REG - Platform HG - Half-year Report
29/11/2024 08:15
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RNS Number : 0739O Platform HG Financing PLC 29 November 2024
29 November 2024
Platform HG Financing Plc
Platform Housing Group Limited
Results for the half year to 30 September 2024
Highlights
· Total turnover growth of 13.9% to £189.6m (Sep-23: £166.4m),
supported by continued development of new homes coming into management
· Shared ownership sales turnover up 57.8%
· Operating margins of 26.3% (Sep-23: 28.7%) under pressure, driven by
increased costs and continued investment into homes and services
· 84% increase to investment in existing homes, reflecting component
replacements, energy efficiency works and on-going increases in maintenance
costs
· Customer satisfaction maintained at 78% in challenging conditions
· Arrears of 3.2% consistent with prior year (Sep-23: 3.2%)
· A+ credit ratings with S&P and Fitch
· Highest governance and viability ratings of G1 / V1 with Regulator
for Social Housing
At or for the six months to 30 September 2023 2024 Change
Turnover £166.4m £189.6m 13.9%
Social housing lettings turnover £137.4m £148.6m 8.2%
Operating surplus((1)) £47.8m £49.9m 4.4%
New homes completed 480 451 -6.0%
Investment in new homes £135.7m £160.5m 18.3%
Investment in existing homes £14.1m £25.9m 84.0%
Share of turnover from social housing lettings 82.6% 78.4% -4.2ppt
Social housing lettings margin((2)) 34.2% 32.5% -1.7ppt
Current tenant arrears((3)(4)) 3.2% 3.2% +0.0ppt
Gearing((2)(4)) 45.3% 45.1% -0.2ppt
EBITDA-MRI interest cover((2)) 204% 140% -64.0ppt
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/1162672/Value_for_Money_metrics_Technical_note_guidance_2023.pdf
(3) Current tenant arrears includes all general needs tenants (this
excludes shared ownership properties)
(4) Figures as at 30 September (as opposed to accumulated over the period
to September)
Elizabeth Froude, Platform's CEO commented:
"The year to date reflects our ongoing priority of putting our customers and
the standard of their homes at the front of the queue. The investment in our
existing homes has again been mobilised quicker this year, going from £14.1m
to £25.9m, as we continue to improve the energy standards and comfort of all
our homes. We also have a programme to deliver energy improvements to almost
1,000 homes as part of the Social Housing Decarbonisation Fund programme.
We have continued to build new homes and acquire strategic development sites
for the future pipeline, which remains strong, and in the first half of this
year completed 451 new homes, all with EPC B or above and wherever possible
off gas.
Our operating surpluses and net surpluses are slightly down year-on-year,
mostly reflecting the increased investment in existing homes and other one-off
items such as office disposals in the prior year and breakage costs in
managing our loan book in the current. All of our financial metrics remain
strong with solid headroom to our targets.
Our commitment to listening to our customers and applying what they tell us
remains a core part of who we are and in the year we have recruited 10 new
members for our Customer Voice Panel and supported them with extensive
training to allow them to feel confident and assured in their role as a voice
in helping us shape our plans and strategies.
We have continued to drive a focus on controllable costs and hope that our
investors continue to see the solid investment they have seen in the past."
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 half year ended 30
September 2024.
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 half year saw the surprise snap election of a new Government in the
summer, with Labour returning to office after a near 15-year absence. We
will seek to work with the new Government to continue to provide quality,
affordable and sustainable housing to those who need it most and welcome the
opportunity to work with the new Government's challenging housing targets.
We are committed to doing this in the face of challenging conditions,
including relatively high interest rates, an increase in taxes and an
uncertain global geopolitical outlook.
Our Strategy remains focussed on the well-being of our customers, the
provision of new homes, quality of our existing homes and the decarbonisation
of our operations. We continue to deliver against our objectives whilst
maintaining financial strength, a key strategic objective.
It is pleasing to report that overall our turnover in the half year was 14%
higher than the prior year period. Social housing lettings turnover, which
represents our core operations and 78% of overall turnover, was up 8% and
shared ownership sales revenues was up 58%. Operating surpluses and margins
have been under increasing pressure as the Board continues to balance
investment in homes, customer services and high-cost inflation, however, our
margins continue to be amongst the best in the sector as is highlighted in the
peer group comparison later in this report.
Service review
Supporting our customers, welfare benefits and arrears
Although inflation is now around the Bank of England's target in the UK, the
impact of rising energy price caps, international tariffs and geopolitical
uncertainty all have the ability to push prices back up, disproportionately
affecting our customers. When these high prices are added to Universal
Credit migration and a cut in the winter fuel allowance, we expect the need
for crisis support will remain. We continue to support our customers in a
number of ways, the success of which is highlighted through stable arrears
levels. Applications to our Wellbeing Fund for essential support (food,
energy and white goods) remain high although there has been an easing in
comparison to the prior year, with c1,500 customers supported (Sep-23: c2,000)
at a total cost of £0.39m (Sep-23: £0.65m). In addition to the Wellbeing
Fund, we continue to support our customers with an array of measures,
including advice on benefits, debt management and flexible payment
arrangements when needed. Our arrears performance, including customers in
receipt of Universal Credit, general needs and shared ownership tenants was
3.18%, which is broadly in line with the prior half-year (Sep-23: 3.19%)
(arrears excluding shared ownership tenants is 3.17%).
Customer satisfaction remains a key area of focus for Platform and one in
which considerable investment has been and continues to be made. We measure
satisfaction using transactional surveys, which are given to customers
immediately following an interaction with us. During the half-year we had
c22,000 responses to these surveys with an average satisfaction of 77%, which
is above our target of 76%. It was pleasing to see satisfaction in Platform
Hub (our call centre) improve significantly in the half-year following a
number of service improvements, including reduced waiting times, an improved
out-of-hours service and the formation of a Customer Hub Quality Team. We
also monitor satisfaction through the regulatory Tenant Satisfaction Measures,
which are showing year-on-year improvements. Although overall satisfaction
is above our target, we know there is room for further improvement and have a
number of on-going projects which should help increase overall satisfaction
going forwards. These include investment into our Service Charges Team,
in-sourcing more estate management work and improving the data we hold on our
customers and our assets in order to better tailor interactions.
Voids management
During the half-year the absolute number of voids have experienced some small
decreases although losses were higher than the equivalent prior-year period.
These movements are not caused by any single issue and Platform continues to
actively manage void numbers in order to keep losses to a minimum. There
were 419 voids at September 2024 (Sep-23: 448), plus 131 that were newly
completed shared ownership units awaiting sale (Sep-23:168). Void loss as a
proportion of turnover was 1.75% (£2.6m), slightly up from 1.5% (£2m) in the
prior year, which is in part due to voids being handed over to Platform in
poor condition and therefore requiring longer to undertake repairs. This has
impacted the average number of days for voids in repair, which was 42 (Sep-23:
31).
We continue to target longer-term voids (over 100 days void) with new and
targeted marketing initiatives and this effort has supported a small reduction
in the average re-let days of 58 (Sep-23: 61).
Digital integration and security
In the first half of the year we consolidated our housing management systems,
providing a single data source and set of processes for the entire
organisation, which in turn has provided business efficiencies, increased
reporting capabilities and a simpler user experience. We have also launched
our "on our way" solution which provides the real time location of the
allocated repairs operative to our customers to reduce the number of no access
incidents and to enhance our customer experience. Complaints management has
also been a focus, seeing the development and launch of our complaints
aftercare solution which tracks agreed actions, reducing complaint escalations
and repeated calls. These improvements have been complemented by our
continuing focus on AI, which we continue to deploy to help drive operational
efficiencies.
As always cyber security is a priority, and we've made significant strides in
enhancing our cybersecurity posture, improving the Group's resilience against
an increasingly complex and dynamic threat landscape. We continually
report on security-focused KPIs to gauge the effectiveness of our defences and
adapt swiftly to emerging threats, like deepfakes and AI-driven attacks. To
stay ahead of such threats, we have finalised our position on AI and are in
the process of incorporating AI governance into our cybersecurity strategy and
training programs, equipping our teams with the knowledge to mitigate
advanced, AI-based risks. We continue to maintain ISO27001 information
security certification, the international standard for information security.
Asset management
During the year Platform has focussed efforts on providing high quality,
sustainable asset management whilst continuing to improve the energy
efficiency of homes. These objectives have been set against some challenging
macro-economic headwinds, including a high demand for maintenance services,
affecting labour availability and affecting costs, which continues to affect
our margins.
Our commitment to enhancing the quality and sustainability of our homes is
reflected in increased expenditures, with investment into existing homes up
84% to £25.9m (Sep-23: £14.1m) on the prior year equivalent period. This
is partly due to timing, with programmes achieving a fast start in the current
year, partly due to an increase in our planned programme and partly due to a
build-up in sustainability related works, which were £3.0m in the half-year
(Sep-23: £0.6m).
Repairs satisfaction averaged 88% for the half-year, in line with the prior
year (Sep-23: 87%) but still below our target of 92%. The main source of
dissatisfaction related to the time taken to complete repairs, with the
average time to complete a responsive repair rising to 33 days (Sep-23: 24
days). This increase has been driven by a greater number of higher-value
repairs, which have taken longer to complete.
The Cost Sharing Vehicle (CSV) arrangement within Platform's maintenance
subsidiary, Platform Property Care, which provides an efficient way of
delivering asset management services to members at cost, continued to operate
effectively in the half-year. Repairs satisfaction for all three members was
above 85%, which has helped expansion of areas of operations and scope of
works for the CSV.
The volumes of damp and condensation mould (DCM) cases has continued to be
significant, with 1,424 cases in the half-year (Sep-23: 1,718). Our
customers face a challenging winter ahead, with rises in energy costs and the
removal of the winter fuel allowance, which could cause a spike in cases over
the second half of the year. Platform have a clear process for dealing with
DCM to ensure all cases reported are tracked to resolution. Information
regarding DCM is communicated to customers on letting and available on the
Platform website to help customers prevent and treat instances as they arise.
Gas and fire risk assessment compliance was 99.9% and 100% (Sep-23: 99.9% and
100%), with the non-compliant gas instances as a consequence of a small number
of homes denying access, which we will continue to follow-up to achieve
compliance. Fire risk actions identified continue to be managed within
business-as-usual budgets and fully provided for in Platform's long term
financial plan.
Environmental, social and governance ('ESG')
Platform considers ESG to be a key part of its core operations and strategy,
as highlighted by the five core priorities within our Corporate Strategy:
1. Investment in existing stock, including the move to EPC 'C' and carbon
neutral targets;
2. Improving customer services, including reduction in complaints,
compensation and an increase in customer satisfaction;
3. Compliance in relation to requirements from the Regulator of Social
Housing and other legislative and statutory expectations;
4. Completion of our transformation processes;
5. Employee retention, engagement and well-being.
We continue to support the sector and investor led Sustainability Reporting
Standard (SRS), publishing performance against the SRS as part of our
Sustainability Report in July 2024. We also continue to prioritise
sustainable finance, with a £250m sustainable bond issued in April 2024
through our Sustainable Finance Framework (the Framework). Both the
Sustainability Report and Framework are available to download from the
Investor Centre section of the Platform website.
Environmental
Platform is committed to the decarbonisation of its operations and is
establishing a programme based on the principles of fabric first, future
proofing and no fossil fuels, to ensure that we both transition all homes to
EPC C and above by 2030 and net zero carbon by 2050.
We continue to work with Parity Projects and Portfolio, a software tool that
assesses the energy efficiency of our homes, to allow us to model live EPC
ratings using historical assessments and subsequent works undertaken to
improve energy efficiency. The Portfolio assessment highlights that the
Group has 79% of homes that are rated at least EPC C and 98% that are rated at
least D.
Social
Making a social impact is at the core of what we do, by managing existing
affordable housing, delivering new affordable housing and taking a leading
role in the communities in which we operate.
Platform continues to run a Wellbeing Fund to support customers in need of
crisis funding. In the half year c1,500 customers were supported at a cost
of c£0.4m. The fund remains focused on essentials, with two thirds of
awards going to food, utilities and clothing. The remainder of awards is
split between funding for white goods and special projects, including
supporting local charities such as Tutors United in Leicester, who were
awarded over £6,000 to help deliver community-based tutoring programmes to
primary school pupils from low-income, migrant and refugee backgrounds living
in social housing.
In addition to the fund, we continue to help with an array of support
measures, including advice on benefits, debt management and flexible payment
arrangements when needed. These measures are delivered by our Successful
Tenancies Team, who received 3,145 referrals during the half year (Sep-23:
3,164) and recorded £1.6m in financial outcomes secured for customers by way
of unclaimed welfare benefit claims, appeals and backdated payments (Sep-23:
£1.5m).
Following changes to the Winter Fuel Allowance criteria, which is now means
tested, the Successful Tenancies team have initiated a targeted campaign,
engaging with over 12,500 customers that could be affected by the withdrawal
of this allowance. This has included personalised letters offering pension
reviews and support surgeries held within specialist housing schemes. With
pension credit hugely underclaimed nationally, the focus has been to increase
this welfare benefit uptake and in the half year the team have secured
c£97,000 on behalf of customers in unclaimed pension credit income. This is
more than double for the same prior year period, and we expect to yield record
levels for customers for the remainder of financial year.
The value of the team, on top of other activities, is tracked using the HACT
(Housing Associations' Charitable Trust) social value creation methodology.
HACT provides a way to quantify how different interventions affect peoples'
lives by evaluating the impact on wellbeing, health and finances. The HACT
social value captured for the half year was £8.0m (excluding development
activity), of which £5.5m was generated by the Successful Tenancies Team
(Sep-23: £3.3m). In addition, other major projects included:
· Providing assured housing to homeless and those in temporary
accommodation: £1.3m social value generated by housing c500 people;
· Evaluating the mental and physical health of customers at retirement
villages and tailoring support, such as social groups and events, exercise
classes, and on-site staff visits: £0.6m social value generated and due to
the success of this initiative, it is now planned to be rolled out across all
retirement villages over the next year.
On top of supporting customers financially, we directly involve our customers
in shaping and improving our services and products. September-24 marks the
one-year anniversary of our updated strategic customer engagement framework,
which aims to increase customer influence at a strategic level through our
Customer Voice and Scrutiny Panels. Over the last year the panels have
recruited ten new customer members, spent c300 hours in training, meetings and
other activities and had a key part in shaping policies and making service
improvement recommendations.
Governance
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),
which was affirmed following a scheduled In-depth Assessment earlier in the
calendar year.
Group Board Member and the Chair of People and Governance Committee, Helen
Southwell, retired in June 2024 and was replaced by Mandy Clark. Mandy has
experience in the public and private sectors in HR, transformation and
organisational development, as well as being an inspirational coach and
mentor. She brings experience as a board member and chair in other
organisations.
Development review
Strategy
We have recently refreshed our Growth and Development Strategy, which remains
focussed on larger sites where we have greater control over delivery and
quality. This is expected to have an impact on cash flows, with larger
outflows required in the short term. Key building priorities are quality,
customer experience and sustainability, with homes delivered by strengthening
relationships with funders, developers and other key stakeholders, as well as
creating new strategic partnerships. We continue to target our development
completions, whilst maintaining financial strength and the programme is
continuously monitored to ensure this remains the case, with modifications
implemented where appropriate in light of changing external factors.
Home building programme
The development programme progressed well during the half year in spite of
headwinds which are impacting the speed of delivery. Site management
continues to be a challenge as contractors have had labour issues and had to
renegotiate supply chain contracts to keep labour on site. We also continue to
see resource pressures in Local Authorities cause delays to complete sites,
particularly related to signing off planning conditions and highways section
agreements.
We have recently completed our Europa Way development in Leamington Spa,
Warwickshire. This was a scheme delivering over 185 homes over four years in
joint venture with Vistry Partnerships, working alongside Warwick District
Council. The scheme was the first venture between Platform and Vistry and
together we have gone on to develop hundreds more affordable homes across the
Midlands.
The development programme produced 451 new homes in the half year (Sep-23:
480), of these, 94 (21%) were added for social rent, 137 (30%) for affordable
rent and 220 (49%) for shared ownership. All new homes developed had an EPC
rating of B and above.
Development expenditures were £161m in the period (Sep-23: £136m). At 30
September 2024, Platform owned a total of 49,576 homes (Sep-23: 48,522).
Financial review
Turnover
In the six months to 30 September 2024 total turnover increased by 13.9% to
£189.6m (Sep-23: £166.4m).
At or for the six months to 30 September 2023 2024
£m £m Change
Social housing lettings turnover 137.4 148.6 8.2%
Shared ownership first tranche sales 18.3 28.9 57.9%
Other social housing activities 0.8 1.5 87.5%
Total social housing turnover 156.5 179.0 14.4%
Non-social housing activities 9.9 10.6 7.1%
Total turnover 166.4 189.6 13.9%
Social housing lettings turnover increased by 8.2% to £148.6m (Sep-23:
£137.4m), in part due to inflationary rent increases of 7.7% and in part due
to a year-on-year increase in social housing homes, with 1,202 homes completed
in the year to March 2024 and a further 451 homes completed in the six months
to September 2024.
Turnover from shared ownership first tranche sales was up 57.9% to £28.9m
(Sep-23: £18.3m). The number of shared ownership sales in the year was 312
(Sep-23: 179) and the average percentage sold was 34.5% (Sep-23: 35.4%),
making the weighted average number of whole homes equivalent sold 108, 70%
higher than the prior year (Sep-23: 63). The increase in volume has been
partially offset by a decrease in the average sales price, which was 7% lower
than the prior year. The sales price variation is due to house type and
location and not a reflection of our experience of the shared ownership sales
market.
The number of homes unsold at the half year was 131, of which 105 were
reserved for purchase.
Opening unsold at April 2024 222
New completions 220
Transfers from other tenures 1
Sales (312)
Unsold at September 2024 131
Of which reserved for purchase 105
Turnover from all social housing activities of £179.0m (Sep-23: £156.5m)
accounted for 94.4% (Sep-23: 94.1%) of Platform's total turnover in the
period.
Turnover from non-social housing activities increased by 7.1% to £10.6m
(Sep-23: £9.9m) due in part to inflationary sales increases and in part to
new contracts for external maintenance services provided to Stonewater.
Although these activities are classified as 'non-social housing' for
accounting purposes, they mainly involve providing repairs to social housing
customers of other charitable registered providers.
Operating costs and costs of sale
Total costs increased 17.8% to £139.7m (Sep-23: £118.6m), with operating
costs (from both social and non-social activities) increasing 11.3% to
£114.6m (Sep-23: £103m) and costs of sales increasing 61.5% to £25.2m
(Sep-23: £15.6m).
At or for the six months to 30 September 2023 2024
£m £m Change
Social housing lettings operating costs 90.4 100.4 11.1%
Other social housing costs
- shared ownership costs of sale 15.6 25.2 61.5%
- other social housing operating costs 2.9 4.0 37.9%
Total social housing costs 108.9 129.5 18.9%
Other non-social housing operating costs 9.7 10.2 5.2%
Total costs 118.6 139.7 17.8%
Social housing lettings operating costs make up the majority of costs and
these increased by 11.1% to £100.4m (Sep-23: £90.4m), largely tracking
increased turnover of 8.2%. In addition, costs were impacted by management
and maintenance costs increases, which were higher in the half-year as
Platform continues to manage high maintenance cost inflation, whilst investing
in the customer experience, the quality and sustainability of homes and
improving the operational efficiency of systems and processes.
Shared ownership cost of sales increased by 61.5%, broadly in line with
associated revenue increases of 57.9%. Other non-social housing costs relate
mainly to maintenance activities carried out for external parties as part of
Platform's cost sharing vehicle and have risen due to increased revenues, as
activities have been extended to cover additional services for
Stonewater.
Net Interest costs
Net interest payable and financing costs increased by £3.6m to £26.4m
(Sep-23: £22.8m). This was due to an increase in net debt of £127m and
one-off loan breakage costs in the period of £1.3m, net of a £0.7m increase
in capitalised interest. The additional net debt was predominantly used to
fund development activity.
Surpluses and margins
Maintaining surpluses is a crucial part of Platform's business model. We
reinvest 100% of surpluses into building more homes, improving energy
efficiency and enhancing our services.
For the six months to 30 September 2023 2024
Amount Margin Amount Margin
£m % £m %
Social housing lettings surplus 47.0 34.2 48.2 32.5
Shared ownership sales surplus 2.7 14.9 3.8 13.0
Overall operating surplus((1)) 47.8 28.7 49.9 26.3
Surplus after tax 28.0 16.8 25.3 13.3
Notes
(1) Excluding gains on disposal of property, plant and equipment
Social housing lettings surpluses of £48.2m were 2.6% higher than the prior
period (Sep-23: £47m) and margins were down 1.7% to 32.5% (Sep-23: 34.2%).
Overall operating surpluses were up 4.3% to £49.9m (Sep-23: £47.8m), with
margins down 2.4% to 26.3% (Sep-23: 28.7%). Margins have been affected by
high maintenance costs, driven by general inflation in combination with a high
number of damp and condensation mould and disrepair cases. On top of this we
have continued with our strategic investment plans into customer services,
existing homes and improving the operational efficiency of existing systems
and processes.
Shared ownership sales surpluses were £3.8m, representing 7.2% of total
operating surplus (Sep-23: £2.7m / 5.4%), with associated margins of 13%
(Sep-23: 14.9%). Margins have been affected by a larger volume of sales
coming from land-led schemes (as opposed to section s106 sales from
developers), which attract a slightly lower margin but grant Platform control
over build quality.
The overall net surplus after tax, which incorporates interest costs, was
£25.3m in comparison to £28m in the prior year. Net interest increased by
£3.6m and surpluses arising from the sale of housing fixed assets were £1.1m
lower than the prior year period. Fixed asset sales were affected by
surpluses on staircasing sales of shared ownership properties, where a
customer buys a further stake in their home, which were down £0.6m to £1.3m
(Sep-23: £1.9m).
The table below shows a reconciliation of Platform's surplus after tax between
the six months to September 2023 and 2024.
Income Expenditure Surplus
£m £m £m
Surplus after tax - six months to September 2023 28.0
Social housing lettings turnover 11.2 11.2
Social housing costs:
Repairs and maintenance (7.4)
Management costs (2.8)
Depreciation (0.3)
Rent Losses from Bad Debts 0.2
Service costs 0.3
(10.0)
Property sales((1)) 10.6 (9.6) 1.0
Gains on disposal of property, plant and equipment (1.1) 0.1 (1.0)
Other social housing activities 0.6 (1.0) (0.4)
Non-social housing activities 0.7 (0.5) 0.2
Net interest costs 1.4 (5.7) (4.3)
Capitalised interest 0.7 0.7
Other (0.1)
Surplus after tax - Sept 2024 25.3
Notes
(1) Property sales consist of shared ownership first tranche sales
Treasury review
Financing activity
Platform continue to operate a £1bn EMTN programme of which £250m
sustainable bonds were issued from the programme in April 2024, in addition to
those issued in 2021, with £500m remaining to be issued.
During May and August 2024 debt facilities totalling c£50m were cancelled and
prepaid in order to save interest costs and optimise financial loan covenants.
Ratings activity
Our A+ rating was affirmed by Fitch shortly after the quarter end, with the
outlook updated to 'negative' from 'stable'. It is pleasing to have retained
an A+ rating with Fitch, which demonstrates on-going commitment to strong
metrics that sit comfortably within the A-grade space. Platform are
committed to providing excellent services to customers and maintaining
quality, affordable and sustainable homes. We know these things are not
achievable without continued investment and appreciate that this will put some
pressure on particular credit ratios that are important in Fitch's
methodology, but our interest cover remains strong. We were also rated A+
(stable outlook) by S&P, with the annual rating review due in the second
half of the year.
Debt and liquidity
Net debt was £1,502m (Sep-23: £1,375m) at the half year. Net debt
comprised nominal values of £1,121m in bond issues, £80m in private
placements and £390m in term loan and revolving credit facilities, partially
offset by cash and equivalents of £75m and non-cash accounting adjustments of
£14m.
The average cost and average maturity of Platform's drawn debt was 3.56% and
23 years respectively (Sep-23: 3.38% and 22 years). Drawn debt was 99% fixed
rate providing protection against interest rate increases over the last year
and moving forwards.
Platform had sufficient liquidity as at 30 September 2024 (£583m including
undrawn committed facilities, short term investments and cash and cash
equivalents) to meet all forecast needs until into 2026 (on top of maintaining
18 months of liquidity in line with policy), taking into account projected
operating cash flows, forecast investment in new and existing properties and
debt service and repayment costs. Liquidity is also sufficient to deliver
the current committed development programme without further funding (excluding
uncommitted schemes and sales income from both committed and uncommitted
schemes).
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 45.1% (Sep-23: 45.3%). Gearing has decreased in the last year
as a consequence of the timing of cash flows related to development
activities, with high cash receipts for sales activity and grant experienced,
relative to expenditures.
EBITDA-MRI interest cover was 140% (Sep-23: 204%), with the reduction a
consequence of Platform's deliberate increased investment into services and
homes.
Review of value for money (VfM) performance
Obtaining VfM ensures Platform make the best use of resources and is an
essential part of delivering its charitable objectives. Platform assesses
its performance against the Regulator of Social Housing in England's VfM
metrics for the year in the context of a group of 13 other major social
housing providers. This analysis is helpful as these metrics are defined by
the regulator and reported across the sector, providing a greater degree of
comparability.
Peer group information for the period to 31 March 2024 in comparison to
Platform is shown below. The peers included in the analysis are set out in
the footnotes to the table.
Peer Group Platform
RSH VfM metric(1/2) Lowest Average(3) Highest Mar-24 Rank(4) Mar-23 Rank(4)
Reinvestment 4.0% 9.0% 13.3% 11.1% 3 9.4% 3
New supply (social housing units) 0.7% 2.0% 3.4% 2.5% 4 2.2% 8
New supply (non-social housing units)(5) 0.0% 0.1% 0.8% 0.0% 1 0.0% 1
Gearing 30.5% 47.2% 53.9% 45.7% 5 43.4% 5
EBITDA-MRI interest cover(7) 33% 117% 196% 162% 4 186.9% 2
Headline social housing CPU(6) £3,997 £4,832 £6,369 £3,997 1 £3,436 1
Operating margin (SHL)(6) 17.8% 26.2% 34.0% 32.0% 2 32.1% 4
Operating margin (total)(7) 9.7% 20.8% 30.0% 26.0% 3 27.2% 2
Return on capital employed(7) 1.9% 2.9% 5.2% 2.8% 9 3.0% 5
Notes
(1) Sample of social housing providers includes Platform, Bromford,
Citizen, East Midlands Housing, Green Square Accord, Guinness, Home Group,
Jigsaw, Longhurst, Midland Heart, Orbit, Sanctuary, Stonewater, Walsall
Housing. 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/1162672/Value_for_Money_metrics_Technical_note_guidance_2023.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 years to March 2024 and March 2023
(5) A low focus on building non-social housing is viewed as positive /
giving a strong ranking due to property market risks related with such
activities
(6) CPU: cost per unit; SHL: social housing lettings
(7) One-off pension accounting adjustments relating to the closure of a
number of defined benefit schemes have been removed from these calculations
Platform regularly reviews its Value for Money Strategy to ensure that it
remains fit for purpose and continues to underpin its current Strategic Plan.
Platform's goal remains to ensure that we are investing in our assets,
customers and communities in a way that delivers the greatest impact and
demonstrable value for money.
Platform recognises its responsibility for meeting the requirements of the
regulators Value for Money Standard and in particular, to take a comprehensive
approach that achieves continuous improvement in the Group's performance on
the running costs and use of our assets. We remain focussed on value for money
whilst delivering enhanced customer service and improving the quality and
sustainability of our homes.
Costs and performance continue to be benchmarked against similar organisations
in terms of size, activity and geography. Targets are set by the Group Board
and senior management for improved financial and operational performance
through the annual budget. Board Members review performance on a quarterly
basis and revise the targets on an annual basis or following a significant
change in the operating environment.
Investing in quality, affordable and sustainable homes is a key component of
our Corporate Strategy. In the half year our investment in new and existing
homes increased by 18% and 84% respectively. This is demonstrated above in
our levels of reinvestment of 11.1%, the third highest amongst peers (a group
of 13). New supply of 2.5% was higher than the prior year (Mar-23: 2%), with
strong credit metrics allowing a continued commitment to provide much needed
new housing. As a consequence of this investment, interest cover and gearing
have both been affected, but it's pleasing to note that relative to peers we
continue to perform well.
Platform continues to perform strongly relative to peers in a number of the
metrics that measure efficiency of operations. Headline social cost per
unit, which shows the efficiency of operations in comparison to the size of
the organisation, remains the lowest amongst peers. Operating margins
(overall and for social housing lettings) remain amongst the best, with ROCE
faring slightly less favourably, however, we are aware that ROCE is influenced
by historical accounting decisions that affect the book value of (housing)
fixed assets.
Outlook
We remain committed to providing excellent services to our customers and
investing into the quality and sustainability of our new and existing homes,
whilst maintaining financial strength and stability. This will continue in
the second half of the year, with investment objectives centred around
customer satisfaction, new homes development and improving the energy
efficiency of our existing homes. This, in combination with cost inflation
and other headwinds, is likely to add increasing pressure on margins. The
wider macro-economic environment continues to present challenges, such as
increased taxes (employers national insurance tax) and relatively high
interest rates, but there are also some supportive factors such as a more
stable inflationary environment and the UK Governments recent announcement
over affordable housing rents, which will help provide certainty over revenue
streams and aid in longer-term decision making.
Platform remains committed to developing in a prudent and sustainable manner,
without compromising financial strength. A new, pro-housing Government, in
combination with additional funding into affordable housing and easing of the
planning system will improve market conditions and positively impact our
building aspirations. We project that completions for the year to March 2024
will be broadly in-line with the prior year at approximately 1,100 - 1,200
homes.
Platform's goal of decarbonisation remains unchanged at the half year and
progress will continue to bring all homes to EPC C and above by 2030 and to
net zero by 2050.
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 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
2022. Following the implementation of FRS 102, housing properties are stated
at deemed cost at the date of transition and additions are recorded 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 six months ended 30 September 2024
Six months ended 30 September 2024 Six months ended 30 September 2023
Note £000 £000
Turnover 1&2 189,636 166,417
Operating Expenditure 1&2 (114,585) (102,982)
Cost of Sales 1&2 (25,161) (15,596)
Gain on disposal of property, plant and equipment - 1,859 2,914
Operating Surplus 51,749 50,753
Interest receivable 4 3,133 1,689
Interest payable and financing costs 4 (29,558) (24,482)
Surplus before tax 25,324 27,960
Taxation - - -
Surplus for the period after tax 25,324 27,960
Change in fair value of hedged financial instrument/investment valuation - -
Total comprehensive income for the period 25,324 27,960
Statement of Financial Position at 30 September 2024
30 September 2024 30 September 2023
Note £000 £000
Fixed assets
Housing properties 5 3,330,905 3,033,169
Other tangible fixed assets - 22,448 16,510
Intangible fixed assets - 13,308 10,761
Investment properties - 17,333 17,225
Homebuy loans receivable - 7,154 7,348
Fixed asset investments - 19,944 19,081
3,411,092 3,104,094
Current assets
Stocks: Housing properties for sale - 48,243 47,383
Stocks: Other - 255 220
Trade and other Debtors - 36,332 35,511
Cash and cash equivalents 75,169 34,708
159,999 117,822
Less: Creditors: amounts falling due within one year - (195,467) (107,577)
Net current assets / (liabilities) (35,468) 10,245
Total assets less current liabilities 3,375,624 3,114,339
Creditors: amounts falling due after more than one year - (2,194,768) (1,967,720)
Provisions for liabilities
Pension provision - (7,821) (12,393)
Total net assets 1,173,035 1,134,226
Income and expenditure reserve 956,904 917,985
Revaluation reserve 216,131 216,241
Total reserves 1,173,035 1,134,226
Consolidated Statement of Cash Flows for the six months ended 30 September
2024
Six months ended 30 September 2024 Six months ended 30 September 2023
£000 £000
Net cash generated from operating activities (see note i below) 108,572 63,634
Cash flow from investing activities
Purchase of fixed assets (183,301) (172,700)
Proceeds from sales of tangible fixed assets 5,020 5,595
Grants received 47,097 25,801
Interest received 2,256 1,780
Homebuy and Festival Property Purchase loans repaid 117 85
Cash flow from financing activities
Interest paid (24,679) (24,145)
New secured debt 250,000 25,000
Repayment of borrowings (160,729) (8,398)
Net change in cash and cash equivalents (64,592) (83,348)
Cash and cash equivalents at the beginning of the period 30,816 118,056
Cash and cash equivalents at the end of the period 75,169 34,708
Note i
Surplus for the period 25,324 27,960
Adjustments for non-cash items
Depreciation of tangible fixed assets 22,852 21,517
Amortisation of grants (2,755) (2,626)
Movement in properties and other assets in the course of sale 1,845 -
Increase in stock (14) (14,772)
(Increase) / decrease in trade and other debtors (13,008) 372
(Decrease) / increase in trade and other creditors 49,638 (15,908)
Movement in investments (513) 26,373
Adjustments for investing or financing activities
Proceeds from sale of tangible fixed assets (1,120) (3,268)
Interest payable 29,558 24,482
Interest receivable (3,133) (1,689)
Movement in fair value of financial instruments (102) (90)
Net cash generated from operating activities 108,572 63,634
1. Turnover, Cost of Sales, Operating Expenditure and Operating Surplus
Group Six months ended 30 September 2024
Turnover Cost of Sales Operating Expenditure Operating Surplus / (Deficit)
£000 £000 £000 £000
Social housing lettings 148,630 - (100,387) 48,243
(see note 2)
Other social housing activities
Development services - - (2,722) (2,722)
Management services 82 - (411) (329)
Support services 175 - (496) (321)
Sale of Shared Ownership first tranche 28,911 (25,161) - 3,750
Other 1,158 - (343) 815
30,326 (25,161) (3,972) 1,193
Activities other than social housing
Developments for sale - - -
Student accommodation 5 - (2) 3
Market rents 463 - (329) 134
Other 10,212 - (9,895) 317
10,680 - (10,226) 454
Total 189,636 (25,161) (114,585) 49,890
1. Turnover, Cost of Sales, Operating Expenditure and Operating Surplus
(continued)
Group Six months ended 30 September 2023
Turnover Cost of Sales Operating Expenditure Operating Surplus / (Deficit)
£000 £000 £000 £000
Social housing lettings 137,436 - (90,400) 47,036
(see note 2)
Other social housing activities
Development services - - (2,235) (2,235)
Management services 89 - (264) (175)
Support services 148 - (252) (104)
Sale of Shared Ownership first tranche 18,324 (15,596) - 2,728
Other 539 - (187) 352
19,100 (15,596) (2,938) 566
Activities other than social housing
Developments for sale - - -
Student accommodation 5 - 4 9
Market rents 694 - (683) 11
Other 9,182 - (8,965) 217
9,881 - (9,644) 237
Total 166,417 (15,596) (102,982) 47,839
2. Turnover and Operating Expenditure for Social Housing Lettings
Six months ended 30 September 2024
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 83,210 29,256 8,490 13,108 1,553 135,617
Service charge income 3,847 921 3,551 1,842 8 10,169
Amortised government grants 1,324 824 113 466 15 2,742
Other income 3 71 1 26 - 101
Turnover from social housing lettings 88,384 31,072 12,155 15,442 1,576 148,629
Operating Expenditure
Management (11,241) (3,177) (2,538) (2,397) (245) (19,598)
Service charge costs (6,879) (1,864) (4,249) (2,134) (240) (15,366)
Routine maintenance (20,669) (5,587) (2,628) (294) (277) (29,455)
Planned maintenance (3,688) (1,107) (270) (40) (29) (5,134)
Major repairs expenditure (4) (5,457) (1,851) (735) (23) (8,070)
Bad debts (859) (302) (166) (138) (29) (1,494)
Depreciation of housing properties (11,889) (5,627) (1,253) (2,154) (346) (21,269)
Operating expenditure on social housing lettings (55,229) (23,121) (12,955) (7,892) (1,189) (100,386)
Operating surplus on social housing lettings 33,158 7,950 (801) 7,550 386 48,243
Void losses (1,254) (394) (354) (513) (44) (2,558)
2. Turnover and Operating Expenditure for Social Housing Lettings
(continued)
Six months ended 30 September 2023
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 77,050 25,125 7,631 11,409 2,014 123,229
Service charge income 3,728 915 4,614 1,741 12 11,010
Other grants 365 - 25 - - 390
Amortised government grants 1,395 828 58 443 15 2,739
Other income 18 50 - - - 68
Turnover from social housing lettings 82,556 26,918 12,328 13,593 2,041 137,436
Operating Expenditure
Management (9,601) (2,590) (1,899) (2,526) (178) (16,794)
Service charge costs (7,623) (1,320) (4,768) (1,776) (180) (15,667)
Routine maintenance (20,114) (4,772) (2,829) (186) (312) (28,213)
Planned maintenance (3,098) (888) (346) (36) (29) (4,397)
Major repairs expenditure (660) (575) (1,318) (48) (44) (2,645)
Bad debts (959) (275) (283) (149) (22) (1,688)
Depreciation of housing properties (12,270) (5,395) (1,223) (1,932) (176) (20,996)
Operating expenditure on social housing lettings (54,325) (15,815) (12,666) (6,653) (941) (90,400)
Operating surplus on social housing lettings 28,231 11,103 (338) 6,940 1,100 47,036
Void losses (871) (337) (361) (380) (70) (2,019)
3. Units
Social housing properties in management at end of period
September 2024 September 2023
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 28,838 15 28,853 8 28,846 28,663 28,660
Affordable rent 8,383 - 8,383 - 8,383 7,956 7,956
Supported 553 - 553 65 618 290 355
Housing for older people 2,706 - 2,706 - 2,706 2,977 2,977
Intermediate rent 481 - 481 - 481 459 459
Total 40,961 15 40,976 73 41,034 40,345 40,407
Shared Ownership(1) <100% 6,880 6 6,886 - 6,880 6,438 6,432
Social Leased @100% sold 1,153 - 1,153 - 1,153 1,147 1,147
Total social 48,994 21 49,015 73 49,067 47,930 47,986
Non-social housing
Non-social rented 111 - 111 - 111 111 111
Non-social leased 397 - 397 1 398 396 425
48,437 48,522
Total stock 49,502 21 49,523 74 49,576
(1)The equity proportion of a shared ownership property is counted as one
unit.
4. Net Interest
Interest receivable and similar income Six months ended 30 September 2024 Six months ended 30 September 2023
£000 £000
On financial assets measured at amortised cost:
Interest receivable (3,133) (1,689)
(3,133) (1,689)
Interest payable and financing costs
On financial liabilities measured at amortised cost:
Loans repayable 29,061 24,374
Loan breakage costs 1,277 -
Costs associated with financing 1,853 2,086
32,191 26,460
On financial liabilities measured at fair value:
Interest capitalised on housing properties (2,633) (1,978)
29,558 24,482
5. Tangible Fixed Assets - Housing Properties
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 2024 2,711,382 245,002 603,302 40,479 3,600,164
Additions 70 85,765 315 71,765 157,915
Works to existing properties 25,949 - - - 25,949
Disposals (2,498) (2,372) (4,870)
Fair value disposal 12 - - - 12
Transfer (to)/from current assets 649 (23,547) (22,898)
Interest capitalised - 1,488 - 1,145 2,633
Schemes completed 7,007 (7,007) 39,059 (39,059) -
At 30 September 2024 2,741,922 325,248 640,953 50,783 3,758,905
Depreciation
At 1 April 2024 380,635 - 28,153 - 408,788
Charge for the period 18,590 - 1,987 - 20,577
Disposals (1,179) (188) (1,367)
At 30 September 2024 398,046 - 29,952 - 427,998
Net Book Value
At 30 September 2024 2,343,876 325,248 611,000 50,783 3,330,907
At 30 September 2023 2,249,360 218,884 540,719 24,206 3,033,168
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