REG - Aster Treasury Plc - Trading Statement

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11/05/2022 16:30

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RNS Number : 1564L  Aster Treasury PLC  11 May 2022

Aster Group

Trading update for the year ended 31 March 2022

 

Aster Group issues its unaudited Group trading update for the twelve months
ended 31 March 2022, with comparatives to the audited financial statements for
the 12 months ended 31 March 2021.

 

Full year highlights:

 

•     We remain in a stable financial position and ended the year with a
turnover of £240.7m, operating profit of £75.3m and a profit before tax of
£171.0m

 

•     Standard and Poor's (S&P) maintained our 'A+ rating'. The
outlook was amended from 'stable' to 'negative'. Our continued commitment to
health and safety, our plans to increase investment in existing and new homes
and our transition to carbon neutral as well as our acquisition of Central and
Cecil Housing Trust (Central and Cecil) in January are particular areas which
influenced S&P's decision

 

•     Despite the challenges faced across the sector over the past 12
months, our strong operational management and financial stability remain
robust and we continue to hold our governance and viability ratings of G1 / V1
from the regulator

 

•     Merging with London-based Central and Cecil in January 2022 - a
mutually beneficial arrangement that will boost our combined capacity to build
new homes. Together we'll be able to build over 11,200 homes by 2030. Our
partnership also enables £571m worth of asset management, maintenance,
improvements, and sustainability upgrades to existing stock, as well as
increased investments in the technology we need to support a great customer
experience. Integration is continuing at pace, with a focus on realising real
term cost efficiencies over the next three years

 

•     We delivered 939 new homes in the year, a significant achievement
given the challenges faced. 768 of those homes were affordable homes with the
remaining 171 homes sold on the open market through our joint venture with
Vistry

 

•     Selected as a Homes England Strategic Partner - we will receive
£114m in grant funding to deliver 1,550 homes with start on site due before
the end of March 2026. 51% of those homes will be for shared ownership and 49%
for affordable and social rent. Of this additional funding from Homes England,
5% (82 homes) will be allocated for supportive living via our partner East
Boro Housing Trust and 14% for Community Land Trusts. Under the programme,
we're committed to building 25 per cent of these homes using modern methods of
construction, we'll use high-quality sustainable design and work with small
and medium-sized enterprises

 

•     We spent £80.1m on repairing and maintaining our homes and have
invested £2.8m to carry out full stock condition surveys on almost 26,000 of
our homes - we're one of only a few housing associations to take this
approach. Understanding the condition of our homes provides us further
assurance around health and safety, compliance and decent homes standards and
gives us the opportunity to look at how we can further improve the quality of
our homes and services we provide to our customers

 

•     We continue to focus on the modernisation of our customer services
through the delivery of our strategic framework, The Future of Customer
Experience. The framework sets out how we will ensure we are delivering our
vision to provide modern, reliable customer services into the future

 

•     Over 50% of customers are now registered to use our free online
portal MyAster, with 80% telling us they're happy with our service. With the
introduction of Live Chat messaging last autumn, we're giving customers more
ways to access our services in ways that suits them. Customers can use Live
Chat to log repairs, ask questions, update their tenancy and more. Their
feedback will continue to help us shape and improve our digital platforms that
provide accessible ways for customers to reach us

 

•     Customer voice is embedded across every team in the business.
During the year, over 3,750 customers shared their views and experiences via
our engaged customer groups, consultations and complaints and compliments
service and we've seen over 300% increase in customer engagement over the past
three years as we offer customers more ways to engage and provide feedback.
Our recently enhanced complaints service makes it simple for customers to let
us know when something could be improved and a new dedicated complaints
learning group will give us more opportunities to learn from complaints and
make positive change

 

•     Through The Future of Customer Experience programme, we're
committed to co-designing current and future services with customers. Their
contributions strengthen our service delivery by ensuring we provide proactive
services that meet their expectations and needs. We are also members of the
Institute of Customer Service (ICS) and currently working towards ICS and
tenant engagement specialists, TPAS accreditation

 

•     £350,000 grant to tackle rough sleeping in Hampshire. Using the
Homes England funding and working with Test Valley Borough Council we have
bought one new home and plan to buy a further four homes in the next financial
year to help people who rough sleep or are at risk of sleeping rough in
Andover

 

•     Aster Foundation has been granted official charitable status by
the Charity Commission. This is a really exciting step forward for the
Foundation's vision to enable the better lives of 40,000 people by 2030. We'll
do this through impact programmes that are aligned to our community's needs:
financial wellbeing; employment; mental wellness and resilience; homelessness;
volunteering; ageing well; inc. (our social incubator); inc.academy
(developing entrepreneurial capabilities) and influencing social change

 

•     Through our charity events and individual fundraising, we raised
over £20,000 for our Charity of the Year, Dementia UK

 

•     We are committed to ensuring all our stock is at least EPC C or
above ahead of the government's deadline of 2030, lowering our carbon
footprint and protecting the biodiversity of our communities. We are
continually reviewing and upgrading our fleet with new fuel-efficient vehicles
and have been trialling fully electric and hybrid vehicles. We're also looking
to introduce green slots, allowing customers to select an appointment time
that ensures operatives drive the most energy efficient route to reach them.
Alongside this we're trialling new digital approaches to first time fixes and
online viewings for lettings to provide an easier and quicker service for our
customers

 

•     We are one of the first employers in the UK to achieve Menopause
Friendly Employer accreditation. The accreditation recognises inclusive
employers that build awareness and understanding around menopause. Our
menopause support programme has been running for three years and is part of
our wider inclusion programme and our commitment to creating a fair and
inclusive culture. Our commitment to ongoing training, awareness and guidance
helps those experiencing menopause symptoms allowing us to support colleagues
more effectively

 

•     Released our second Environmental, Social and Governance (ESG)
report covering the 12 months to 31 March 2021

 

Financial and operating performance

 

Unaudited profit before tax for the twelve months ended 31 March 2022 was
£171.0m and includes a gain on acquisition of £119.6m. Excluding this gain,
underlying profit before tax is £51.4m, £5.9m ahead of last year. Housing
properties (net of depreciation) have increased to £2,003m from £1,866m at
31 March 2022.

 

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

March 2022
March 2021
 Turnover                                                                      240,682      224,379
 Operating costs                                                               (188,135)    (168,223)
 Surplus on sale of housing property, plant and equipment                      22,751       17,871
 Operating Profit                                                              75,298       74,027
 Profit on disposal of other property, plant, equipment and intangible assets  23           (44)
 Impairment of housing assets                                                  -            (138)
 Impairment of office premises                                                 -            (1,241)
 Share of profit in joint ventures                                             2,707        400
 Increase in fair value of investment properties                               1,154        633
 Net finance expense                                                           (27,794)     (28,163)

 Gain on acquisition                                                           119,590      -
 Profit before tax for the period                                              170,978      45,474

 

 Financial indicators                                                        12 months     12 months

March 2022
March 2021
 Operating margin (excluding surplus on sale of housing property, plant and  21.8%        24.4%
 equipment) ¹
 Social housing operating margin²                                            26.5%        29.2%
 EBITDA MRI interest cover³                                                  184.7%       210.5%
 Gearing⁴                                                                    48.8%        52.8%

 

 

With the easing of COVID-19 measures back in March 2021 we were able to start
to return to normality, working through the backlog of non-essential and
planned major works deferred from the prior financial year. Despite the second
half of the year seeing a larger programme of works completed, with increased
expenditure, some works have rolled over into the new financial year. Further
costs were also incurred as a result of the storm damage in February 2022.
Overall, operating margin was 21.8% being down from 24.4% in the prior year
due to partial catch up of works unable to be completed during covid lockdown,
continued IT and staff investment in the underlying business.

 

Sales of shared ownership homes and open market sales homes (predominantly
delivered through joint ventures) totalled 540 units for the twelve months
ended 31 March 2022 (12 months ended March 2021: 470). We continue to see high
demand for shared ownership properties with customers drawn to their lower
risk, particularly in the current climate. As at 31 March 2022, the Group had
stock of 50 completed shared ownership homes (March 2021: 115) available for
sale, of which 49 were reserved (March 2021: 100).

 

Other asset sales performed ahead of budget for the year due to the
continuation of our Void Disposal Programme and an upturn in sales from
staircasing of shared ownership homes due to the market conditions.

 

The acquisition of Central and Cecil was recognised as a non-exchange
transaction and resulted in a gain of £119.6m based on the fair value of
assets and liabilities acquired as at 1 January 2022.

 

Overall customer satisfaction was 82% as at March 2022 (March 2021: 81%). Rent
arrears have been tightly managed and remained strong at only 1.8% (March
2021: 2.0%) of associated revenue due to the assistance of our financial
wellbeing team. Void losses for the Group's general needs and sheltered stock
were 0.8% (March 2021: 0.8%).

 

Debt and liquidity

 

Net debt over the year has increased to £1,002m from £941m a year earlier.
Liquidity at 31 March 2022 was £377.9m, consisting of committed and available
undrawn facilities of £280.0m, and cash and cash equivalents of £97.9m.
During the year the remaining £50m borrowed under the Covid Corporate
Financing Facility (CCFF) was repaid.

 

Development

 

The Group completed 768 affordable units in the year ended 31 March 2022 (year
ended March 2021: 817 units) which was a significant achievement given the
challenges faced during the year. The number of handovers is lower than the
prior year, mainly due to the material and labour delays experienced across
the industry pushing back the programme. Our developer led programme has also
suffered where developers concentrated on their private sale homes because of
the strong market conditions and limited materials. Build cost inflation and
the general economic climate are being monitored closely. We have a strong
pipeline of schemes and have been successful securing both land and developer
led opportunities, with a contracted pipeline of 3,464 homes compared to 3,406
homes at the end of the previous year. Aster is a Homes England Strategic
Partner and has secured £114 million to deliver 1,550 homes by March 2028,
which will support the delivery of our land led programme.

 

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.

 

During the year, the following appointments were made: Claire Whitaker OBE was
appointed as a non-executive director to the Board from 12 August 2021. 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+ (negative) by Standard and Poor's (December
2021), and G1 / V1 by the Regulator of Social Housing (December 2021).

 

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

 

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