REG - Aster Treasury Plc - Trading Statement for 12 months to 31 March 2025
14/05/2025 17:00
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RNS Number : 7032I Aster Treasury PLC 14 May 2025
Trading Statement
Aster Group issues its unaudited Group trading update for the twelve months
ended 31 March 2025, with comparatives to the audited financial statements for
the 12 months ended 31 March 2024.
Full Year Highlights
· In another challenging year for the sector, we have achieved an
underlying profit before tax for the twelve months ended 31 March 2025 of
£41.4m with an operating margin of 15.5% and a statutory profit before tax of
£11.5m and an operating margin of 6.7%.
· During the year to 31 March 2025, we have recognised two one-off
exceptional items with a net negative effect of £2.9m:
o Closure of the Group's four Local Government Pension Schemes, which
resulted in a cessation charge included in operating profit of £29.0m and a
cessation actuarial gain of £27.0m included in other comprehensive income,
giving an overall net comprehensive expense of £2.0m; and
o Vistry, our joint venture partner underestimated the total full-life cost
projections to complete the Boorley Green joint venture development. These
costs were due to mismanagement and non-compliance with the Vistry Group's
established commercial forecasting processes. Aster's share of costs amounts
to £6.2m, of which £0.9m relates to the year ended 31 March 2025 and £5.3m
relates to prior years.
· We continue to play our role in delivering high quality homes across a
range of tenures spanning the south of England and London. We completed 984
homes (2024: 997) despite continued challenges in the planning process and the
impact of nitrate neutrality requirements. This comprised of 863 affordable
homes and 121 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 2,915 homes.
· In November 2024, the Regulator for Social Housing reaffirmed our
G1/V1 governance and viability ratings and in December 2024 Standard and
Poor's (S&P) reaffirmed our credit rating as 'A' and our outlook
continuing to be stable.
· As a Group we are focused on cost and ensuring business operations are
as efficient as possible. During the year we achieved annualised recurring
savings of over £3.6m, almost double the £2m target set at the beginning of
the year. The Group has identified further annualised recurring cost savings
of c£5m over the next three years.
· We're continuing to use customer voice, data and technology to inform
how we invest in our homes to make sure they are safe and comfortable for our
customers. We've invested £110.9m in our homes for the full year compared to
last year's spend of £106.2m.
· We pride ourselves on offering a local, dedicated and skilled service
centred around our customers' evolving and varied needs. We have a range of
ways to ensure customers inform and co-design our offer, and this year we have
been piloting a regional panel approach as part of governance changes which
strengthen customer voice and influence. As at 31 March 2025, we've maintained
our overall customer satisfaction at 79% and repairs satisfaction at 85%
(2024: 77% and 81% respectively).
· Through our Customer Services Modernisation Programme we've improved
how our customers can make appointments and our online reporting portal,
MyAster, has been extended to enable access to even more of our customers. As
part of our proactive approach to address condensation, damp and mould, we've
partnered with Ecosafe for a prompt, risk-based response, with customers
receiving an initial survey within seven days.
· We are serious about creating the best possible environment for our
people to thrive and feel at home doing their best work. We believe that a
person's ability to do their job is what is important, not their gender, age,
sexuality or any other personal factor. We maintained our Silver Award in the
2024 Talent Inclusion and Diversity Evaluation (TIDE) benchmarking and in May
2024 we were the first UK employer to be re-accredited as 'Menopause
Friendly'. We've signed up again to the HouseProud Pledge which demonstrates
our commitment to LGBTQ+ resident equality and support and been reaccredited
with Disability Confident Leader status for another three years. Our average
Group-wide gender pay gap for 2024 was 13.9% down from 15.2% in 2023.
· This year we supported 2,519 customers and households through our
Financial Wellbeing and Tenancy Sustainment Service. Through our work on
income maximisation, we secured £822k of additional income for those
customers, primarily through unclaimed benefits and other sources of financial
support. We also addressed non-financial tenancy risks such as personal
neglect or property condition concerns, supporting customers achieve
independence in the management of their homes and other aspects of their
lives, bringing in statutory and third sector support and intervention where
needed. These services have reduced costs associated with failed tenancies,
such as bad debt through rent arrears, litigation and enforcement actions, and
in turn have maintained low levels of evictions.
· During the year the Aster Foundation positively impacted 3,979 people,
exceeding the target set at the start of the year by 888 people, including:
o 2,205 people have improved mental wellness against a target of 1,537.
o 1,565 people have been supported with financial inclusivity.
o 209 people have been supported with employability.
· We're continuously improving our approach to the way we work with
suppliers to make sure our procurement is robust, sustainable and delivering
best value, so we attract and collaborate with high-calibre, environmentally
friendly partners to benefit our customers and stakeholders and deliver high
quality services. We're using technology and following best practice
principles to drive efficiencies and improvements and ensure our readiness for
the Procurement Act 2023, which came into force in February 2025.
· We've entered into contract on 27 schemes which will provide over 890
homes to our development programme. We've completed on the land for our third
London site at Springfield Hospital, to deliver 52 new homes and we completed
the first Zero Bills homes at Templegate, West Sussex with our £58m joint
venture with Thakeham for 120 net zero carbon homes. Construction is under way
for 25 affordable homes at Orchard Gate, our land-led New Forest site and
we've completed 57 homes at The Hops, Brewery Square, Dorchester. We've handed
over the first homes to the Isle of Portland's first ever community land trust
(CLT) and exchanged contracts on our fourteenth and fifteenth CLT schemes in
Dartington and Arundel.
· 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 31March 2025 we claimed £45.2m of grant through the Strategic
Partnership.
· We have launched a £4.2m framework for development consultants and
surveyors which will run alongside our £200m contractor framework. This new
network of chartered surveyors and property consultancies ensures we have
access to the right professionals across the housing regions.
· 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. Our Social
Housing Decarbonisation Fund Wave 2 project exceeded delivery targets meaning
we were able to secure additional funding and add more homes to the
project. We've also been successful in the bid for the Warm Homes: Social
Housing Fund Wave 3. This will enable us to upgrade circa 750 homes in Dorset,
Hampshire, Wiltshire and Somerset to improve how these homes retain heat.
· Further to the successful integration of Enham Trust's central,
housing and maintenance services into our Group, we're working toward our
long-term ambition to create a vibrant and integrated, community that is
inspiring and inclusive. During the year, we invested £4.5m in the
organisation to bring its infrastructure, homes and services up to the
standard required. During 24/25 Enham Trust supported over 6,000 disabled
people with services spanning the South of England. They provide homes and
person-centred care and support so individuals can live the life they choose,
supported access to work, skills development, and confidence building, and a
range of accessible opportunities that support individuals' mental and
physical wellbeing enabling them to enjoy life.
Financial and operating performance
Unaudited underlying profit before tax for the twelve months ended 31 March
2025 was £41.4m and statutory profit before tax £11.5m. Housing properties
(net of depreciation) have increased to £2,536m from £2,383m at 31 March
2024.
12 months to 31 March 2025 12 months to March 2024
Consolidated Statement of Comprehensive Income (£000) Underlying results Exceptional one off Statutory results Statutory results
items (unaudited) (restated)*
Turnover 330,237 330,237 313,733
Operating costs (276,454) (276,454) (261,972)
Surplus on sale of housing property, plant and equipment 26,622 26,622 24,610
Increase in fair value of investment properties 1,503 1,503 598
Operating profit before impairment and pension cessation 81,908 - 81,908 76,969
Impairment of housing assets (2,750) (2,750) (3,288)
LGPS cessation - charge - (29,045) (29,045) -
Operating profit 79,158 (29,045) 50,113 73,681
Profit on disposal of other property, plant, equipment 1 1 532
Donations received - - 198
Share of (loss) in joint ventures (2,197) (859) (3,056) (5,399)*
Gain on acquisition - - 6
Net finance expense (35,546) (35,546) (32,248)
Profit before tax for the year 41,416 (29,904) 11,512 36,770*
Other comprehensive income (OCI) for the year:
LGPS cessation - actuarial gains - 27,047 27,047 -
Effective cash flow hedge gains 1,723 - 1,723 814
Total comprehensive income for the year (before tax and other OCI) 43,139 (2,857) 40,282 37,584
Financial indicators
Operating margin (excluding surplus on sale of housing property, plant and 15.5% 6.7% 15.5%
equipment) ¹
Social housing operating margin² 20.8% 9.4% 21.4%
EBITDA MRI interest cover³ 136.0% 81.1% 125.9%
Gearing⁴ 51.2% 51.2% 52.2%
*Audited profit before tax for the prior year 31 March 2024 as previously
reported was £41.1m. Additional costs of £12.9m have been identified in one
of our joint venture investments, Boorley Green, of which £4.3m relate to the
group's share for the year ended 31 March 2024 and £1.0m relates to the year
ended 31 March 2023. The total additional costs for both years has been
treated as a prior year adjustment and the results to 31 March 2024 have been
restated to include £4.3m, which has been added to the previously reported
joint venture loss of £1.1m. Further details are provided in the following
pages.
The Group's revenue continues to focus on low-risk affordable housing with the
majority of rent increases from 1 April 2024 at 7.7% in line with the rent
standard. Rent arrears continue to be tightly managed and remained strong at
1.7% (March 2024: 2.0%) against a target of 2.5% of associated revenue. Void
losses for the Group were at 1.1% for the year, compared to the target of
1.5%.
Demand for routine repairs continues to increase and despite challenges, we're
pleased to report that our overall customer satisfaction was 79% as at March
2025.
During the year, we have continued to experience high demand for response
repairs, as well as providing additional investment in our housing stock.
Overall the Group spent £110.9m on maintaining its stock, slightly lower than
budget due to the phasing and related underspend on planned works. The Group
continues to face cost challenges which have been tightly controlled, and
enacted a program of savings and efficiencies which delivered annualised
savings of £3.6m in the year, well ahead of our target of £2m with a further
£5m of annualised cost savings identified for delivery over the next 3 years.
As a result, our underlying operating margin was 15.5%, in line with the
12-month period to 31 March 2024, and our underlying social housing operating
margin was 20.8%, down only 0.6 percentage points despite the increase in
investment in our stock across the business.
Sales of shared ownership homes and open market sales homes (predominantly
delivered through joint ventures) totalled 497 units for the year ended 31
March 2025 (March 2024: 462). We continue to see strong demand for shared
ownership properties, however sales for the twelve-month period have been
slightly slower and for a lower average share, than seen in previous years.
For the twelve-month period we achieved first tranche sales of £44.8m (376
properties) at an average sales percentage of 37%. The average reservation
rate for the twelve-month period is 33 properties per month and average sales
time for such properties was 16.5 weeks from property handover to completion,
against a target of 26 weeks. As at 31 March 2025 the Group had 117 completed
shared ownership homes available for sale (March 2024: 117), of which 52 were
reserved (March 2024: 67) and two were older than 26 weeks (March 2024: 18).
Other asset sales saw a good recovery in the last six months of the year,
finishing off with a strong performance for the twelve months with an overall
profit of £26.6m for the year, compared to £25.0m in the prior year. Despite
market conditions still being slow, staircasing sales of shared ownership
properties performed significantly over budget for the year.
Exceptional items and restatement
As disclosed as a post balance sheet event in our previous Trading Update and
in the statutory accounts for the 31 March 2024, on 1 April 2024, all four of
our Local Government Pension Schemes (LGPSs) closed to future accrual. As a
result, the Group remeasured the assets and liabilities of these schemes on a
cessation basis which has resulted in an overall settlement loss, as expected,
of £2.0m in the year to 31 March 2025. From a statutory accounting
perspective, a cessation charge of £29.0m has been reflected in operating
profit as an exceptional item, with the actuarial gains on cessation of
£27.0m being recognised in other comprehensive income.
The Group is party to a LLP, Boorley Green, with Vistry Group, whereby the
Group holds a 50% joint venture interest. During the year to 31 March 2025,
Vistry became aware of the underestimation of the total full-life cost
projections to complete several of its developments in its South Division, one
of these sites being Boorley Green. Investigations concluded that the specific
issues could be attributed to insufficient management capability and poor
culture in the Vistry Group's South Division, and non-compliance with the
Vistry Group's established commercial forecasting processes to which the LLP
was exposed through the South Division's management of the joint venture. Such
costs have been reviewed by Vistry and on the basis that they could and should
have been known about in prior periods, it was concluded that there was a
material error and the prior period financial statements required restatement.
The total value of additional costs for Boorley Green is £12.9m, with our 50%
share being £6.45m. After consideration of our 50% share of results
recognised in prior years, this has resulted in additional costs of £6.2m
that need to be reflected by our Group. Of this amount £4.3m relates to the
year ended 31 March 2024, and £1.0m relates to the year ended 31 March 2023.
The balance of £0.9m has been recognised in the year to 31 March 2025 and
reflected in the Group's share of joint venture loss for the year of £3.1
million. The £5.3 million relating to prior years, will be reflected as a
prior year adjustment in the Group's financial statements for the year ending
31 March 2025, with the March 2024 comparatives being restated.
Debt and liquidity
Net debt during the period has increased to £1,300m from £1,222m at 31 March
2024, funding our development programme. Liquidity at 31 March 2025 was £420m
(31 March 2024: £531m), consisting of committed and available undrawn
facilities of £185m and cash and cash equivalents of £45m, plus £190m of
retained bonds.
Development
We completed 984 homes, comprising of 863 affordable homes and 121 homes
developed with our joint venture partner. We have a strong pipeline of schemes
and have been successful securing both land and developer led opportunities,
adding to our contracted pipeline of 2,915 homes.
The Group has achieved strong performance up to 31 March 2025 despite a
challenging operating environment. The number of handovers is slightly lower
than the previous year, however, we have a robust forward pipeline consisting
of land acquisitions, community-led developments (CLT), and developer-led
schemes. Growth in the programme remains static due to factors such as
inflation, interest rates and investment into existing stock. Our land team
has successfully entered into contract on six schemes, which will add 223
homes to the programme. Additionally, construction has commenced on four CLT
schemes in partnership with Community Land Trusts. Together, these four
schemes will contribute 93 homes to the development programme.
We continue to maintain strong relationships with national and regional
housebuilders, focusing on those who deliver quality products. We have
contracted with new developers while also strengthening our established
relationships. Our Homes England Strategic Partnership, which aims to deliver
1,500 homes, is progressing well, with all homes identified for the programme.
In the year we claimed £45.2 million in grants through the affordable homes
programme. However, the planning system remains our biggest challenge, causing
significant delays in obtaining planning consents and clearing planning
conditions. Additionally, we have faced contractor insolvency in the SME
market, where operating conditions are particularly challenging.
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.
There were no changes to the Board during the year to 31 March 2025.
Aster Treasury plc: There were no changes to the membership of the Board.
Aster Group credit rating and governance
Aster Group Limited is rated A (Stable outlook) by Standard and Poor's
(December 2024) and G1/V1 by the Regulator of Social Housing (November 2024).
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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