REG - Aster Treasury Plc - Trading Statement - 12 months to 31 March 2024

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08/05/2024 11:45

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RNS Number : 6126N  Aster Treasury PLC  08 May 2024

Aster Group issues its unaudited Group trading update for the twelve months
ended 31 March 2024, with comparatives to the audited financial statements for
the 12 months ended 31 March 2023.

 

Full year highlights

·    Despite another challenging year, we have achieved profit before tax
of £41.9m for the twelve months ended 31 March 2024, with operating profit
performing slightly behind budget.

 

·    An improvement in social housing and underlying operating margins.

 

·    £250m of medium-term notes issued in June 2023.

 

·    We're continuing to tackle the chronic housing shortage by creating
choice in the market, delivering high quality new homes across a range of
tenures spanning the south of England and London. We delivered 997 new homes
this year of which 517 were for affordable rent, 405 for shared ownership and
75 sold on the open market. In July 2023, we were seventh in Inside Housing's
'Top 50 Biggest Builders Survey 2023', up from 14(th) the previous year.

 

·    In July 2023, the Regulator for Social Housing reaffirmed our G1/V1
governance and viability ratings and in December 2023 Standard and Poor's
(S&P) confirmed our credit rating as 'A' (down from 'A+'), with our
outlook moving from negative to stable.

·    Over the last year we have focused on our governance modernisation
following the outcomes of an independent organisation-wide review carried out
in 2022. The review concluded that we have strong, well understood, governance
arrangements in place, that we're working effectively and that we're
demonstrating a strong emphasis on social value and focus on customers.
However, we have continued to develop our approach, from January 2024
simplifying our committee structure and working towards further strengthening
our approach to hearing customer voice.

 

·    Further to merger and acquisition activity over recent years, we've
been improving the effectiveness of our services across the Group and
achieving efficiencies by integrating technology systems across our entities.
As part of this work, Central and Cecil Housing Trust (C&C) has now been
fully integrated into the Group. We have also invested over £11m in Enham
Trust to date.

·    We continue to listen to our customers to ensure we consistently
deliver a good community and customer focused service that is fit for purpose
today and in the future. As at 31 March 2024, we've maintained our overall
customer satisfaction at 77% and repairs satisfaction at 81%.

 

·    We're targeting investment in our homes in the right places, informed
by data and supported by technology, while also listening to our customers'
needs. This means we understand our homes better and can act quicker. We
encourage customers to report any issues to us, in particular those related to
damp and mould (D&M). To help tackle an increase in cases of D&M more
proactively and efficiently, we're launching phase two of the Home Health
Check pilot, delivered by our specially trained damp and mould team and
informed by results from our stock condition surveys and previous trial.

·    We have developed a more robust, sustainable and well-vetted
procurement process to attract and collaborate with higher calibre,
environmentally friendly suppliers/ contractors to benefit customers and
stakeholders. This year we won a delegate's award for "Most Innovative
Property Service" in partnership with Crystal Clear at the National Housing MF
awards in January 2024.

·    Demolition has started on our biggest ever land-led site at Bargates,
Christchurch and we have started construction on two new schemes in London -
Southall and Silvertown. Our community land trust (CLT) programme continues to
grow with a number of CLTs selecting us as their housing association partner.
We've also signed a joint venture with south east developer and builder
Thakeham to deliver our first all net carbon zero site.

·    As part of our ongoing environmental, social and governance (ESG)
strategies, we continue to benchmark our delivery against the Sustainability
Reporting Standard for social housing as well as the United Nation's SDG's. We
are on track for meeting and exceeding our goal to ensure the energy
efficiency in all our homes meets EPC C standard by 2030.

·    As part of our customer services modernisation programme, we're
committed to making our colleague and customer experience more inclusive. Our
offer is underpinned by Restorative Principles of fair process, customer
voice, employee voice and accountability. This year our Registered Restorative
Organisation status from the Restorative Justice Council (RJC) has been
renewed and we've also signed up to the HouseProud Pledge which demonstrates
our commitment to LGBTQ+ resident equality and support. We're committed to
creating an environment where diversity in all its forms is welcomed and
celebrated.

 

·    We've started preparing for the Competence and Conduct Standard which
will come into place in April 2025 as part of the Social Housing Regulation
Act. We're reviewing which roles within Aster may need to have which level of
qualification and are working with our colleagues to identify any gaps and
necessary action.

Financial and operating performance

Unaudited profit before tax for the twelve months ended 31 March 2024 was
£41.9m. Housing properties (net of depreciation) have increased to £2,381m
from £2,221m at 31 March 2023.

 

 Consolidated Statement of Comprehensive Income (£000)                         12 months March 2024   12 months

March 2023
 Turnover                                                                      313,814               301,199
 Operating costs                                                               (261,107)             (254,583)
 Surplus on sale of housing property, plant and equipment                      23,707                20,303
 Operating profit                                                              76,414                66,919
 Profit on disposal of other property, plant, equipment and intangible assets  1,336                 6
 Donations received                                                            214                   386
 Impairment of housing assets                                                  (3,419)               (291)
 Share of (loss)/profit in joint ventures                                      (1,088)               1,776
 Increase in fair value of investment properties                               596                   159
 Net finance expense                                                           (32,170)              (26,415)
 Profit before tax and gain on acquisition                                     41,883                42,540
 Gain on acquisition                                                           -                     12,769
 Profit before tax for the year                                                41,883                55,309

 

 Financial indicators                                                        12 months     12 months

March 2024
March 2023
 Operating margin (excluding surplus on sale of housing property, plant and  15.8%        15.8%
 equipment, including impairment) ¹
 Social housing operating margin²                                            22.4%        20.5%
 EBITDA MRI interest cover³                                                  126.4%       164.7%
 Gearing⁴                                                                    52.1%        51.0%

 

The Group's revenue continues to focus on low-risk affordable housing with the
majority of rent increases being capped at 7% this year in line with the rent
standard. Rent arrears continue to be tightly managed and remained strong at
1.75% (March 2023: 1.8%) against a target of 3% of associated revenue. Void
losses for the Group's general needs and sheltered stock remained at 0.7% for
the period (March 2023: 0.7%), better than the target of 0.8%.

Demand for routine repairs continues to increase and despite these challenges,
we're pleased to report that our overall customer satisfaction was 77% as at
March 2024 (March 23: 77%) and repairs satisfaction at 81%.

Our overall operating margin remains at 15.8% in the 12-month period to 31
March 2024, despite a £3m increase in impairment costs. Adjusting for this,
the Group's operating margin increased to 16.9%. The Group continues to face
cost challenges which have been tightly controlled, with savings and
efficiencies seen across the business. We have increased investment in our
stock in the second half of the year both through our planned investment
programme and through higher levels of maintenance and repair spend
experienced during the winter months.

Sales of shared ownership homes and open market sales homes (predominantly
delivered through joint ventures) totalled 515 units for the period ended 31
March 2024 (March 2023: 556). We continue to see high demand for shared
ownership properties, with first tranche sales of £48.0m for the year (387
units) with an average of 41% equity sold. The average reservation rate for
the year was 33 properties per month and average sales time for such
properties was 15 weeks from property handover to completion, against a target
of 26 weeks. Buyer confidence in the UK housing market remains reasonably
strong, with our highest levels of reservations for the year seen in Quarter
4.  As at 31 March 2024 the Group had 117 completed shared ownership homes
(March 2023: 94) available for sale, of which 67 were reserved (March 2023:
70).

Other asset sales, which includes assets sold through our Void Disposals
Program (VDP), shared ownership staircasing, right to buy and other asset
sales, ended up performing to budget for the year, with stronger sales seen in
the second half of the year, as expected. The number of units sold through our
VDP was lower than budgeted but high sales values resulted in us exceeding the
sales budget. However, we continue to see a slight downturn in staircasing
sales.

The gain on acquisition in the prior year of £12.8m related to the
acquisition of Enham Trust on 1 October 2022, which was recognised as
non-exchange transaction.

 

Debt and liquidity

Net debt during the year increased to £1,222m from £1,108m at 31 March 2023.
Liquidity at 31 March 2024 was £341m (31 March 2023: £312m), consisting of
committed and available undrawn facilities of £255m and cash and cash
equivalents of £86m. In addition to this, the Group holds £190m of retained
bonds. During the year £250m of medium-term notes were issued at an all-in
rate of 5.4%.

 

Development

We completed 997 homes (2023: 1,312), comprising of 922 affordable homes and
75 homes developed with our joint venture partners. We have a strong pipeline
of schemes and have been successful securing both land and developer led
opportunities, adding to our contracted pipeline of 3,174 homes.

 

Aster has delivered strong numbers for the twelve months to the end of 31
March 24, even though the number of handovers is lower than the previous year.
There is a strong forward pipeline in place of both land, community-led
development and developer-led schemes, although capacity has plateaued due to
the pressures from our operating environment including inflation, interest
rates, and investment into existing stock. Our land team has been successful
and entered into contract on ten schemes which will provide over 850 homes to
the programme. We have also entered into a contractors framework with seven
developers to support the delivery of the land programme. We continue to have
strong relationships with the national and regional housebuilders,
particularly concentrating on those who deliver a quality product. Our Homes
England Strategic Partnership, which will deliver 1,500 homes, is progressing
well with all homes identified for the programme. During the year to 31 March
2024 we claimed £29.3m of grant through the Strategic Partnership and £2.7m
from the Greater London Authority. We continue to find the planning system our
biggest challenge and experience long delays in achieving planning consents
and clearing of planning conditions; nitrate neutrality also continues to have
a significant impact.

 

Board and executive team changes

Aster Group Ltd: The members of the Executive Board are Bjorn Howard, Chris
Benn, Rachel Credidio, Dawn Fowler-Stevens, Emma O'Shea and Amanda Williams.

 

From 1 October 2023, due to expired tenures there were the following changes
to the Board:

·    Stephen Trusler was appointed a Non-Executive Director and from 3
November 2023 replaced Mike Biles as Group Chair. Mike stepped down from the
Board at that date having reached the maximum permitted term of nine years as
a Non-Executive Director;

 

·    Mehul Desai was appointed as a Non-Executive Director; and

·    Andrew Kluth retired from the Board having reached the maximum
permitted term of nine years.

Aster Treasury plc: There were no changes to the membership of the Board.

 

Aster Group credit rating and governance

Aster Treasury plc is rated A (stable outlook) by Standard and Poor's
(December 2023), and Aster Group G1/V1 by the Regulator of Social Housing
(July 2023).

 

 

Notes:

¹ Demonstrates the profitability of operating assets before exceptional
expenses. Defined as operating profit, excluding surplus on sale of property,
plant and equipment, as a percentage of total turnover.

 

² Demonstrates the profitability of social housing operating assets before
exceptional expenses. Defined as operating profit derived from social housing
activities, excluding surplus on sale of property, plant and equipment, as a
percentage of total turnover.

 

³ Seeks to measure the level of surplus generated compared to interest
payable. It is a key indicator for liquidity and investment capacity. EBITDA
MRI is Earning before interest, tax, depreciation, amortisation, excluding
profit on disposal of property, plant and equipment, but including the cost of
capitalised major repairs (major repairs included). Interest includes the
group's interest payable plus interest capitalised during the year but
excluding interest on the net pension liabilities.

 

⁴ Calculated as net debt (loans less cash) as a proportion of social housing
assets. Shows how much of the social housing assets are made up of debt, and
the degree of dependence on debt finance. It also sets out the potential
capacity for further borrowing which can be used to fund the future
development of new housing.

 

For more information, please contact:

Chris Benn, Chief Financial Officer - Chris.benn@aster.co.uk

https://www.aster.co.uk/corporate/about-us/investor-relations
(https://www.aster.co.uk/corporate/about-us/investor-relations)

 

Disclaimer

 

The information contained herein (the "Trading Update") has been prepared by
Aster Group Limited (the "Parent") and its subsidiaries (the "Group"),
including Aster Treasury plc (the "Issuer") and is for information purposes
only. The information contained in the Trading Update is unaudited.

The Trading Update should not be construed as an offer or solicitation to buy
or sell any securities issued by the Parent, the Issuer or any other member of
the Group, or any interest in any such securities, and nothing herein should
be construed as a recommendation or advice to invest in any such securities.

Statements in the Trading Update, including those regarding possible or
assumed future (or other) performance of the Group as a whole or any member of
it, industry growth or other trend projections may constitute forward-looking
statements and as such involve risks and uncertainties that may cause actual
results, performance or developments to differ materially from those expressed
or implied by such forward-looking statements. Accordingly, no assurance is
given that such forward-looking statements will prove to have been correct.
They speak only as at the date of the Trading Update and neither the Parent
nor any other member of the Group undertakes any obligation to update or
revise any forward- looking statements, whether as a result of new
information, future developments, occurrence of unanticipated events or
otherwise. The information contained in the Trading Update is unaudited.
Trading Updates may be based on Management Accounts rather than draft
financial statements so may not take into account all consolidation and other
adjustments as required for the financial statements. These include, but are
not limited to, corporation tax, fair value of investment properties, fair
values relating to business combinations, balance sheet reclassifications
between fixed and current asset housing stock and defined benefit pension
costs such as interest and current service cost adjustments. The group does
not anticipate these adjustments will have a material effect on the outputs.

None of the Parent, any member of the Group or anyone else is under any
obligation to update or keep current the information contained in the Trading
Update. The information in the Trading Update is subject to verification, does
not purport to be comprehensive, is provided as at the date of the Trading
Update and is subject to change without notice.

No reliance should be placed on the information or any projections, targets,
estimates or forecasts and nothing in the Trading Update is or should be
relied on as a promise or representation as to the future. No statement in the
Trading Update is intended to be a profit estimate or forecast. No
representation or warranty, express or implied, is given by or on behalf of
the Parent, any other member of the Group or any of their respective
directors, officers, employees, advisers, agents or any other persons as to
the accuracy or validity of the information or opinions contained in the
Trading Update (and whether any information has been omitted from the Trading
Update). The Trading Update does not constitute legal, tax, accounting or
investment advice.

END

 

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