---------
Core operating costs (108.0) (96.8) (11.2)
-------- -------- ---------
Depreciation and impairment (22.4) (21.6) (0.8)
-------- -------- ---------
Cost of first tranche sales (16.5) (13.7) (2.8)
-------- -------- ---------
Surplus on fixed asset disposals 5.4 7.6 (2.2)
-------- -------- ---------
Operating surplus 39.6 44.4 (4.8)
-------- -------- ---------
Net interest (33.4) (29.7) (3.7)
-------- -------- ---------
Gift aid, taxation and other adjustments 1.1 1.3 (0.2)
-------- -------- ---------
Fair value accounting movements 28.8 20.4 8.4
-------- -------- ---------
Total comprehensive income 36.1 36.4 (0.3)
-------- -------- ---------
Statement of Financial Position as at 31 March 2023
(unaudited)
31 Mar 23 31 Mar 22
GBPm GBPm
Negative goodwill (5.4) (6.1)
---------- ----------
Tangible fixed assets - housing
properties 2,155.6 1,971.8
---------- ----------
Tangible fixed assets - other 24.3 23.5
---------- ----------
Current assets 108.7 129.0
---------- ----------
Current liabilities (111.1) (52.3)
---------- ----------
Total assets less current liabilities 2,172.1 2,065.9
---------- ----------
Creditors due after more than
one year (1,523.9) (1,466.9)
---------- ----------
Pension liabilities and other
provisions (17.0) (23.5)
---------- ----------
Total net assets 631.2 575.5
---------- ----------
Reserves 631.2 575.5
---------- ----------
Other key metrics and indicators as at 31 March 2023
(unaudited)
Headline financials 31 Mar 23 31 Mar 22
Operating margin (social housing
lettings) 20% 23%
---------- ----------
As above excluding fire safety
remediation spend 23% 27%
---------- ----------
Operating margin (all activities) 22% 28%
---------- ----------
EBITDA-MRI interest cover (loan
covenant basis) 133% 146%
---------- ----------
Available liquidity GBP299m GBP362m
---------- ----------
Cash GBP17m GBP29m
---------- ----------
Total loans and borrowings GBP1,086m GBP994m
---------- ----------
Net debt GBP1,069m GBP965m
---------- ----------
Gearing (loan covenant basis) 54% 52%
---------- ----------
Core lettings business 31 Mar 23 31 Mar 22
---------- ----------
Current resident rent arrears 4.3% 4.0%
---------- ----------
Rent loss through voids 2.4% 2.6%
---------- ----------
Re-let times (general needs properties) 36 days 57 days
---------- ----------
Development and sales 31 Mar 23 31 Mar 22
---------- ----------
Completed homes: rented social
tenures 180 132
---------- ----------
Completed homes: shared ownership 104 185
---------- ----------
Completed homes: other 0 1
---------- ----------
New build shared ownership homes
sold 148 127
---------- ----------
Unsold homes total 130 174
---------- ----------
Unsold homes > 6 months 49 71
---------- ----------
Average sales margin 23% 30%
---------- ----------
Note: The above 2022/23 figures are based on unaudited
management accounts and are subject to change following audit. In
particular, pension scheme year end accounting entries are not yet
finalised and so final audited figures will differ in this
respect.
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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