TIDM42RJ
RNS Number : 8110S
Aster Treasury PLC
08 November 2023
ASTER GROUP
Trading Update - 30 September 2023
8 November 2023
Aster Group issues its unaudited Group trading update for the
six months ended 30 September 2023, with comparatives to the
audited financial statements for the 12 months ended 31 March
2023.
Highlights:
- Despite another challenging period, we have achieved profit
before tax of GBP23.3m for the six months, with operating profit
performing in line with budget.
- Following the issue of GBP250m through our MTN programme in
June 2023, our liquidity is at GBP608m.
- Our strong operational management and financial stability
remain robust. We're pleased to continue to hold our governance and
viability ratings at the highest levels of G1 / V1, which was
reaffirmed by the Regulator in July 2023 - something we have
maintained since the gradings were introduced. The learnings from
our own governance review in 22/23 are focused on balancing good
governance with agility and pace and ensuring continued
connectivity between all elements of our governance structure.
- We continue to integrate EBHT, C&C and Enham Trust into
the Group. We're focused on improving the effectiveness of our
services as a Group and achieving efficiencies by integrating our
technology systems where possible. For the first time in its
63-year history, the number of homes EBHT manages has gone over
500. Enham has benefited from our skilled people across our trades
and care teams to improve services and deliver some major
improvements for some of Enham's homes. Grace House, our flagship
170-home development in North London from C&C continues to
showcase a blueprint for housing for over 55s. The scheme has won a
number of awards including the Inside Housing Award for the Best
Supported Housing Development - urban.
- We have maintained a strong development pipeline, delivering
533 homes in the six months to 30 September 2023. Looking ahead, we
remain on track to complete on our forecast to deliver over 1,160
homes by 31 March 2024.
- First tranche sales continue to perform well, given current
market conditions and are tracking up on budget at GBP28.0m.
- Our team has remained focused on delivering our customer
service modernisation programme which includes measures to drive up
standards, improve digital self-serve options and streamline our
repairs operations to reduce cost.
- Further to our accreditation by the Tenant Participation
Advisory Service (Tpas) , we're making sure we're adding scrutiny
to every step of the process on our customer journey. We're finding
more ways to interact and listen via our Customer Voice programme
and involved customer groups to provide another layer of scrutiny
to how we operate. Together with our customers we can challenge and
improve our offer and co-design our services to be the best they
can be. This includes continual improvements and adoption of
technology to make sure our complaints service is a positive
experience.
- Having surveyed most of our homes as part of our GBP3.1m stock
condition survey (SCS), we've recently piloted our new 'Home Health
Check' service. This is designed to support customers by finding
out about any issues they may be dealing with - through both asking
them questions and undertaking a short assessment of their home.
The findings from our SCS also informs our planning with regard
making sure our homes are as energy efficient as possible; even
more vital to help tackle issues of fuel poverty in our
communities.
- To deliver lasting benefits for our customers and communities,
we need to employ and retain the best people. To achieve this,
we're developing a progressive and inclusive people service and
employment offer which is underpinned by restorative principles of
fair process, employee voice and accountability. We've been
carrying out extensive work to make sure our approach is informed
by colleague insight, including an in-depth culture audit and a
research piece in partnership with one of our inc. entrepreneurs to
understand what our colleagues want to see from our future
workspaces. Listening to our colleagues means we're able to adapt
and evolve our approach on an ongoing basis to make sure we meet
their diverse needs, both now and in the future.
- Our work around diversity and inclusion has been recognised
for a Silver Award through Talent Inclusion and Diversity
Evaluation (TIDE), up from a Bronze Award last year. We scored 80%,
a 12% increase on last year's results and a 26% increase since our
first benchmarking submission in 2021.
- We recently released our fourth Environmental, Social and
Governance (ESG) report covering the 12 months to 31 March 2023,
again benchmarking our delivery against the Sustainability
Reporting Standard (SRS) for social housing as well as the United
Nation's Sustainable Development Goals (SDGs). ESG is embedded
within the Group with continuous development through a new
sustainability roadmap.
- The Aster Foundation reframed its mission this year to enable
the better lives of our communities by combatting the causes and
effects of poverty. The charity is achieving this through a range
of programmes including mental wellness and social connectivity,
financial inclusion and improving people's chances of employment.
The Aster Foundation has three 'enablers' to support the delivery
of its strategy: volunteering, inc. (its social incubator), and
annual social research. So far this year, 2,642 people have been
positively impacted by the Aster Foundation's programmes is which
is 9% ahead of forecast. It is expected that there will be an
increased need of the Foundation's support this year, due to the
cost-of-living and fuel poverty in particular, putting extra strain
on people in the community.
Fina n ci al and ope r a t i ng p e rfo rman ce
Unaudited profit before tax for the six months ended 30
September 2023 was GBP23.3m. H o using p r o perties (net of
depreciati o n) h a ve increased to GBP 2,290m fr om GBP2,221m at
31 March 2 0 23.
Consolidated Statement of Comprehensive Income 6 months 12 months
(GBP000) Sept 2023 March 2023
Turnover 159,971 301,199
Operating costs (130,020) (254,583)
Surplus on sale of housing property, plant and
equipment 9,969 20,303
Operating profit 39,920 66,919
Profit on disposal of other property, plant,
equipment and intangible assets - 6
Donations received - 386
Reversal/(Impairment) of housing assets 98 (291)
Share of (loss)/profit in joint ventures (269) 1,776
Increase in fair value of investment properties - 159
Net finance expense (16,408) (26,415)
------------ -------------
Profit before tax and gain on acquisition 23,341 42,540
Gain on acquisition - 12,769
Profit before tax for the period 23,341 55,309
Financial indicators 6 months 12 months
Sept 2023 March 2023
Operating margin (excluding surplus on sale
of housing property, plant and equipment) (1) 18.8% 15.8%
Social housing operating margin(2) 23.6% 20.5%
EBITDA MRI interest cover(3) 171.1% 164.7%
Gearing 51.8% 51.0%
----------- -------------
The Group's revenue continues to focus on low-risk affordable
housing with the majority of rent increases being capped at 7% in
line with the rent standard from 1 April 2023. Rent arrears have
been tightly managed and remained strong at 1.8% (March 2023: 1.8%)
against a target of 3% of associated revenue. Void losses for the
Group's general needs and sheltered stock remained at 0.7% for the
period (March 2023: 0.7%), compared to the target of 0.8%.
Demand for routine repairs continues to increase and despite
these challenges, we're pleased to report that our overall customer
satisfaction was 76% as at September 2023 (March 23: 77%).
Our overall operating margin was 18.8%, an increase from 15.8%
in the 12-month period to March 2023. During the last six months of
the March 2023 year we saw additional investment in our stock
following the initial outcome from our stock condition survey, as
well as from investment in Enham Trust post-acquisition, and the
usual increase in demand for response repairs throughout the winter
months. We will continue to face cost challenges across the
business, with an increased level of maintenance and repair spend
expected throughout the winter, as well as an uptick in the planned
investment programme in the second half of the year.
Sales of shared ownership homes and open market sales homes
(predominantly delivered through joint ventures) totalled 252 units
for the period ended 30 September 2023 (March 2023: 556). We
continue to see high demand for shared ownership properties, with
first tranche sales of GBP28.0m for the six-month period (215
units) at an average sales percentage of 42%. The average
reservation rate for the six-month period is 31 properties per
month and average sales time for such properties was 14 weeks from
property handover to completion, against a target of 26 weeks .
Sales rates remain good despite the initial enquiry levels being
lower than prior years. As at 30 September 2023 the Group had 94
completed shared ownership homes (March 2023: 94) available for
sale, of which 49 were reserved (March 2023: 70).
Other asset sales are performing slightly behind budget for the
period due to a budgeted acceleration in our Void Disposal
Programme (VDP), which we should see catch up in the next six
months. We have seen a slight downturn in staircasing sales, with
levels back to those seen before the COVID-19 pandemic.
The gain on acquisition in the prior period of GBP12.8m related
to the acquisition of Enham Trust on 1 October 2022, which was
recognised as non-exchange transaction.
Debt and li qu i d i ty
Net debt during the period has increased to GBP1,163m from
GBP1,108m at March 2023. Liquidity at 30 September 2023 was GBP608m
representing 36 months of our net cash spend (31 March 2023:
GBP402m and 21 months), consisting of committed and available
undrawn facilities of GBP255m, cash and cash equivalents of
GBP163m, plus retained notes and bonds of GBP190m. During the six
months GBP250m of medium-term notes were issued, with a further
GBP100m retained.
Development
We completed 533 homes, comprising of 496 affordable homes and
37 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
3,069 homes.
There has been a strong start to the year with 45% of homes
completed at this mid-point of the financial year, having completed
on our first affordable homes funded through the Homes England
Strategic Partnership programme. Renegotiation of our Strategic
Partnership delivery has concluded resulting with an increase of
grant totalling GBP127m to deliver 1,500 affordable homes up to
March 2028. Development delivery continues to be challenged through
planning delays including water neutrality solutions and a
slow-down in build on housebuilder sites to reflect sales. Aster's
Contractor Framework will be announced shortly to support our
land-led delivery across our programme. We completed the purchase
of our flag-ship land scheme in Christchurch which is set to
include private sale, affordable, retirement housing and
commercial. Furthermore, land-led deals secured 398 units from 1
April 2023 and we entered a joint venture with Thakeham on a scheme
in Burgess Hill, Sussex to jointly deliver 120 homes.
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 six-month period
to 30 September 2023. From 1 October 2023, due to expired tenures
there were the following changes to the Board:
-- Stephen Trusler was appointed a Non-Executive Director and
from 3 November 2023 replaced Mike Biles as Group Chair. Mike
stepped down from the Board at that date having reached the maximum
permitted term of nine years as a Non-Executive Director;
-- Mehul Desai was appointed as a Non-Executive Director; and
-- Andrew Kluth retired from the board having reached the maximum permitted term of nine years.
We thank both Mike and Andrew for their enormous contribution
and commitment to Aster.
Aster Treasury plc: There were no changes to the membership of
the Board.
Aster Group credit rat i ng and governance
Aster Group is rated A+ (negative outlook) by Standard and
Poor's (December 2 022) and G 1/ V1 by t he Regulat or of Social H
o using (July 2023).
Notes:
(1) Demonstrates the profitability of operating assets before
exceptional expenses. Defined as operating profit, excluding
surplus on sale of property, plant and equipment, as a percentage
of total turnover.
(2) Demonstrates the profitability of social housing operating
assets before exceptional expenses. Defined as operating profit
derived from social housing activities, excluding surplus on sale
of property, plant and equipment, as a percentage of total
turnover.
(3) Seeks to measure the level of surplus generated compared to
interest payable. It is a key indicator for liquidity and
investment capacity. EBITDA MRI is Earning before interest, tax,
depreciation, amortisation, excluding profit on disposal of
property, plant and equipment, but including the cost of
capitalised major repairs (major repairs included). Interest
includes the group's interest payable plus interest capitalised
during the year but excluding interest on the net pension
liabilities.
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 m o re i nfo rmation, p l e ase c onta ct:
Chris Benn, Chief Financial Officer - Chris.benn@aster.co.uk
https://www.aster.co.uk/corporate/about-us/investor-relations
Dis claimer
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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