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| Name | Symbol | Market | Type |
|---|---|---|---|
| Plat Hg Fin 55 | LSE:17YE | London | Bond |
| Price Change | % Change | Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0 | - |
From Dec 2019 to Dec 2024
TIDM17YE
RNS Number : 7565T
Platform HG Financing PLC
29 November 2021
29 November 2021
Platform HG Financing Plc Platform Housing Group Limited
Results for the six months ended 30 September 2021
Highlights
-- Turnover increased by 12% to GBP150.5m (2020: GBP134.3m) -- Housing market showing continued resilience, with strong sales volumes and values
-- Impacts of Covid-19 and Brexit experienced in the supply chain for maintenance and development activities, affecting materials costs, lead times and labour availability
-- Operating surpluses decreased by 14.3% to GBP46.9m (2020: GBP54.8m), driven by one-off charges -- First report under the Sustainability Reporting Standard published in July 2021 -- First 'Sustainable' GBP250m bond issued in September 2021 At or for the six months ended 30 2020 2021 Change September --------------------------------------- ---------- ---------- ---------- Turnover GBP134.3m GBP150.5m 12.1% Operating surplus(1) GBP54.8m GBP46.9m -14.4% New homes completed 393 715 81.9% Investment in new and existing homes GBP102.1m GBP98.1m -3.9% Share of turnover from social housing lettings 83.96% 77.27% -6.69ppt Social housing lettings margin(2) 47.1% 37.04% -10.06ppt Current tenant arrears(3) 3.32% 2.96% -0.36ppt Gearing(2) 42.78% 41.76% -1.02ppt EBITDA-MRI interest cover(2) 198% 197% -1ppt ---------------------------------------- ---------- ---------- ----------
Notes
(1) Surplus excluding gains on disposal of property, plant and equipment and movements in the valuation of investment properties
(2) Regulator for Social Housing Value for Money metric; for more information go to https://www.gov.uk/government/publications/value-for-money-metrics-technical-note/value-for-money-metrics-technical-note-guidance-june-2020
(3) Current tenant arrears includes all general needs tenants (this excludes shared ownership properties)
Elizabeth Froude, Platform's CEO commented:
"This year we have started to come out of lockdown and deal with backlogs and the impact of that, and Brexit, on the macro-economic and supply chain issues growing around us.
For Platform this has seen the delivery of many new homes, delayed maintenance being caught up on and moving forward with mobilising our new corporate strategy, which sees us starting to build clear plans of where we see the quality, design and carbon standards of our Homes in the future. As well as the ways in which we grow an engaged and strong workforce.
We have continued to see a good appetite for purchasing shared ownership homes coming out of our development programme and have been successful in acquiring new sites to maintain our future development aspirations.
Like many we have seen the impact of lockdown on the general wellbeing of our customers and this often crystalises in complaints. We have stepped up the ways in which we engage with customers to resolve issues and ensure we stay alive to their needs. This has also seen sustained demand for the resources of our Wellbeing Fund and we may yet see further need as we head in to what will inevitably be a difficult winter
We have issued a further Bond in this period, our first as a part of our sustainability enabled EMTN programme. The continued support of the Investor market is valued and it was also good to see new and diversified investors placing orders.
This issuance is key in enabling our future plans for good quality and carbon efficient homes, both new and existing.
I thank our investor base for their continued support and I am certain the consistency of our results reflects the stability of our organisation and sustainable approach to growth."
Conference call for the credit community to be hosted by
Elizabeth Froude, CEO and Rosemary Farrar, CFO
29 November 2021, 12.00pm (UK time)
Join audio of presentation by phone To view the presentation Numbers: 0800 640 6441/+44 20 3936 Click below and follow instructions 2999 https://www.netroadshow.com/nrs/home/#!/?show=afa84439 Access code: 632290 or go to www.platformhg.com/investor-centre Investor enquiries Media enquiries Ben Colyer - +44 7918 160990 media@platformhg.com investors@platformhg.com
Disclaimer
These materials have been prepared by Platform Housing solely for use in publishing and presenting its results in respect of the six months ended 30 September 2021.
These materials do not constitute or form part of and should not be construed as, an offer to sell or issue, or the solicitation of an offer to buy or acquire securities of Platform Housing in any jurisdiction or an inducement to enter into investment activity. No part of these materials, nor the fact of their distribution, should form the basis of, or be relied on or in connection with, any contract or commitment or investment decision whatsoever. Neither should the materials be construed as legal, tax, financial, investment or accounting advice. This information presented herein does not comprise a prospectus for the purposes of Regulation (EU) 2017/1129 as it forms part of domestic law by virtue of the European Union (withdrawal) Act 2018 (the UK Prospectus regulation) and/or Part VI of the Financial Services and Markets Act 2000.
These materials contain statements with respect to the financial condition, results of operations, business and future prospects of Platform Housing that are forward-looking statements. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements, including many factors outside Platform Housing's control. Among other risks and uncertainties, the material or principal factors which could cause actual results to differ materially are: the general economic, business, political and social conditions in the key markets in which Platform Housing operates; the ability of Platform Housing to manage regulatory and legal matters; the reliability of Platform Housing's technological infrastructure or that of third parties on which it relies; interruptions in Platform Housing's supply chain and disruptions to its development activities; Platform Housing's reputation; and the recruitment and retention of key management. No representations are made as to the accuracy of such forward looking statements, estimates or projections or with respect to any other materials herein. Actual results may vary from the projected results contained herein.
These materials contain certain information which has been prepared in reliance on publicly available information (the "Public Information"). Numerous assumptions may have been used in preparing the Public Information, which may or may not be reflected herein. Actual events may differ from those assumed and changes to any assumptions may have a material impact on the position or results shown by the Public Information. As such, no assurance can be given as to the Public Information's accuracy, appropriateness or completeness in any particular context, or as to whether the Public Information and/or the assumptions upon which it is based reflect present market conditions or future market performance. Platform Housing does not make any representation or warranty as to the accuracy or completeness of the Public Information.
These materials are believed to be in all material respects accurate, although it has not been independently verified by Platform and does not purport to be all-inclusive. The information and opinions contained in these materials do not purport to be comprehensive, speak only as of the date of this announcement and are subject to change without notice. Except as required by any applicable law or regulation, Platform Housing expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any information contained herein to reflect any change in its expectations with regard thereto or any change in events, conditions or circumstances on which any such information is based.
None of Platform Housing, its advisers nor any other person shall have any liability whatsoever, to the fullest extent permitted by law, for any loss arising from any use of the materials or its contents or otherwise arising in connection with the materials. No representations or warranty is given as to the achievement or reasonableness of any projections, estimates, prospects or returns contained in these materials or any other information. Neither Platform nor any other person connected to it shall be liable (whether in negligence or otherwise) for any direct, indirect or consequential loss or damage suffered by any person as a result of relying on any statement in or omission from these materials or any other information and any such liability is expressly disclaimed.
Any reference to "Platform" or "Platform Housing" means Platform Housing Group Limited and its subsidiaries from time to time and their respective directors, board members, representatives or employees and/or any persons connected with them.
Operating review
Introduction
This half year has seen the end of Covid-19 related lockdowns and the largely successful rollout of vaccinations across the United Kingdom. As we begin to move forward the after-effects of Covid-19 and Brexit are beginning to materialise, with inflationary pressures evident in our capital programmes, shortages of employees affecting maintenance provision, and the unwinding of Government support initiatives.
These challenges continue to be navigated by the continued dedication and industry of our people, suppliers and partners. Our success in responding to the demands placed on us with agility, empathy and speed ensured that we produced strong results for the half year. Turnover was ahead of the prior year figure supported by strong sales performance. Operating surpluses and margins were lower than the prior year, driven by one-off changes to depreciation charges and an increase in routine maintenance, which compensated for slippage in capital programmes.
The impacts on our customers from the end of Covid related Government initiatives will be closely monitored and we expect to manage these with continued support, rolling out our new operating model and utilising our customer facing teams and support partners to provide help and advice to those who need it.
We will continue to carry out our activities with a strong focus on managing controllable costs, ensuring that at the same time we act in a way that is both sustainable and helps contribute towards the housing crisis by building more homes.
Service review
Supporting our customers, welfare benefits and arrears
Our services continue to evolve and improve, with an increase in the provision and utilisation of digital services to customers. Our new customer portal, Your Platform, was launched in December 2020 allowing customers to log repair requests, set up direct debits, make payments and update account details at a time that suits them. At the half year the number of customers using the service had more than doubled since the start of the year to over 10,000.
We continue to support customers through the rent collection process by managing accounts proactively and offering advice and guidance to those in financial difficulties. This is supported with our on-going arrangement with Stay Nimble, who provide employment and training for customers who are close to employment, recently unemployed and for those needing support to move into another sector or industry. Since the partnership was established, 38% of participants have secured employment and training outcomes. Stay Nimble have evidenced a GBP147,268 Social Value return through increases in confidence, training and employment.
Our arrears performance remains strong at the half year, with overall arrears of 2.96% at 30 September 2021, down from 3.32% at 30 September 2020. Within this, arrears from customers in receipt of Universal Credit ('UC') continue to reduce as we get better at supporting customers through this transition. Arrears from customers in receipt of UC was 3.32% at 30 September 2021, down from 6.40% at 30 September 2020 which has also been positively affected by a change in the timing of payments from the Department for Work and Pensions.
Growth in the known number of residents receiving UC continued during the half year, with 13,702 in receipt of UC at September 2021, a growth of 25% in comparison to 30 September 2020 (10,934 customers). The average monthly increase in customers in receipt of UC was just under 200 for the first six months of the year. This was almost half of the comparative prior year figure of 365, with the prior year significantly affected by the outbreak of Covid-19. After full roll out in 2024, we expect approximately 18,000 of our customers to be in receipt of UC.
Voids management
It has been a challenging environment in which to let properties in the first half of the year, with maintenance teams being impacted by a shortage of available labour to carry out necessary repairs before properties can be re-let. Discussions are on-going with a number of external contractors to help support voids service delivery. Our property care business is now looking to increase internal recruitment to add capacity to existing teams, with the effects of this likely to be felt in the fourth quarter. There were 667 voids at the half year in comparison to 620 at September 2020, of which 162 related to homes awaiting sale (September 2020: 211). Re-let days were 54 days at September 2021 (September 2020: 57), with 36 days on average taken to carry out repairs.
Asset management
During the first half of the year asset management activities continued to be adversely affected by supply chain issues as logistical delays added to a swell of demand and a shortage of supply. As a consequence, capital programmes delivered less than projected, with some areas affected worse than others. For example, roofing has been affected by competing demands for materials that are also used in face masks. The Group is working extensively with current partners and in some instances, looking for new sources of supply to overcome these challenges as we move into the second half of the year.
Repairs satisfaction was high during the period, recording 85% at September 2021 (30 September 2020: 90%). Satisfaction levels have been adversely affected by an increase in the time taken to repair, driven by Covid access, staff shortages and supply chain issues. Gas and fire risk assessment compliance was 99.9% and 100% (30 September 2020: 99.2% and 99.3%), with access issues beginning to subside towards the end of the period. Fire Risk Assessments have identified a number of low level recommendations such as moving bin storage further away from buildings. The Group is committed to implementing all recommendations at an estimated cost of GBP10m over the next two years.
Environmental, social and governance ('ESG')
The Group considers ESG to be a key part of its core operations. Earlier this year we published our 2021-26 Corporate Strategy, which identified sustainability, environmental and social value creation as one of our six strategic areas of focus. In July 2021 we published our first report under the Sustainability Reporting Standard (SRS), which showcases our performance and aspirations in the area of ESG. This was followed in August 2021 with the establishment of a Sustainable Finance Framework (the Framework). The framework was used to issue our first sustainable bond in September 2021. Both the SRS Report and Framework are available to download from the Investor Centre section of the Platform website.
In the first half of the year we have been working with global sustainability consultants Anthesis, to determine our scope one, two and three greenhouse gas emissions. The findings of the report show that the majority of emissions come from purchased goods and services (49%) and housing stock (43%). During the year to March 2021 emissions reduced by 7%, largely as a result of reduced development and maintenance activity. The findings of the report will help support the formation of our Green and Sustainability Strategies, which are due to be completed in the second half of the year and provide targets for carbon reduction as we plan for carbon neutrality by 2050. To help support our sustainability initiatives a new Head of Sustainability was recruited during the year with the specific remit to decarbonise the Group.
During the first half of the year energy performance certificates (EPCs) were completed for a further 6,000 homes. EPCs are now available for 80% of all of our homes as we continue to push ahead with plans to have full coverage by the end of the year. At September 2021 an estimated 70% of our homes had an EPC rating of C or better and 94% had an EPC rating of D or better. Air source heat pumps were retro-fitted to 54 and solar panels were retro-fitted to 30 of our homes.
The Group continues to make a strong social contribution with a focus on the delivery of affordable housing for our customers. During the first half of the year all of the homes we developed were for social or affordable rent, or built for sale on a shared ownership basis. We continue to focus on build quality and are developing a 'Platform Standard' for all new build properties, with the aim of moving existing properties towards the Standard at the point we carry out significant investment or void works.
The Group has started working with the Housing Associations' Charitable Trust (HACT) to measure the social value created by our projects. The HACT Social Value Calculator will be used to determine the social rate of return on projects across the Group, highlighting the value created. The total returns will be published at the end of the year as part of our reporting under the SRS and be used to form targets going forwards.
The first half of the year has seen the continued roll-out of our GBP1.6m well-being fund, which has disbursed approximately GBP0.9m in the year to September 2021, helping over 1,600 customers who were struggling to meet the costs of food, clothing and other essential items. The fund will continue to support customers for the remainder of this year and will operate again in the year to March 2023 to help those most in need.
In May 2021 the Group established a Trainee Board programme. Over 100 applicants were received for the five places on the programme. The trainees will attend Board and Committee meetings, have formal training from the Chartered Institute of Housing and be assigned a Board member mentor. The objective is to place trainees on the Board at the end of the two years to ensure the Board remains diverse and representative of our customers.
The Group's credit ratings remain in place with S&P (A+, stable) and Fitch (A+, stable), with the latter reaffirmed shortly after the half year. These compliment the highest ratings for governance and financial viability assigned by the Regulator of Social Housing (RSH) ('G1 / V1').
Development review
Strategy
The first half of the year saw the continued implementation of our Development Strategy, as we seek larger sites, with greater control over delivery, quality and additionality. The Group is currently negotiating on a number of larger sites and we hope to have secured some of these during the second half of the year.
Home building programme
During the year our home building programme has been affected by an increase in global demand for materials, the impact of Brexit and the last national lockdown in the UK. These have resulted in sharp increases in materials costs and extended supply times. In spite of this, developments have shown considerable resilience, with 715 homes completed in the six months to September 2021 (30 September 2020: 393). Of these, 137 (18%) were built for social rent, 287 (40%) for affordable rent, 278 (39%) for shared ownership, 10 (1%) for 'Rent to Buy' and three commercial units built as part of a regeneration project. Given our current pipeline, we expect to build between 1,300 and 1,400 homes in the year to March 2022, which is down on previous estimates of 1,500 due to the materials shortages and supply chain delays outlined above. At 30 September 2021, Platform owned a total of 46,745 homes (30 September 2020: 45,838).
In the half year to 30 September 2021 development expenditures were GBP93.3m in comparison to GBP100m in the prior year. The reduction in expenditures is due to Covid-19 related delays to construction on site in combination with supply chain delays and the strategic change to look for larger sites, which have longer lead times.
The Group made a significant bid under the Homes England 2021-2026 affordable homes programme in the first half of the year and was successfully allocated grant of GBP250m to develop 4,680 homes at a total cost of approximately GBP1.1bn. All of the homes will be for affordable tenures, with approximately 20% for social rent. In accordance with the requirements of the programme, 50% will provide affordable routes into home ownership, of which 38% will be for shared ownership and 12% Rent to Buy. Of the homes developed, 35% will be built using modern methods of construction, of which 16% will be traditional build types with modern methods utilised to reduce labour and increase productivity. We expect to start on site for schemes in the year to March 2023, with completions coming in years ending March 2024-28.
Governmental and regulatory developments
The social housing regulator is in the process of identifying measures to use for assessing compliance with the Charter for Social Housing Residents: Social Housing White Paper and will be consulting with the sector on this in December 2021. It is likely that any new, formal regulatory measuring requirements will not be in place until April 2023 and the Group are already proactively working to ensure compliance.
Financial review
Turnover
In the six months to 30 September 2021 total turnover grew 12.0% to GBP150.5m (2020: GBP134.3m).
Hot Features
Premium
Six months ended 30 September 2020 2021
GBPm GBPm Change
------------------------------------- ------ ------ -------
Social housing lettings 112.8 116.3 3.1%
Shared ownership first tranche
sales 14.3 27.5 92.3%
Other social housing activities 1.5 1.2 -20.0%
-------------------------------------- ------ ------ -------
Total social housing turnover 128.6 145.0 12.8%
Development for sale 2.3 0.0 -99.5%
Other non-social housing activities 3.4 5.5 61.1%
-------------------------------------- ------ ------ -------
Total turnover 134.3 150.5 12.1%
====================================== ====== ====== =======
Social housing lettings turnover increased 3.1% to GBP116.3m (2020: GBP112.8m), in part due to inflationary rent increases of 1.5% (set at September 2020 UK consumer price index of 0.5% plus 1%). The effects of the rent increase was supported by a year on year increase in social housing units, with 909 units completed in the year to March 2021 and a further 715 in the six months to September 2021.
Shared ownership first tranche sales have continued to perform well, significantly improving on the prior year which was adversely affected by the initial Covid-19 lockdown. Turnover increased 92.3% to GBP27.5m (2020: GBP14.3m). This reflected an 80.9% increase in sales to 322 homes (2020: 178 homes) and an average sales price 4.0% higher than in the prior year. With new shared ownership completions of 278 units, unsold shared ownership stock declined from 206 units at 31 March 2021 to 162 units at 30 September 2020.
Total social housing turnover of GBP145.0m (2020: GBP128.6m) accounted for 96.3% (2020: 95.7%) of Platform's total turnover in the period.
Operating costs and costs of sale
Total costs increased 30% to GBP103.5m (2020: GBP79.6m), with operating costs increasing 23.6% to GBP81.1m (2020: GBP65.6m) and costs of sale increasing 60.2% to GBP22.4m (2020: GBP14m).
Year ended 31 March 2020 2021
GBPm GBPm Change
------------------------------------ ----- ------ --------
Social housing lettings operating
costs 59.7 73.2 22.6%
Other social housing costs
- shared ownership costs of sale 11.7 22.4 91.5%
- other social housing operating
costs 2.6 2.0 -23.7%
------------------------------------- ----- ------ --------
Total social housing costs 74.0 97.6 31.9%
Developments for sale costs of
sale 2.3 0.0 -100.0%
Other non-social housing operating
costs 3.3 5.9 79.3%
------------------------------------- ----- ------ --------
Total costs 79.6 103.5 30.0%
===================================== ===== ====== ========
Social housing lettings operating costs make up most of our costs and they increased by 22.6% to GBP73.2m (2020: GBP59.7m), driven by one-off depreciation charges of GBP5.6m as a result of aligning policy. In addition, revenue maintenance costs were higher by GBP5.5m, with expenditures helping to compensate for delays in capital programmes.
Shared ownership cost of sales increased by 91.5%, slightly below related turnovers (92.3%), with sales price growth marginally ahead of associated cost inflation. Other non-social housing cost growth has been driven primarily by growth in revenues of 61%, and also affected by staff shortages in external maintenance contracts which have resulted in a greater proportion of agency staff being utilised.
Interest costs
Total net interest payable in the six months ended 30 September 2021 increased 13.2% to GBP30.9m (2020: GBP27.3m). This was principally due to increased levels of one-off break costs paid (GBP2.3m). Underlying net interest payable increased 1.7% to GBP24.0m (2020: GBP23.6m), largely due to a higher proportion of fixed rate debt being drawn throughout the period.
Surpluses and margins
Maintaining surpluses is a crucial part of our business model. We reinvest 100% of surpluses into building more homes, improving energy efficiency and enhancing our services.
Operating surpluses and margins for social housing lettings were lower than the prior year due to one-off depreciation charges following alignment of our capitalisation policies, higher revenue maintenance expenditures in the current year to compensate for delayed capital programmes, and subdued maintenance in the prior year as activity was curtailed during the first national lockdown. Total operating surpluses were also lower for the same reasons. Operating margins have been affected by reductions in surpluses and also by a larger proportion of turnovers being generated from lower margin shared ownership sales. In the six months to 30 September 2021 18.3% of turnover came from shared ownership sales (September 2020: 10.6%), with associated margins of 18.4% (September 2020: 18.3%). The overall surplus after tax, which incorporates interest costs, declined to GBP20.5m (2020: GBP30.6m), driven by the items outlined above in combination with one-off loan breakage costs exceeding the equivalent prior year cost by GBP2.3m. When one-off depreciation and loan breakage costs are adjusted for the reduction in surplus after tax totals GBP2.2m, driven by higher maintenance costs. The different measures of surplus and related margins for the current and prior year are set out below.
Six months ended 30 September 2020 2021
Amount Margin Amount Margin
GBPm % GBPm %
--------------------------------- ---------- ------- ---------- -------
Social housing lettings surplus 53.1 47.1 43.1 37.0
Overall operating surplus(1) 54.8 43.0 46.9 31.2
Surplus after tax 30.6 22.8 20.5 13.6
Adjusted surplus after tax(2) 37.0 27.5 34.8 23.1
--------------------------------- ---------- ------- ---------- -------
Notes
(1) Excluding gains on disposal of property, plant and equipment
(2) Excluding one-off depreciation charges for - capitalisation policy alignment and loan breakage costs
The table below sets out the key drivers of the variance in Platform's surplus after tax between the six months to September 2021 and prior year.
Income Expenditure Surplus
GBPm GBPm GBPm
---------------------------------------------------- ------- ------------ --------
Six months ended 30 September 2020 30.6
One-off loan breakage costs 6.4
--------
Surplus after tax before one-off charges -
September 2020 37.0
Social housing lettings turnover 3.5 3.5
Other social housing turnover (excluding sales) -0.3 -0.3
Property sales(1) 10.9 -8.4 2.5
Repairs and maintenance costs -5.5 -5.5
Other social housing lettings costs -2.5 -2.5
Other social housing activities excluding sales 0.7 0.7
Non-social housing activities 2.0 -2.7 -0.7
Gains on disposal of property, plant and equipment 7.6 -6.4 1.2
Net interest costs -0.4 -0.4
Capitalised interest -0.9 -0.9
Other 0.2 0.2
--------
Surplus after tax before one-off charges -
September 2021 34.8
One-off depreciation charges for - capitalisation
policy alignment -5.6 -5.6
One-off loan breakage costs -8.7 -8.7
--------
Six months ended 30 September 2021 20.5
==================================================== ======= ============ ========
Notes
(1) Property sales include shared ownership first tranche sales and developments for sale at cost to Local Authority partners
Treasury review
Financing activity
Platform issued its first 'sustainability' bond in September 2021, using the EMTN programme established in February 2021 and the Sustainable Finance Framework launched in August 2021. The 20 year, GBP250m issuance had an interest rate of 1.926% and will help support Platform's ambitions to build more homes and reduce its carbon footprint.
In July 2021 a legacy facility with Nationwide Building Society was repaid. The GBP33m facility included fixed rates that averaged 4.5%, with maturities that went out to 2037, resulting in GBP9m of break costs, which will be recovered through interest cost savings going forwards. The cancellation of the facility helps to harmonise the Group's funding covenants and liberates security that was restricted to EUV-SH valuations, generating extra debt capacity.
Debt and liquidity
At 30 September 2021, Platform's net debt was GBP1,114.4m (31 March 2021: GBP1,094.4m). Net debt comprised nominal values of GBP832m in bond issues, GBP80m in private placements and GBP497.1m in term loan and revolving credit facilities, partially offset by GBP284.1m in cash and cash equivalents and GBP10.6m in unamortised financing fees and other accounting adjustments.
The average cost and average life of Platform's drawn debt was 3.32% and 23 years respectively at 30 September 2021 (31 March 2021: 3.40% and 22 years) with the enhanced metrics driven by the bond issued in September 2021.
Platform had sufficient liquidity at 30 September 2021 (approximately GBP800m including undrawn committed facilities and cash and cash equivalents) to meet all its forecast needs until the end of 2023, taking into account projected operating cash flows, forecast investment in new and existing properties and debt service and repayment costs.
Financial ratios
Gearing, measured as the ratio of net debt to the net book value of housing properties, was 41.8% at 30 September 2021 (30 September 2020: 42.8%). Gearing was also comfortably within Platform's golden rule of maintaining gearing below 50% and tightest financial covenant in its banking arrangements (60%).
EBITDA-MRI interest cover for the 12 month rolling period to 30 September 2021 was 197% (12 months to 30 September 2020: 198%). It remains well above Platform's golden rule (120%) and tightest financial covenant in its banking arrangements (110%).
Both ratios have remained broadly similar to the previous year. Gearing has improved due to lower development expenditures, strong grant and sales incomes reducing debt requirements.
At 30 September 2021, Platform had over 6,800 unencumbered properties with an estimated value of approximately GBP480m, providing the business with flexibility to raise additional financing when required to complement its existing substantial cash and undrawn facilities.
Review of value for money (VfM) performance for year ended 31 March 2021
Obtaining VfM is an essential part of our charitable objective to provide affordable housing and ensures we make the best use of our resources. Platform assesses its performance against the RSH's VfM metrics for the year in the context of a group of other major social housing providers. This analysis is helpful as these metrics are defined by the RSH and reported across the sector, providing a greater degree of comparability.
We have included data published by Platform and 13 other major social housing providers in this assessment and our performance versus this group on the metrics is set out in the table below. The peer group has been amended since last time we provided this analysis to be more comparable to our geographic footprint and operating model. The peers included in the analysis are set out in the footnotes to the table.
Platform
RSH VfM metric(1)(2) Lowest Average(3) Highest Mar-21 Ranking(4)
Reinvestment 3.4% 6.1% 8.5% 8.0% 2
New supply (social housing
units) 0.7% 1.5% 2.2% 2.0% 2
New supply (non-social housing
units) 0.0% 0.2% 0.6% 0.0% 1(5)
Gearing 28.9% 44.2% 51.9% 41.9% 3
EBITDA-MRI interest cover 91% 181% 241% 218% 4
Headline social housing CPU(6) GBP2,463 GBP3,638 GBP4,484 GBP2,463 1
Operating margin (SHL)(6) 17.5% 31.4% 42.9% 42.9% 1
Operating margin (total) 13.8% 26.6% 38.0% 37.2% 2
Return on capital employed 2.6% 3.6% 5.1% 4.1% 3
Notes
(1) Sample of social housing providers includes Platform, Bromford, Citizen, Guinness, Home Group, Jigsaw, Longhurst, Midland Heart, Optivo, Orbit, Riverside, Sanctuary, Sovereign and Stonewater. We may evolve the make-up of the sample in future.
(2) Definitions of these metrics are set out at https://www.gov.uk/government/publications/value-for-money-metrics-technical-note/value-for-money-metrics-technical-note-guidance-june-2020
(3) Unweighted or simple average of performance across the selected group of social housing providers
(4) Platform ranking is based on performance against peers as reported in the year to March 2021
(5) A low focus on building non-social housing is viewed as giving a strong ranking due to property market risks related with such activities
(6) CPU: cost per unit; SHL: social housing lettings
This year has been challenging as the effects of Brexit and Covid-19 have begun to materialise, with inflationary pressures to materials, supply chain delays and labour shortages. Despite the challenges encountered in the year, we have continued to invest in new and existing homes. Our strong reinvestment has kept pace with the prior year and reflects our commitment to sustained significant, prudent investment, supported by our strong margins and cash flows, competitive cost of debt and grant funding from Homes England. This is core to our key purpose of alleviating the Midlands housing shortage and providing enhanced life prospects for as many local people as possible.
Our investments in new housing properties is shown in new supply metrics, with the supply of new units representing 2% of total units. These metrics also highlight our focus on affordable tenures, with no non-social units developed.
On the two credit metrics monitored by the RSH, we rank strongly for both gearing and EBITDA-MRI interest cover. Gearing has been strengthened, with lower development and maintenance expenditures due to Covid-19.
Performance on headline social housing cost per unit, operating margins and return on capital employed are amongst the best in the sector and leading amongst our peers. Performance in these areas is inter-linked, with efficient management structures and geographical stock concentrations, helping to keep costs low. The average age of our homes is relatively low at 35 years, meaning maintenance obligations are relatively low, which supports strong performance for these metrics.
Outlook
The Group has delivered strong surpluses and margins for the first six months of the year in a challenging environment. We expect the economic environment to continue to be challenging, with increased costs and supply chain issues projected to continue as the year progresses. Major works programmes are expected to experience an element of catch up, which will increase costs further. The end of the UK Governments' furlough scheme, reduction in Universal Credit and increases to gas prices is expected to have an adverse effect on our customers and our level of bad debts. In this context, margins are expected to remain broadly consistent with current levels.
We remain committed to the development of new affordable housing and expect some of the larger sites in our pipeline to start on site in the second half of the year. We recognise the current challenges in supply chains and expect to complete 1300-1400 homes in the year, down from previous estimates of 1,500.
Acting in a sustainable way remains a core tenet of everything that we do and the second half of the year will see the completion of our Green Strategy, setting out how we plan to improve energy efficiency and reduce our carbon footprint. We will also complete work on the development of our 'Platform Standard', the benchmark for quality and sustainability that we will apply to all new developments. We are committed to increasing the EPC ratings of all our homes to C and above by 2028 and works to properties will continue in the year to achieve this.
In the longer term our resilient financial and operational model leaves us well placed to continue delivering strategic objectives, centred on the provision and maintenance of high quality, affordable and sustainable housing, alleviating the Midlands housing shortage and providing enhanced life prospects for more local people.
Financial Statements
Legal Status
Platform Housing Group (the parent company) is incorporated in England under the Co-operative and Community Benefit Societies Act 2014 and is registered with the RSH as a Private Registered Provider of Social Housing. The registered office is 1700 Solihull Parkway, Birmingham Business Park, Solihull, B37 7YD.
Platform Housing Group comprises the following entities:
Name Incorporation Registration
Platform Housing Group Co-operative and Community Registered
Limited Benefit Societies
Act 2014
--------------------------- ---------------
Platform Housing Limited Co-operative and Community Registered
Benefit Societies
Act 2014
--------------------------- ---------------
Platform Property Companies Act 2006 Non-registered
Care Limited
--------------------------- ---------------
Platform New Homes Companies Act 2006 Non-registered
Limited (formerly
ESHA (Developments)
Limited)
--------------------------- ---------------
Platform HG Financing Companies Act 2006 Non-registered
PLC
--------------------------- ---------------
Waterloo Homes Limited Companies Act 2006 Non-registered
(Dormant)
--------------------------- ---------------
Basis of Accounting
The Group's financial statements have been prepared in accordance with applicable United Kingdom Accounting Generally Accepted Accounting Practice (UK GAAP), the Statement of Recommended Practice for registered housing providers: Housing SORP 2018 Update and Financial Reporting Standard 102 ('FRS 102'). Platform Housing Group is a Public Benefit Entity under the requirements of FRS 102. The Group is required under the Co-operative and Community Benefit Societies (Group Accounts) Regulations 1969 to prepare consolidated Group accounts.
The financial statements comply with the Co-operative and Community Benefit Societies Act 2014, the Co-operative and Community Benefit Societies (Group Accounts) Regulations 1969, the Housing and Regeneration Act 2008 and the Accounting Direction for Private Registered Providers of Social Housing 2019. Following the implementation of FRS 102, housing properties are stated at deemed cost at the date of transition and additions are record at cost. Investment properties are recorded at valuation. The accounts are presented in sterling and are rounded to the nearest GBP1,000.
As a Public Benefit Entity, The Group has applied the 'PBE' prefixed paragraphs of FRS102.
Statement of Comprehensive Income for the Six Months ended 30 September 2021
Six months Six months
ended 30 September ended 30 September
2021 2020
Note GBP000 GBP000
Turnover 1&2 150,481 134,343
Operating Expenditure 1&2 (81,110) (65,602)
Cost of Sales 1&2 (22,432) (13,973)
Gain on disposal of property,
plant and equipment - 4,366 3,046
Increase/(Decrease) in valuation - - -
of investment properties
Operating Surplus 51,305 57,814
Interest receivable 4 101 68
Interest payable and financing
costs 4 (30,926) (27,318)
Surplus before tax 20,480 30,564
Taxation - - -
Surplus for the period after
tax 20,480 30,564
Actuarial gain / (loss) in respect - -
of pension schemes
Change in fair value of hedged (44) -
financial instrument/investment
valuation
Total comprehensive income for
the period 20,436 30,564
==================== ====================
The Group's results all relate to continuing activities.
Statement of Financial Position at 30 September 2021
30 September 2021 30 September 2020
Note GBP000 GBP000
Fixed assets
Housing properties 5 2,668,168 2,544,312
Other tangible fixed assets - 8,713 21,439
Intangible fixed assets - 4,196
Investment properties - 16,495 15,775
Homebuy loans receivable - 8,023 8,738
Fixed asset investments - 16,435 15,831
Investment in subsidiaries - -
------------------ ------------------
2,722,030 2,606,095
Current assets
Stocks: Housing properties for sale - 28,238 34,095
Stocks: Other - 146 187
Trade and other Debtors - 20,188 17,165
Cash and cash equivalents 284,137 221,232
------------------ ------------------
332,709 272,679
Less: Creditors: amounts falling due within one year - (106,178) (162,278)
Net current assets / (liabilities) 226,531 110,401
Total assets less current liabilities 2,948,561 2,716,496
------------------ ------------------
Creditors: amounts falling due after more than one year - (1,900,408) (1,713,084)
Provisions for liabilities
Pension provision - (65,842) (47,913)
Other provisions - - (100)
Total net assets 982,311 955,399
Reserves
Non-equity share capital - - -
Income and expenditure reserve 765,173 734,354
Revaluation reserve 217,138 221,045
Total reserves 982,311 955,399
Consolidated Statement of Changes in Reserves
Income and Property Investment Total
Expenditure Revaluation Revaluation
Reserve Reserve Reserve
GBP000 GBP000 GBP000 GBP000
Balance at 1 April 2020 703,790 220,258 650 924,698
Surplus for the year 56,066 - - 56,066
Actuarial gain / (loss)
on pension scheme (18,449) - - (18,449)
Valuation in the year - - (440) (440)
Transfer between reserves 3,286 (3,286) - -
Balance at 31 March 2021 744,693 216,972 210 961,875
------------- ------------- ------------- ---------
Surplus for the period 20,480 - - 20,480
Actuarial gain / (loss) - - - -
on pension scheme
Valuation in the period - - (44) (44)
Transfer between reserves - - - -
Balance at 30 September
2021 765,173 216,972 166 982,311
============= ============= ============= =========
Consolidated Statement of Cash Flows for the period ended 30 September 2021
Six months ended 30 September 2021 Six months ended 30 September 2020
GBP000 GBP000
Net cash generated from operating
activities (see note i below) 53,684 61,123
Cash flow from investing activities
Purchase of tangible fixed assets (96,411) (74,831)
Proceeds from sales of tangible fixed
assets 41,571 6,003
Grants received 14,702 27,872
Interest received 61 107
Homebuy and Festival Property Purchase 197 -
loans repaid
Investments - (442)
Cash flow from financing activities
Interest paid (23,427) (23,437)
New secured debt 289,313 418,996
Repayment of borrowings (173,539) (269,773)
One-off loan breakage costs (8,716) (6,395)
Finance costs (1,901) (1,835)
----------------------------------- -----------------------------------
Net change in cash and cash equivalents 95,534 137,388
Cash and cash equivalents at the
beginning of the period 188,603 83,844
----------------------------------- -----------------------------------
Cash and cash equivalents at the end of
the period 284,137 221,232
----------------------------------- -----------------------------------
Note i
Surplus for the period 20,480 30,564
Adjustments for non-cash items
Depreciation of tangible fixed assets 23,104 17,764
Amortisation of grants (2,672) (2,420)
Impairment losses - -
Movement in properties and other assets
in the course of sale 10,445 1,324
Increase in stock - (40)
(Increase) / decrease in trade and other
debtors (4,361) (2,256)
(Decrease) / increase in trade and other
creditors (17,003) (8,154)
Movement in investments (312) -
Increase / (decrease) in provisions (1,693) -
Adjustments for investing or financing
activities
Proceeds from sale of tangible fixed
assets (4,365) (3,046)
Interest payable 30,926 27,318
Interest receivable (101) (68)
Movement in fair value of financial
instruments (44) 137
Increase in valuation of investment (720) -
property
Net cash generated from operating
activities 53,684 61,123
----------------------------------- -----------------------------------
1. Turnover, Cost of Sales, Operating Expenditure and Operating Surplus
Group Six months ended 30 September 2021
Turnover Cost of Sales Operating Expenditure Operating Surplus / (Deficit)
GBP000 GBP000 GBP000 GBP000
Social housing lettings
(see note 2) 116,270 - (73,204) 43,066
Other social housing activities
Development services (13) - (474) (487)
Management services 83 - (222) (139)
Support services 83 - (258) (175)
Sale of Shared Ownership first
tranche 27,499 (22,433) - 5,066
Other 1,065 - (980) 85
--------- -------------- ---------------------- ------------------------------
28,717 (22,433) (1,934) 4,350
Activities other than social
housing
Developments for sale 11 1 - 12
Student accommodation 5 - (9) (4)
Market rents 660 - (462) 198
Other 4,818 - (5,501) (683)
--------- -------------- ---------------------- ------------------------------
5,494 1 (5,972) (477)
Total 150,481 (22,432) (81,110) 46,939
========= ============== ====================== ==============================
1. Turnover, Cost of Sales, Operating Expenditure and Operating Surplus (continued)
Group Six months ended 30 September 2020
Turnover Cost of Sales Operating Expenditure Operating Surplus / (Deficit)
GBP000 GBP000 GBP000 GBP000
Social housing lettings
(see note 2) 112,791 - (59,670) 53,121
Other social housing activities
Development services 16 - (1,503) (1,487)
Management services 82 - (188) (106)
Support services 280 - (326) (46)
Sale of Shared Ownership first
tranche 14,308 (11,687) - 2,621
Other 1,109 - (648) 461
--------- -------------- ---------------------- ------------------------------
15,795 (11,687) (2,665) 1,443
Activities other than social
housing
Developments for sale 2,286 (2,286) - -
Student accommodation 5 - (9) (4)
Market rents 589 - (350) 239
Other 2,877 - (2,908) (31)
--------- -------------- ---------------------- ------------------------------
5,757 (2,286) (3,267) 204
Total 134,343 (13,973) (65,602) 54,768
========= ============== ====================== ==============================
2. Turnover and Operating Expenditure for Social Housing Lettings
Six months ended 30 September 2021
Group General Needs Affordable Rent Supported Low Cost Home Intermediate Total
Housing Housing & Ownership rent
Housing for
older people
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Income
Rent receivable
net of
identifiable
service charges 68,416 20,218 6,908 8,794 1,262 105,598
Service charge
income 2,835 611 2,924 1,461 - 7,831
Other grants 119 - - - - 119
Amortised
government
grants 1,350 793 61 455 13 2,672
Other income 12 38 - - - 50
---------------- ---------------- ---------------- ---------------- ---------------- ---------
Turnover from
social housing
lettings 72,732 21,660 9,893 10,710 1,275 116,270
Management (8,874) (2,415) (1,715) (1,456) (144) (14,604)
Service charge
costs (3,570) (961) (3,836) (1,517) (150) (10,034)
Routine
maintenance (14,052) (2,109) (1,386) (75) (106) (17,728)
Planned
maintenance (2,297) (530) (294) - (31) (3,152)
Major repairs
expenditure (3,234) (384) (1,417) (89) 41 (5,083)
Bad debts (392) (123) (85) (127) (30) (757)
Depreciation of
housing
properties (13,924) (4,736) (1,488) (1,522) (176) (21,846)
Operating
expenditure on
social housing
lettings (46,343) (11,258) (10,221) (4,786) (596) (73,204)
Operating
surplus on
social housing
lettings 26,389 10,402 (328) 5,924 679 43,066
================ ================ ================ ================ ================ =========
Void losses (793) (298) (229) (394) (91) (1,805)
2. Turnover and Operating Expenditure for Social Housing Lettings (continued)
Six months ended 30 September 2020
Group General Needs Affordable Rent Supported Shared Intermediate Total
Housing Housing & Ownership rent
Housing for
older people
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Income
Rent receivable
net of
identifiable
service charges 66,999 18,736 6,835 7,843 1,224 101,637
Service charge
income 2,833 594 2,909 1,437 2 7,775
Other grants 629 129 63 105 9 935
Amortised
government
grants 1,337 641 63 366 13 2,420
Other income 1 23 - - - 24
---------------- ---------------- ---------------- ---------------- ---------------- ---------
Turnover from
social housing
lettings 71,799 20,123 9,870 9,751 1,248 112,791
Operating expenditure
Management (7,902) (1,882) (925) (1,466) (95) (12,270)
Service charge
costs (3,563) (856) (3,254) (1,326) (119) (9,118)
Routine
maintenance (10,277) (1,394) (1,003) (40) (40) (12,754)
Planned
maintenance (2,211) (581) (230) (63) (15) (3,100)
Major repairs
expenditure (3,716) (308) (73) (330) (224) (4,651)
Bad debts (755) (231) (110) (129) (16) (1,241)
Depreciation of
housing
properties (10,238) (3,830) (1,062) (1,248) (158) (16,536)
Impairment of
housing
properties - - - - - -
Other costs - - - - - -
---------------- ---------------- ---------------- ---------------- ---------------- ---------
Operating
expenditure on
social housing
lettings (38,662) (9,082) (6,657) (4,602) (667) (59,670)
Operating
surplus on
social housing
lettings 33,137 11,041 3,213 5,149 581 53,121
================ ================ ================ ================ ================ =========
Void losses (761) (211) (235) (478) (73) (1,758)
3. Units
Social housing properties in management at end of period
September 2021 March 2021
Owned and Managed not Total Owned not Total Owned Total Managed Total Owned
managed owned managed managed
Number Number Number Number Number Number Number
General Needs 28,337 8 28,345 8 28,345 28,244 28,244
Affordable
rent 7,168 4 7,172 - 7,168 6,902 6,897
Supported 276 - 276 57 333 284 342
Housing for
older people 2,975 - 2,975 - 2,975 2,973 2,973
Intermediate
rent 468 - 468 - 468 458 458
------------- ------------- ------------- ------------- ------------ -------------- ------------
Total 39,224 12 39,236 65 39,289 38,861 38,914
*Shared
Ownership
<100% 5,814 6 5,820 - 5,814 5,606 5,600
Social Leased
@100% sold 1,121 - 1,121 - 1,121 1,118 1,118
------------- ------------- ------------- ------------- ------------ -------------- ------------
Total social 46,159 18 46,177 65 46,224 45,585 45,632
Non social
housing
Non social
rented 112 - 112 - 112 112 112
Non social
leased 380 - 380 29 409 378 407
Total stock 46,651 18 46,669 94 46,745 46,075 46,151
============= ============= ============= ============= ============ ============== ============
*The equity proportion of a shared ownership property is counted as one unit.
4. Net Interest
Interest receivable and similar Six months ended 30 September 2021 Six months ended 30 September 2020
income
GBP000 GBP000
On financial assets measured at
amortised cost:
Interest receivable 101 68
101 68
=================================== ===================================
Interest payable and financing Six months ended 30 September Six months ended 30 September
costs 2021 2020
GBP000 GBP000
On financial liabilities measured
at amortised cost:
Loans repayable 22,085 21,740
Loan breakage costs 8,716 6,395
Costs associated with financing 1,901 1,835
----------------------------------- -----------------------------------
32,702 29,970
On defined benefit pension scheme:
Expected return on plan assets - -
Interest on scheme liabilities - -
----------------------------------- -----------------------------------
- -
On financial liabilities measured
at fair value:
Interest capitalised on housing
properties (1,776) (2,652)
30,926 27,318
=================================== ===================================
5. Tangible Fixed Assets - Housing Properties
Group
Housing Properties Housing Properties Completed Shared Shared Ownership Total
held for letting in the course of Ownership Properties in the
construction Properties course of
construction
GBP000 GBP000 GBP000 GBP000 GBP000
Cost
At 1 April 2021 2,332,304 101,557 430,231 49,251 2,913,343
Reclassification - - - - -
Additions (1,670) 58,807 (105) 36,240 93,272
Works to existing
properties 4,857 - - - 4,857
Disposals (5,638) - (4,675) - (10,313)
Fair value disposal (38) - - - (38)
Transfer (to)/from
current assets - 513 (12,048) (11,535)
Interest capitalised - 1,025 - 751 1,776
Schemes completed 64,855 (64,855) 51,062 (51,062) -
At 30 September 2021 2,394,670 96,534 477,026 23,132 2,991,362
-------------------- ------------------- ------------------- ------------------- ----------
Depreciation
At 1 April 2021 284,322 - 19,155 - 303,477
Charge for the year 20,476 - 1,454 - 21,930
Disposals (1,934) - (279) - (2,213)
At 30 September 2021 302,864 - 20,330 - 323,194
-------------------- ------------------- ------------------- ------------------- ----------
Net Book Value
-------------------- ------------------- ------------------- ------------------- ----------
At 30 September 2021 2,091,806 96,534 456,696 23,132 2,668,168
==================== =================== =================== =================== ==========
At 31 March 2021 2,047,982 101,557 411,076 49,251 2,609,866
==================== =================== =================== =================== ==========
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