27 July 2022

Platform HG Financing Plc   Platform Housing Group Limited

Results for the year ended 31 March 2022

 

Highlights

 

·   Strong turnover growth of 10% to £296.9m (20/21: £269.9m)

·  Shared ownership sales volumes and values demonstrate robust housing market in areas of operation - sales of 563 (20/21: 408)

·   Impacts of Covid-19 and Brexit experienced in maintenance and development activities, affecting materials costs, labour availability and completions 

·  Operating surpluses reduced by 11% to £89.9m (20/21: £101.2m) and social housing lettings margin reduced by 7.7% to 35.2% (20/21 42.9%) driven by maintenance expenditures, one-off depreciation charges and higher void levels

·    Sustainable Finance Framework established in year to support a £250m Sustainability bond issuance

·    Sustainability-linked £235m revolving credit facility established

·     A+ (stable) ratings affirmed with S&P and Fitch

 

At or for the year ended 31 March		2021	2022	Change
Turnover		£269.9m	£296.9m	10.0%
Operating surplus(1)		£101.2m	£89.9m	-11.2%
New homes completed		909	1,171	28.8%
Investment in new and existing homes		£208.5m	£217.0m	4.1%
Share of turnover from social housing lettings		83.5%	79%	-4.5%
Social housing lettings margin(2)		42.9%	35.2%	-7.7%
Current tenant arrears(3)(4)		2.7%	2.4%	-0.3%
Gearing(2)(4)		41.9%	42.3%	0.5%
EBITDA-MRI interest cover(2)		218%	188%	-30%

 

Notes

(1)   Surplus excluding gains on disposal of property, plant and equipment

(2)   Regulator for Social Housing Value for Money metric; for more information go to https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1066373/20220404_Value-for-Money-metrics-Technical-note-guidance_FINAL.pdf

(3)   Current tenant arrears includes all general needs tenants (this excludes shared ownership properties)

(4)   Figures as at 31 March (as opposed to accumulated over the year to March)

 

Elizabeth Froude, Platform's CEO commented:

"We close the year in a strong and stable position in spite of a number of economic pressures and one-off costs, which have had an adverse impact on our year-on-year performance.  

 

Our core business is delivering good surpluses and cash generation, and our sales team have continued to maintain a high level of reservations for any units not sold at the end of the year.  We also continue to acquire development sites to facilitate our new homes aspirations and commitments to Homes England as a strategic partner.

 

As we close a very variable year in terms of operating environment, we, like many others, are dealing with a number of challenges and whilst clearing maintenance backlogs, are also managing increasingly difficult supply chains and cost increases for our future property investment.

 

We continue to invest in enhancing core systems and customer facing services whilst we are stepping up our asset investments to achieve improved energy efficiency and absorbing the increasing cost of maintenance and construction.  At the same time we are maintaining tight cost control on overhead costs to protect our strong financial credit metrics.

 

The overall results reflect a good out-turn in a difficult environment and we thank our investors for their continued support as we strive to improve people's lives across the Midlands area of operation."

 

Virtual presentation for the credit community to be hosted by

 

Elizabeth Froude, CEO, Rosemary Farrar, CFO and Gerraint Oakley, Executive Director - Growth and Development

 

27 July 2022, 9am

Microsoft Teams invite available on request: contact below

 

 

Investor enquiries Ben Colyer - +44 7918 160990 [email protected]

Media enquiries [email protected]

 

Disclaimer

These materials have been prepared by Platform Housing solely for use in publishing and presenting its results in respect of the year ended 31 March 2022. 

 

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, representatives or employees and/or any persons connected with them.

 

Operating review

 

Introduction

This year has seen the end of Covid-19 restrictions in the United Kingdom and the emergence of an illegal war in the Ukraine by Russia.  Although the humanitarian crisis has dominated the thoughts and actions of people and policy makers alike, the economic fallout has been significant and added to pressures already experienced as a consequence of Brexit and Covid-19.  As we move forward into a new financial year, there is significant uncertainty on a macro level as well as clear evidence that these shocks are being felt by our customers, who are facing higher inflation than has been seen in a generation.  

 

We continue to navigate these challenges whilst delivering our strategic objectives.  In this difficult environment turnover has shown strong year on year growth of 10%, supported by a strong sales pipeline and robust housing market.  Operating surpluses and margins were lower than the prior year, driven by one-off changes to depreciation policy, high inflation and a shortage of labour supply in our maintenance division that has driven up contractor costs.

 

The economic headwinds being faced by the Group in combination with a desire to retain strong credit metrics has resulted in a moderation of our capital aspirations, with new homes completions now projected to increase to a steady output of 1,600 in 2025, and the ambition to bring all Energy Performance Certificate (EPC) ratings to C and above adjusted to 2030 (from 2028). 

 

We will continue to carry out our strategic 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 those most in need in our areas of operation. 

 

Service review

 

Supporting our customers, welfare benefits and arrears

The prevailing economic turbulence during the year has had significant detrimental impacts on the lives of our customers, in particular for the most vulnerable.  We have seen more customers present with financial problems and we continue to help with an array of support measures, including advice on benefits, debt management and flexible payment arrangements when needed.  These measures sit alongside our Wellbeing Fund, which is in place to help support those most in need.   For the second year in a row the Group has utilised the fund, providing £1.6m to help over 4,000 customers with food, clothing and other essential items.  The fund also supported community initiatives across our operating area, allocating £120,000.

 

During the year we significantly improved the quality and evaluation of customer satisfaction data.  The number of surveys issued increased substantially, with c16,000 responses received (2020/21: <6,000).  This will help to better inform how we develop new products and services in the future based on direct insight from our customers.  Customer satisfaction was 70% for the year (2021: 57%).

 

Our arrears performance remains strong at the year end, with arrears of 2.42% down from 2.7% at 31 March 2021.  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 3.02% at 31 March 2022, down from 3.64% at 31 March 2021. 

 

Growth in the number of residents receiving UC continued during the year, with 14,808 in receipt of UC at 31 March 2022, a growth of 18% in comparison to 31 March 2021 (12,530 customers). The average monthly increase in customers in receipt of UC was just under 200 for the year, which is in line with pre-covid levels.  After full roll out in 2024, we expect approximately 18,000 of our customers to be in receipt of UC.   

 

Voids management

The number of properties becoming void and the time to carry out void works have both come under pressure due to Brexit and Covid-19 during the year.  Unusually high levels of properties were handed back in the first half of the year as families continued to consolidate living arrangements in the wake of Covid-19.  Void repairs have been under significant pressure due to labour availability and materials shortages.  Labour shortages were apparent both in the market and as a result of sickness, with Covid-19 related absences peaking in quarter four of the financial year.  There were 524 voids at the year-end in comparison to 422 at March 2021, of which 70 related to homes awaiting sale (March 2021: 206).  Re-let days were 51 at March 2022 (March 2021: 57), with 40 days on average taken to carry out repairs. 

 

The recruitment of 11 multi-skilled operatives had commenced to support void contracts and ensure a consistent delivery in the coming year.     

 

Asset management

During the year the Group focussed efforts on continuing to provide high quality asset management in spite of increasing costs, labour shortages and supply chain issues.  In order to help with labour supply a market rate review of all trades roles was undertaken and increased where necessary to be more in line with the market rates.  In addition, the recruitment for a number of new posts were approved, however, expenditure on contractors was high during the year which has adversely affected expenditures. 

 

Repairs satisfaction was high during the period, averaging 86% and finishing the year at 87% (31 March 2021: 88% / 86%) against a target of 92%.  The Group has worked hard to ensure the consistency of maintenance services which have been adversely affected by Covid access, staff shortages and supply chain issues. 

 

The Cost Sharing Vehicle (CSV) arrangement within our maintenance subsidiary Platform property Care, which provides a VAT efficient way of providing asset management services to members at cost, was expanded in the year as Stonewater Limited was welcomed.  Asset management services will start to be provided to Stonewater from 1 April 2022.  This will scale up the size of the CSV and allow all members (Platform Housing Limited, Rooftop Housing Association Limited and Stonewater Limited) to benefit from greater value for money as economies of scale benefits are maximised.    

 

Gas and fire risk assessment compliance was 99.9% and 100% (31 March 2021: 99.7% and 100%).   During the year we implemented an automated caller solution for booking gas servicing.  The solution allows customers to confirm that they will be available and to re-book appointments as required.  This has significantly improved the booking process, increasing customer communications and reducing no access visits. This has helped gas servicing levels to return to levels experienced before the Covid-19 pandemic,  although some customers are not available or initially deny access when a check becomes due, making 100% compliance challenging.  Fire Risk Assessments have identified a number of low level actions and recommendations such as replacing fire doors and moving bin storage further away from buildings.  The Group is committed to implementing all recommendations over the next two years and the costs are fully provided for in the approved long term financial plan.   

 

Environmental, social and governance ('ESG')

The Group considers ESG to be a key part of its core operations and strategy, identifying sustainability, environmental and social value creation as one of 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 bonds in September 2021.  Both the SRS report and framework are available to download from the Investor Centre section of the Platform website.   

 

During the year we undertook our first carbon baseline assessments with the support of 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 Sustainability Strategy, which is due to be completed in the first half of the year to March 2023 and provide targets for CO2 reduction as we plan for carbon neutrality by 2050.  To help support our aspirations a new Head of Sustainability was recruited during the year with the specific remit to decarbonise the Group. 

 

Energy Performance Certificates (EPCs) were completed for a further 6,000 homes in the year.  EPCs are now available for approximately 90% of all of our homes as we continue to push ahead with plans to have full coverage.  At March 2022 approximately 70% of our homes had an EPC rating of C or better and approximately 95% had an EPC rating of D or better.  Air source heat pumps, solar panels and solar thermal systems were retro-fitted to 120,180 and 22 homes respectively during the year. 

 

Platform Property Care, the Group's maintenance subsidiary, achieved ISO14001 certification during the year. ISO14001 is an internationally agreed standard that ensures a high level of environmental performance through more efficient use of resources and reduction of waste.

 

The Group makes a strong social contribution, including the delivery of affordable housing for our customers.  

For the second year in a row the Group has utilised a well-being fund to support those most in need.  The fund provided £1.6m to help c4,000 customers with food, clothing and other essential items.  The fund also supported community initiatives across our operating area, allocating £120,000.

 

During the year virtually 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.  

 

We continue to rationalisation our offices following the majority of previously office based staff transitioning to home based working.  One office was sold and the lease on another was not renewed.  We are cognisant that this transition can be challenging and are supporting our people in a number of ways, including the progression of health and well-being strategies, implementing new tools to measure and improve employee engagement and investing in the development of our people by targeting year on year growth of those in apprenticeships.     

 

The activities of the Group are supported by a commitment to the highest standards of Governance.  We continue to have the highest governance and viability ratings from the Regulator of Social Housing in England (G1/V1), as well as A+ (stable) ratings with both S&P and Fitch. 

 

The Group achieved ISO 27001 certification during the year.   ISO 27001 is the only auditable international standard that defines the requirements of an information security management system, helping to ensure risks such as cyber attacks, hacks, data leaks and theft are mitigated.

 

In May 2021 a Trainee Board programme was established with an objective of helping to ensure the longer term diversity of the Group Board.  Four trainees sit on the Trainee Board and rotate attendance at Board and Committee meetings and have five of their own Board meetings a year.  The continuance of this programme has recently been approved and the Group will be commencing the recruitment of the second cohort at the end of this calendar year.  The programme will be extended from two to four years, and it is hoped that Trainee Board members will join a Board sub-Committee at the end of year two, with the opportunity to join the main Board at the end of year four.

 

Development review

 

Strategy

Platform's Development Strategy remains centred on larger sites, with greater control over delivery, quality and sustainability.  The Group is currently negotiating on a number of larger sites and we hope to have secured some of these during the coming year.  Over the last two years we have developed the fourth highest number of social and affordable houses in England and the third largest number of social houses, the most accessible tenure of housing for those struggling to meet rental payments.  

 

Home building programme

Our home building programme has been affected by an increase in global demand for materials, the impact of Brexit and the further national lockdowns in the UK.  These have resulted in increases in materials costs and extended supply times.  In the year 1,171 homes were completed (31 March 2021: 909).  Of these, 236 (20%) were built for social rent, 478 (41%) for affordable rent, 429 (37%) for shared ownership, 12 (1%) for rent to buy and 16 for other tenures (no homes were built for outright sale).  Given our current pipeline, we expect to build between 1,100 and 1,200 homes in the year to March 2023.  At 31 March 2022, Platform owned a total of 47,123 homes (31 March 2021: 46,151).

 

Development expenditures were £198m in the year, which is in line with the prior year figure of £198m.  The investment reflects the Group's ongoing commitment to development, in spite of challenging economic conditions, including supply chain delays, labour shortages and cost inflation.

 

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 £250m to develop 4,680 homes at a total cost of approximately £1.1bn.  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.  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 has consulted with tenants, landlords and other stakeholders regarding the introduction of tenant satisfaction measures (TSMs) and particularly the measures that they will put in place for customer satisfaction going forwards.  The Group has provided a full, constructive response back to the regulator on the draft TSMs. In addition, we have offered to be part of a pilot to test the new satisfaction measures.  The consultation has now closed and it is expected that the final measures will be published during the summer.  The Group will have until April 2023 to prepare for how to collect this information during the financial year to March 2024.

 

Financial review

 

Turnover

In the year to 31 March 2022 total turnover grew 10% to £296.9m (2021: £269.9m).

 

Year ended 31 March		2021	2022
		£m	£m	Change
Social housing lettings		225.3	234.6	4.1%
Shared ownership first tranche sales		32.1	48.8	52.0%
Other social housing activities		2.0	1.8	-10.0%
Total social housing turnover		259.4	285.2	9.9%
Development for sale		2.3	-	-100.0%
Other non-social housing activities		8.2	11.7	11.4%
Total turnover		269.9	296.9	10.0%

 

Social housing lettings turnover increased by 4.1% to £234.6m (20/21: £225.3m), 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 1,171 in the year to March 2022. 

 

Shared ownership first tranche sales continue to perform strongly.  Turnover from these sales was £48.8m, £16.7m higher than the prior year (20/21: 32.1m).  This reflected a 38% increase in the number of sales to 563 homes (2021: 408 homes) and an average sales price 1.0% higher than in the prior year.  With new shared ownership completions of 429 units and two units converted to rented tenures, unsold shared ownership stock declined from 206 units at 31 March 2021 to 70 units at 31 March 2020. 

 

	Shared ownership sales
	Year to March 2022	Year to March 2021
Quarter 1	158	46
Quarter 2	164	132
Quarter 3	135	94
Quarter 4	106	136
	563	408

 

The level of unsold shared ownership units has reduced consistently throughout the year due to a number of successful initiatives, including earlier and more focused marketing campaigns, clear targets and enhanced listings.  

 

Opening unsold	206
New completions	429
Net conversions	(2)
Sales	(563)
Unsold at March 2022	70
Of which Reserved	47

 

 

Total social housing turnover of £285.2m (2021: £259.4m) accounted for 96.1% (2021: 96.1%) of Platform's total turnover in the period.

 

Operating costs and costs of sale

Total costs increased 22.3% to £207.2m (2021: £169.4m), with operating costs (from both social and non-social activities) increasing 19.1% to £168m (2021: £141.1m) and costs of sale increasing 38.5% to £39.2m (2021: £28.3m).

 

 

Year ended 31 March		2021	2022
		£m	£m	Change
Social housing lettings operating costs		128.7	152.0	18.1%
Other social housing costs
- shared ownership costs of sale		26.0	39.2	50.8%
- other social housing operating costs		5.2	5.2	0.0%
Total social housing costs		159.9	196.4	22.8%
Developments for sale costs of sale		2.3	0.0	-100.0%
Other non-social housing operating costs		7.2	10.8	50.0%
Total costs		169.4	207.2	22.3%

 

Social housing lettings operating costs make up most of our costs and they increased by 18.1% to £152m (2021: £128.7m), driven by one-off depreciation charges of £5.6m as a result of aligning policies across merged entities.  In addition, revenue maintenance costs were higher by £10.9m, with expenditures adversely affected by high inflation and an increased proportion of contracted work due to labour shortages.    

 

Shared ownership cost of sales increased by 50.8%, slightly below related turnovers (52.0%), with sales price growth marginally ahead of associated cost inflation.  Other non-social housing costs relate mainly to maintenance activities carried out for external parties and growth has been driven primarily by increased revenues.  It has also been affected by cost inflation and labour shortages mentioned above. 

 

Interest costs

Interest payable and financing costs increased by £2.3m to £56.7m (2021: £54.3m). This was due to increased interest costs (£2.5m) and one-off loan break costs (£2.3m higher than the prior year), which were partly mitigated by higher levels of capitalisation (£2.5m).  A summary of financing activity can be seen in the Treasury section later on in this report. 

 

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 were adversely affected by one-off depreciation charges, higher maintenance expenditures and increased voids.  Maintenance expenditures have been affected by a shortage of labour availability, cost inflation and an element of catch up to compensate for delayed programmes.  In addition, the prior year was characterised by subdued maintenance as activity was curtailed during covid lockdowns, affecting the comparative figures.  Voids have been adversely affected by unusual peaks in handbacks due to Covid lockdowns and delays in repairs caused by labour shortages. 

 

Operating margins have also been affected by a larger proportion of turnover being generated from shared ownership sales (that have relatively lower margins).  In the year to 31 March 2022 16.4% of turnover came from shared ownership sales (March 2021: 11.9%), with associated margins of 19.8% (March 2021: 19%).  The overall surplus after tax, which incorporates interest costs, declined to £20.1m (2021: £20.8m).  When one-off depreciation, loan breakage costs and pension revaluations are adjusted for the reduction in surplus after tax totals £5.2m, driven by higher maintenance costs.  The different measures of surplus and related margins for the current and prior year are set out below.

 

Year ended 31 March	2021		2022
	Amount	Margin	Amount	Margin
	£m	%	£m	%
Social housing lettings surplus	96.6	42.9	82.6	35.2
Shared ownership sales surplus	6.1	19.0	9.7	19.8
Overall operating surplus(1)	101.2	40.8	89.8	30.3
Surplus after tax and pensions	37.6	20.8	59.6	20.1
Adjusted surplus after tax(2)	62.4	23.1	57.2	19.3

Notes

(1)   Excluding gains on disposal of property, plant and equipment

(2)   Excluding one-off depreciation charges, loan breakage costs and pensions revaluations

 

The table below sets out the key drivers of the variance in Platform's surplus after tax between the years to March 2022 and 2021.

	Income	Expenditure	Surplus
	£m	£m	£m
Year ended 31 March 2021			37.6
Loss on pensions revaluations			18.4
One-off loan breakage costs			6.4
Surplus after tax before one-off charges - March 2021			62.4
Social housing lettings turnover	9.3		9.3
Other social housing turnover (excluding sales)	-0.2		-0.2
Property sales(1)	14.4	-10.9	3.5
Social housing costs:
Repairs and maintenance		-10.9	-10.9
Depreciation		-3.3	-3.3
Management costs		-1.9	-1.9
Other costs		-2.2	-2.2
Other social housing activities	-0.2		-0.2
Non-social housing activities	3.5	-3.5	-
Gains on disposal of property, plant and equipment	10.2	-9.9	0.3
Net interest costs	0.1	-2.6	-2.5
Capitalised interest	2.5		2.5
Other			0.4
Surplus after tax before one-off charges - March 2022			57.2
Gain on pensions revaluations	16.7		16.7
One-off depreciation charges for - capitalisation policy alignment		-5.6	-5.6
One-off loan breakage costs		-8.7	-8.7
Year ended 31 March 2022			59.6

 

 

Notes

(1)   Property sales include shared ownership first tranche sales and developments for sale at cost to Local Authority partners

 

Treasury review

 

Financing activity

The Group successfully implemented its funding strategy during the year, which centred on maintaining liquidity whilst keeping borrowing costs to a minimum and at the same time, increasing transparency to investors through greater use of sustainability linked finance. 

The Group's first report under the sector wide Sustainability Reporting Standard was issued in July 2021, which was followed by the establishment of a Sustainable Finance Framework in August 2021.  This enabled the Group to issue its first sustainability bonds in September 2021, utilising its £1bn EMTN programme.  The 20 year, £250m issuance had a coupon of 1.926% and will help support the Group's ambitions to build more homes and reduce its carbon footprint. 

Another significant sustainability-linked transaction completed shortly after the year end, creating a £235m revolving credit facility with Lloyds Bank.  The initial five year facility, of which £50m was new borrowing and £185m refinanced, is linked to sustainability targets for energy efficiency and staff development.  A margin benefit if applicable if targets are met.

 

Other notable financing activities include the sale of £50m retained bonds in December 2021 at a yield of just over 1.7%, and the repayment and cancellation of a £33m facility with Nationwide Building Society.  The repayment helped to harmonise the Group's funding covenants and liberates security that was restricted to EUV-SH valuations, generating extra debt capacity.  On repayment to Nationwide break costs of £8.7m were payable (due to the above market interest rates on the facility), which will be recovered through interest cost savings going forwards.

 

Debt and liquidity

At 31 March 2022 net debt was £1,161m (20/21: £1,094m).  Net debt comprised nominal values of £882m in bond issues, £80m in private placements and £490m in term loan and revolving credit facilities, partially offset by cash and equivalents of £278m and accounting adjustments of £13m.

 

Platform's weighted average cost of finance was 3.28% (31 March 2021: 3.40%), benefitting from the low all-in rates achieved on the two capital markets transactions in September (£250m sustainability bonds) and December (£50m retained bonds) 2021, in addition to the repayment of a £33m legacy facility, which also enhanced the flexibility and consistency of funding covenants.   The average life of debt was 22 years (31 March 2021: 22 years).

 

Platform had sufficient liquidity at 31 March 2022 (approximately £850m including undrawn committed facilities and cash and cash equivalents) to meet all projected net cash outflows for the next three years, taking into account projected operating cash flows, forecast investment in new and existing properties and debt service and repayment costs (financing will be arranged in advance of this time to maintain a robust liquidity buffer). 

 

Financial ratios

Platform monitors its performance against various financial ratios, including Value for Money metrics reported to the Regulator of Social Housing and ratios it is required to comply with under its financing arrangements.

 

Gearing, measured as the ratio of net debt to the net book value of housing properties, was 42.3% at 31 March 2022 (31 March 2021: 41.9%). Gearing has increased in the last year due to new funding required for development expenditures. Gearing was comfortably within Platform's target of maintaining gearing below 50%.

 

EBITDA-MRI interest cover was 188% (31 March 2022: 218%).  The movement from the prior year is largely driven by increases to maintenance costs due to high inflation and a catch up in repairs.  The ratio remains well above Platform's guideline minimum (120%).

 

A significant amount of excess security charged to debt facilities has been proactively released during the year.  As part of these exercises former transfer stock has been subjected to legal due diligence and where previously limited to valuations on an Existing Use Value - Social Housing basis, has been uplifted to valuations on the basis of Market Value - Subject to Tenancy (both calculated in accordance with the Royal Institute of Chartered Surveyors (RICS) 'Red Book').  At 31 March 2022, Platform had approximately 9,700 unencumbered properties (31 March 2021: 6,500) with an estimated value of £750m (31 March 2021: £460m).  The robust levels of unencumbered stock will provide the 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 2022

Obtaining VfM ensures we make the best use of our resources and is an essential part of our charitable objective to provide affordable housing.  Platform assesses its performance against the Regulator of Social Housing in England (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.

 

Peer group information is currently not available for the year to 31 March 2022, so a comparison against prior year has been undertaken.  When we report our half year results we will include a full comparison against our peer group for the year to March 2022.  The peers included in the analysis are set out in the footnotes to the table.

 

				Platform
RSH VfM metric(1)(2)	Lowest	Average3	Highest	Mar-21	Ranking4	Mar-22
Reinvestment	3.4%	6.1%	8.5%	8.0%	2	7.9%
New supply (social housing units)	0.7%	1.5%	2.2%	2.0%	2	2.5%
New supply (non-social housing units)	0.0%	0.2%	0.6%	0.0%	1(5)	0%
Gearing	28.9%	44.2%	51.9%	41.9%	3	42.3%
EBITDA-MRI interest cover	91%	181%	241%	218%	4	188%
Headline social housing CPU(6)	£2,463	£3,638	£4,484	£2,463	1	£2,855
Operating margin (SHL)(6)	17.5%	31.4%	42.9%	42.9%	1	35.2%
Operating margin (total)	13.8%	26.6%	38.0%	37.2%	2	30.2%
Return on capital employed	2.6%	3.6%	5.1%	4.1%	3	3.3%

 

 

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)   See: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1066373/20220404_Value-for-Money-metrics-Technical-note-guidance_FINAL.pdf

(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 all affecting operating costs. 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 and 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 2.5% of total units.  These metrics also highlight our focus on affordable tenures, with no non-social units developed.  

 

Gearing has remained broadly consistent with the prior year, with a small increase reflective of additional financing activity. 

 

EBITDA-MRI interest cover, social housing cost per unit, operating margins and return on capital employed have all been adversely affected by cost inflation, particularly in relation to our maintenance activities.

 

As part of our Vfm strategy we have introduced extra resource into our procurement function during the year.  A category council approach has been implemented involving regular meetings with budget holders and their teams in order to identify and leverage efficiencies.  Savings have been made in a number of areas, including insurance, overheads and service costs.  On top of this the first phase of a review into pensions was undertaken during the year following a significant increase in pension liabilities following the the Social Housing Pension Scheme's (SHPS) three yearly (defined benefit) valuation.  As a consequence of the review the scheme has been closed to future accrual.

 

At the same time as keeping costs to a minimum we recognise that Vfm is not solely about cutting costs but about delivering quality services whilst using resources in the most cost-effective manner.  To that end we have launched a Social Value Strategy in the year that aims to capture, amongst other things, social return on investment.  To help support this strategy we have partnered with social value enterprise company HACT and are looking to implement the HACT Social Value roadmap, a three phase project that will improve the valuing, benchmarking, innovation, professionalism, reporting and assurance of social value.  This will allow us to better estimate and value the social impact that our services deliver.

 

Outlook

 

In the coming year turnover is expected to grow in line with new units coming into management and inflationary rental increases (based on CPI inflation in the UK - fixed at September 2021 plus one percentage: 4.1%).  Demand for sales is expected to remain robust in our areas of operation, but turnover slightly lower than the year to March 2022 due to lower volumes of homes available to sell.  Voids are expected to improve, with new staff recruited to help with the backlog of maintenance required. Maintenance costs are expected to remain high as the cost of materials and labour continue to be elevated.  Cost inflation is also likely to have a significant impact on our customers, putting pressure on rental collection.  Overall we expect key financial performance metrics to be similar to those for the year to March 2022.     

We remain committed to the development of new affordable housing and expect some of the larger sites in our pipeline to commence.  We also expect to push ahead with investigative work around the delivery of Modern Methods of Construction (MMC), having now joined the Building Better Framework, which will enable us to have better access to a range of tried and tested MMC manufacturers.  We recognise the current challenges in supply chains and expect to complete 1,100-1,200 homes in the year.  

Acting in a sustainable way remains a core tenet of everything that we do and the coming year will see the completion of our Sustainability 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 2030 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 our 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 Limited	Co-operative and Community Benefit Societies Act 2014	Registered
Platform Housing Limited	Co-operative and Community Benefit Societies Act 2014	Registered
Platform Property Care Limited	Companies Act 2006	Non-registered
Platform New Homes Limited (formerly ESHA (Developments) Limited)	Companies Act 2006	Non-registered
Platform HG Financing PLC	Companies Act 2006	Non-registered
Waterloo Homes Limited (Dormant)	Companies Act 2006	Non-registered

 

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 £1,000.

 

As a Public Benefit Entity, The Group has applied the 'PBE' prefixed paragraphs of FRS102.

 

Statement of Comprehensive Income for the year ended 31 March 2022

		Year ended 31 March  2022	Year ended 31 March  2021
	Note	£000	£000
Turnover	1&2	296,924	269,873
Operating Expenditure	1&2	(167,926)	(141,077)
Cost of Sales	1&2	(39,230)	(28,286)
Gain on disposal of property, plant and equipment	-	9,298	8,929
Increase/(Decrease) in valuation of investment properties	-	150	720
Operating Surplus		99,216	110,159
Interest receivable	4	382	244
Interest payable and financing costs	4	(56,676)	(54,337)
Surplus before tax		42,922	56,066
Taxation	-	-	-
Surplus for the period after tax		42,922	56,066
Actuarial gain / (loss) in respect of pension schemes	-	16,682	(18,449)
Total comprehensive income for the period		59,604	37,617

  The Group's results all relate to continuing activities.

 

Statement of Financial Position at 31 March 2022

		31 March 2022	31 March 2021
	Note	£000	£000
Fixed assets
Housing properties	5	2,744,997	2,609,866
Other tangible fixed assets	-	8,176	11,359
Intangible fixed assets	-	5,066	4,196
Investment properties	-	16,645	16,495
Homebuy loans receivable	-	7,750	8,220
Fixed asset investments	-	17,327	16,141
Investment in subsidiaries		-	-
		2,799,961	2,666,277
Current assets
Stocks: Housing properties for sale	-	24983	38,683
Stocks: Other	-	1,722	146
Trade and other Debtors	-	16,675	17,846
Cash and cash equivalents		277,946	188,603
		321,326	245,278
Less: Creditors: amounts falling due within one year	-	(102,268)	(210,279)
Net current assets / (liabilities)		219,058	34,999
Total assets less current liabilities		3,019,019	2,701,276
Creditors: amounts falling due after more than one year	-	(1,947,932)	(1,673,559)
Provisions for liabilities
Pension provision	-	(49,955)	(65,842)
Total net assets		1,021,132	961,875
Non-equity share capital	-	-	-
Income and expenditure reserve		804,486	744,693
Revaluation reserve		216,646	217,182
Total reserves		1,021,132	961,875

 

Consolidated Statement of Changes in Reserves

 

	Income and Expenditure Reserve	Property Revaluation Reserve	Investment Revaluation Reserve	Total
	£000	£000	£000	£000
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	42,922	-	-	42,922
Actuarial gain / (loss) on pension scheme	16,682	-	-	16,682
Valuation in the period	-	-	(347)	(347)
Transfer between reserves	189	(189)	-	-
Balance at 31 March 2022	804,486	216,783	(137)	1,021,132

 

Consolidated Statement of Cash Flows for the period ended 31 March 2022

 

	Year ended 31 March 2022		Year ended 31 March 2021
	£000		£000
Net cash generated from operating activities (see note i below)	165,869		125,948
Cash flow from investing activities
Purchase of tangible fixed assets	(221,549)		(173,240)
Proceeds from sales of tangible fixed assets	28.360		14,652
Grants received	18,176		69,169
Interest received	180		204
Homebuy and Festival Property Purchase loans repaid	470		518
Cash flow from financing activities
Interest paid	(56,963)		(54,493)
New secured debt	296,196		418,119
Repayment of borrowings	(141,396)		(296,118)
Net change in cash and cash equivalents	89,343		104,759
Cash and cash equivalents at the beginning of the period	188,603		83,844
Cash and cash equivalents at the end of the period	277,946		188,603
Note i
Surplus for the period	42,922		56,066
Adjustments for non-cash items
Depreciation of tangible fixed assets	43,443		34,593
Amortisation of grants	(5,065)		(5,368)
Impairment losses	-		5,943
Movement in properties and other assets in the course of sale	12,142		(3,264)
Increase in stock	(18)		1
(Increase) / decrease in trade and other debtors	1,503		(2,564)
(Decrease) / increase in trade and other creditors	26,182		(1,100)
Movement in investments	(1,186)		(770)
Increase / (decrease) in provisions	(554)		1,693
Adjustments for investing or financing activities
Proceeds from sale of tangible fixed assets	(9,298)		(8,929)
Interest payable	56,676		54,337
Interest receivable	(382)		(244)
Movement in fair value of financial instruments	(346)		(3,726)
Increase in valuation of investment property	(150)		(720)
Net cash generated from operating activities	165,869		125,948

Group	Year ended 31 March 2022
	Turnover	Cost of Sales	Operating Expenditure	Operating Surplus / (Deficit)
	£000	£000	£000	£000
Social housing lettings (see note 2)	234,597	-	(152,000)	82,597
Other social housing activities
Development services	(3)	-	(3,822)	(3,825)
Management services	206	-	(654)	(448)
Support services	342	-	(505)	(163)
Sale of Shared Ownership first tranche	48,844	(39,173)	-	9,671
Other	1,230	-	(188)	1,042
	50,619	(39,173)	(5,169)	6,277
Activities other than social housing
Developments for sale	42	(57)	-	(15)
Student accommodation	9	-	(15)	(6)
Market rents	1,377	-	(1,025)	352
Other	10,280	-	(9,717)	563
	11,708	(57)	(10,757)	894
Total	296,924	(39,230)	(167,926)	89,768

 

Group	Year ended 31 March 2021
	Turnover	Cost of Sales	Operating Expenditure	Operating Surplus / (Deficit)
	£000	£000	£000	£000
Social housing lettings (see note 2)	225,291	-	(128,650)	96,641
Other social housing activities
Development services	53	-	(3,822)	(3,769)
Management services	153	-	(469)	(316)
Support services	366	-	(569)	(203)
Sale of Shared Ownership first tranche	32,099	(26,007)	-	6,092
Other	1,392	-	(296)	1,096
	34,063	(26,007)	(5,156)	2,900
Activities other than social housing
Developments for sale	2,335	(2,279)	-	56
Student accommodation	9	-	(12)	(3)
Market rents	1,189	-	(635)	554
Other	6,986	-	(6,624)	362
	10,519	(2,279)	(7,271)	969
Total	269,873	(28,286)	(141,077)	100,510

 

			Year ended 31 March 2022
Group	General Needs Housing	Affordable Rent	Supported Housing & Housing for older people	Low Cost Home Ownership	Intermediate rent	Total
	£000	£000	£000	£000	£000	£000
Income
Rent receivable net of identifiable service charges	136,041	41,155	13,724	18,039	2,566	211,525
Service charge income	5,647	1,220	5,816	2,892	-	15,575
Other grants	25	79	-	23	-	127
Amortised government grants	2,622	1,445	115	824	31	5,037
Other income	2,281	52	-	-	-	2,333
Turnover from social housing lettings	146,616	43,951	19,655	21,778	2,597	234,597
Operating Expenditure
Management	(17,865)	(4,816)	(3,415)	(3,043)	(282)	(29,421)
Service charge costs	(8,522)	(2,306)	(8,407)	(3,044)	(326)	(22,605)
Routine maintenance	(30,430)	(6,387)	(3,844)	(222)	(369)	(41,252)
Planned maintenance	(3,996)	(900)	(398)	(15)	(44)	(5,353)
Major repairs expenditure	(7,762)	(824)	(1,800)	24	(31)	(10,393)
Bad debts	(965)	(315)	(282)	(58)	(59)	(1,679)
Depreciation of housing properties	(25,718)	(9,361)	(2,737)	(3,134)	(347)	(41,297)
Operating expenditure on social housing lettings	(95,258)	(24,909)	(20,883)	(9,492)	(1,458)	(152,000)
Operating surplus on social housing lettings	51,358	19,042	(1,228)	12,286	1,139	82,597
Void losses	(1,784)	(644)	(524)	(616)	(142)	(3,710)

 

			Year ended 31 March 2021
Group	General Needs Housing	Affordable Rent	Supported Housing & Housing for older people	Shared Ownership	Intermediate rent	Total
	£000	£000	£000	£000	£000	£000
Income
Rent receivable net of identifiable service charges	133,331	37,971	13,686	16,030	2,430	203,448
Service charge income	5,628	1,201	5,783	2,743	3	15,358
Other grants	768	137	66	111	9	1,091
Amortised government grants	2,699	1,584	123	911	26	5,343
Other income	2	49	-	-	-	51
Turnover from social housing lettings	142,428	40,942	19,658	19,795	2,468	225,291
Operating expenditure
Management	(17,327)	(4,109)	(3,067)	(2,791)	(272)	(27,566)
Service charge costs	(7,651)	(2,137)	(7,938)	(3,213)	(286)	(21,225)
Routine maintenance	(24,369)	(5,019)	(3,135)	(156)	(184)	(32,863)
Planned maintenance	(4,555)	(1,060)	(599)	(118)	(40)	(6,372)
Major repairs expenditure	(4,815)	(443)	(962)	(456)	(216)	(6,892)
Bad debts	(742)	(235)	(171)	(128)	(25)	(1,301)
Depreciation of housing properties	(19,475)	(7,868)	(2,105)	(2,668)	(315)	(32,431)
Operating expenditure on social housing lettings	(78,934)	(20,871)	(17,977)	(9,530)	(1,338)	(128,650)
Operating surplus on social housing lettings	63,494	20,071	1,681	10,265	1,130	96,641
Void losses	(1,387)	(416)	(435)	(934)	(165)	(3,337)

 

Social housing properties in management at end of period

	March 2022					March 2021
	Owned and managed	Managed not owned	Total managed	Owned not managed	Total Owned	Total Managed	Total Owned
	Number	Number	Number	Number	Number	Number	Number
General Needs	28,408	8	28,416	8	28,416	28,244	28,244
Affordable rent	7,359	4	7,363	-	7,359	6,902	6,897
Supported	270	-	270	65	335	284	342
Housing for older people	2,975	-	2,975	-	2,975	2,973	2,973
Intermediate rent	469	-	469	-	469	458	458
Total	39,481	12	39,493	73	39,554	38,861	38,914
*Shared Ownership <100%	5,905	6	5,911	-	5,905	5,606	5,600
Social Leased @100% sold	1,128	-	1,128	-	1,128	1,118	1,118
Total social	46,514	18	46,532	73	46,587	45,585	45,632
Non social housing
Non social rented	111	-	111	-	111	112	112
Non social leased	392	-	392	29	421	378	407
Total stock	47,017	18	47,035	102	47,119	46,075	46,151

 

*The equity proportion of a shared ownership property is counted as one unit.

 

Interest receivable and similar income	Year ended 31 March 2022				Year ended 31 March 2021
	£000				£000
On financial assets measured at amortised cost:
Interest receivable	382				244
	382				244
Interest payable and financing costs		Year ended 31 March 2022				Year ended 31 March 2021
		£000				£000
On financial liabilities measured at amortised cost:
Loans repayable		45,846				43,860
Loan breakage costs		8,716				6,395
Costs associated with financing		4,038				3,735
		58,600				53,990
On defined benefit pension scheme:
Expected return on plan assets		(4,017)				(3,955)
Interest on scheme liabilities		5,366				5,049
		1,349				1,094
On financial liabilities measured at fair value:
Interest capitalised on housing properties		(3,273)				(747)
		56,676				54,337

 

Interest has been capitalised at the rate of 3.53% (inclusive of fees) (2021: 3.40%)

 

 

	Housing Properties held for letting	Housing Properties in the course of construction	Completed Shared Ownership Properties	Shared Ownership Properties in the course of construction	Total
	£000	£000	£000	£000	£000
Cost
At 1 April 2021	2,332,305	101,557	430,230	49,251	2,913,343
Reclassification	(148)	119,005	108	79,073	198,038
Additions	15,650	-	-	-	15,650
Works to existing properties	(11,157)	-	(8,233)	-	(19,390)
Disposals	(175)	-	-	-	(175)
Fair value disposal
Transfer (to)/from current assets	-	-	710	(26,653)	(25,943)
Interest capitalised	-	1,982	-	1,291	3,273
Schemes completed	101,351	(101,351)	58,165	(58,165)	-
At 31 March 2022	2,437,827	121,192	480,980	44,797	3,084,796
Depreciation
At 1 April 2021	284,322	-	19,155	-	303,477
Charge for the year	37,316	-	3,080	-	40,396
Disposals	(3,528)	-	(546)	-	(4,074)
At 31 March 2022	318,110	-	21,689	-	339,799
Net Book Value
At 31 March 2022	2,119,717	121,192	459,291	44,797	2,744,997
At 31 March 2021	2,047,983	101,556	411,075	49,251	2,609,865