Paragon Treasury PLC Trading update: period ended 30 September 2019 (4547S)

TIDM60VT

RNS Number : 4547S

Paragon Treasury PLC

08 November 2019

Paragon Treasury Plc

Paragon Asra Housing Limited ('PA Housing') trading update and unaudited financial results for the period ended 30 September 2019

PA Housing, 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 2019/20 financial year.

Over the period, PA Housing has delivered an operating surplus of GBP27.7m from turnover of GBP74.9m, equating to an operating margin of 37 per cent. The net surplus after interest and other adjustments is GBP13.7m. Total available liquidity is at GBP238m. Overall results on core lettings operations are in line with budget expectations. New build shared ownership sales completions are behind budget, primarily reflecting a timing variance driven by delays in completion of the build phase on some development projects. As at the end of September only 16 homes were unsold and available.

Key financial and operational highlights include:

-- Successful launch of our expanded 'Team Purple' housing services model, with 30 new employees recruited and early positive impacts on customer engagement and satisfaction

-- Capital investment in our existing stock forecast at GBP18m, including substantial programmes which will improve the energy efficiency of our homes

-- Investment in new homes forecast at GBP180m, with 750 homes on site and a target to complete 400 homes in the year (all of which are core social housing properties)

   --    Receipt of GBP25m additional grant funding from the GLA in support of our new build programme 

-- Strong margins achieved on new build shared ownership sales to date, with demand in our core operational areas remaining solid and sales values holding up well

   --    Securing GBP2m of additional income for residents through our tenancy sustainment work 

-- A surplus of GBP1.6m from shared ownership staircasing transactions, some GBP0.7m ahead of budget

-- Weighted average cost of capital reduced to 3.9 per cent, arising from work to restructure the derivatives portfolio

-- Establishment of and recruitment into a new Board Trainee position, which has been designed to promote access to non-executive positions for people from minority ethnic backgrounds

-- A successful summer work experience scheme for children of residents and staff, in support of our ambition to help young people into employment

Outlook

PA Housing's financial position remains stable and resilient, in line with the business model which focusses on core social housing activities. Our A3 Stable rating with Moody's was reaffirmed in October 2019. Liquidity is strong and work is ongoing to develop further lines of liquidity in support of our medium term growth plans. We continue to prioritise the safety and comfort of our residents - this will entail some additional expenditure commitments in relation to the evolving national fire safety agenda in particular, and we will factor those commitments into our financial planning. During the current year we remain on track to meet our financial golden rule targets.

Statement of Comprehensive Income to 30 September 2019

 
                                     Actual GBPm   Budget GBPm   Variance 
                                                                   GBPm 
 Rent and service charges income        65.5          66.3        (0.8) 
                                    ------------  ------------  --------- 
 Shared ownership first tranche 
  sales                                  4.5          11.6        (7.1) 
                                    ------------  ------------  --------- 
 Other income                            2.2           1.9         0.3 
                                    ------------  ------------  --------- 
 Amortisation of Social Housing 
  Grant                                  2.7           2.6         0.1 
                                    ------------  ------------  --------- 
 Turnover                               74.9          82.4        (7.5) 
                                    ------------  ------------  --------- 
 
 Core operating costs                  (38.4)        (38.0)       (0.4) 
                                    ------------  ------------  --------- 
 Depreciation                          (10.6)        (10.1)       (0.5) 
                                    ------------  ------------  --------- 
 Cost of first tranche sales            (2.6)         (8.0)        5.4 
                                    ------------  ------------  --------- 
 Surplus on fixed asset disposals        4.4           4.9        (0.5) 
                                    ------------  ------------  --------- 
 Operating surplus                      27.7          31.2        (3.5) 
                                    ------------  ------------  --------- 
 
 Net interest                          (13.5)        (13.7)        0.2 
                                    ------------  ------------  --------- 
 FRS 102 accounting adjustments         (0.5)           -         (0.5) 
                                    ------------  ------------  --------- 
 Total comprehensive income             13.7          17.5        (3.8) 
                                    ------------  ------------  --------- 
 

Statement of Financial Position as at 30 September 2019

 
                                          30 Sep 19   31 Mar 19 
                                             GBPm        GBPm 
 Negative goodwill                           (8)         (8) 
                                         ----------  ---------- 
 Tangible fixed assets                      1,706       1,672 
                                         ----------  ---------- 
 Current assets                              108         102 
                                         ----------  ---------- 
 Current liabilities                        (45)        (57) 
                                         ----------  ---------- 
 Total assets less current liabilities      1,761       1,709 
                                         ----------  ---------- 
 
 Creditors due after more than 
  one year                                 (1,219)     (1,180) 
                                         ----------  ---------- 
 Pension liabilities and other 
  provisions                                (27)        (27) 
                                         ----------  ---------- 
 Total net assets                            515         502 
                                         ----------  ---------- 
 
 Reserves                                    515         502 
                                         ----------  ---------- 
 

Enquiries

All enquiries in relation to this trading update should be directed to:

Simon Hatchman, Executive Director - Resources

Tel: [phone]

email: [e-mail]

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.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [e-mail] or visit www.rns.com.

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November 08, 2019 07:00 ET (12:00 GMT)