3rd Quarter Results

 28 February 2025

The following report provides a trading update for Platform Housing Group (Platform), covering unaudited high level performance outcomes.

Highlights

· Turnover growth of 14% to £285m (Dec-23: £249.9m), with 94.1% of revenues coming from core social housing activities (Dec-23: 93.9%)

· Operating surpluses up 14.2% to £76.2m (Dec-23: £66.7m): additional incomes reinvested in existing homes and services to customers

· Investment in existing homes up 141% to £44.4m (Dec-23: £18.4m)

· Arrears of 2.9% consistent with prior year (Dec-23: 2.9%)

· Credit rating of A+ (stable) with S&P affirmed shortly after quarter end

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 31 December (as opposed to accumulated over the period to December)

(5) Investment in existing homes includes capital expenditure on maintenance and decarbonisation works

Elizabeth Froude, Platform's CEO commented:

"The Housing sector continues to face a difficult environment, whilst we try to support our customers with cost of living, improving the energy standards of existing homes and building much needed new homes. The chronic undersupply leaves many struggling to find a home and those who can't buy a home finding it difficult to afford high rents. We welcome the UK Governments objectives to tackle these issues and will continue to work with them to continue to provide quality, affordable and sustainable housing to those who need it most. Although we are a UK business, we are aware of the threat the wider global eco-political environment raises and take all possible actions to protect our supply chain and watch for new potential threats.

Our focus remains on delivering our corporate strategy objectives and we keep a tight focus on controllable costs to ensure we maximise the impact of our spending for the benefit of our customers, reflected in our social housing lettings margin of 32.7%. Our aim is to deliver a customer-first housing experience for a better future, however, we know that we can always improve what we do and that is why we ask our customers to tell us when we are not hitting the mark. Like many other housing associations, we continue to see high complaint volumes and are working on finding ways to reduce this. We continue to work with our customers to ensure our services are well received, and this is reflected in our satisfaction scores. We survey customers after every interaction we have with them and are pleased to report that satisfaction in these surveys has been increasing throughout the year, hitting a high of 82% in February 2025.

All of these pressures are showing in the increased operational costs across the sector and Platform are no different as we step up the investment in our existing homes each year and have a long road to go until we reach carbon neutral homes. This year so far that is an increase of £26m or 141%, this is strategically and morally the right thing to do, and we will continue to find ways to maximise our ability to achieve this. That said, both our operating surplus and social housing lettings margin still compare well to the prior year outturn and we continue to work to make our business a well-managed and stable environment for our investors and funders as well.

The coming year will undoubtedly be even harder, with increases to our core social housing rental income being limited by the lowest inflationary increase for three years and our costs growing at a faster rate, but we are hopefully setting ourselves out to continue to ride the tide well (social housing rental increases are restricted by the UK Government in line with September consumer price inflation plus one percent)."

Financial review

Turnover

In the nine months to 31 December 2024 total turnover increased by 14% to £285m (Dec-23: £249.9m). This was driven by growth in social housing lettings turnover, which increased by 9.3% to £224.4m (Dec-23: £205.3m), as a result of inflationary rental increases and a year-on-year increase in social housing units. 

Turnover from shared ownership first tranche sales of £41.6m was higher than the prior year period, due to the timing of the development cycle (Dec-23: £28.2m).  There were 448 shared ownership sales in the nine months to December (Dec-23: 280).  Demand for shared ownership remained robust during the quarter in our areas of operation.

Turnover from all social housing activities, including shared ownership sales, of £268.3m (Dec-23: £234.7m) accounted for 94.1% (Dec-23: 93.9%) of Platform's total turnover in the period. 

Surpluses and margins

Operating surpluses excluding fixed assets sales of £76.2m were up 14.2% on the prior year period (Dec-23: £67.7m) and operating surpluses including fixed asset sales increased by 12.9% to £79.8m (Dec-23: £70.7m). Surpluses from social housing lettings increased by 12.8% to £73.4m (Dec-23: £65m). 

Operating margins were 26.8% excluding fixed asset sales (Dec-23: 26.7%), 28% including fixed asset sales (Dec-23: 28.3%) and 32.7% from social housing lettings (Dec-23: 31.7%). Operating surpluses remain broadly in line with the prior year position, as rental growth has helped to support investment into existing homes and improving services for customers. 

Shared ownership sales surpluses were £5.8m (Dec-23: £4.1m), representing 7.3% of total operating surplus (Dec-23: 5.9%), with associated margins of 14.1% (Dec-23: 14.7%). Margins remain in line with the prior year and were supported by robust demand experienced in our areas of operation. The number of homes unsold was 86, of which 71 were reserved for purchase.

Sales of fixed assets, which include subsequent staircasing sales of shared ownership homes and homes acquired under the 'right to buy' scheme, had surpluses and margins of £4.1m and 43% (Dec-23: £4m / 44%). 

The overall net surplus after tax, which incorporates interest costs, was £40.6m in comparison to £36.7m in the prior year. The increase was supported by higher operating surpluses as highlighted above, net of a £5.2m increase in net interest costs due to a £250m sustainable bond issued in April 2024.

Outlook

Moving into the fourth quarter turnover is expected to continue to grow albeit at a slower rate, as new units come into management. Operating costs are expected to continue to be affected by investment into existing homes and customer services. 

Development review

We continue to build in a customer-focused way, delivering homes that are high quality, affordable and sustainable. Where possible we are implementing our 'Platform Standard' specification on all new schemes. The specification delivers energy enhancements and thermal efficiencies with a fabric-first approach. We are now gas free on all new development opportunities and look to incorporate solar panels to offset costs to the customer wherever possible. We are delivering Octopus's 'Zero Bills' specification on a number of sites including our landmark Boots scheme in Nottingham and exploring opportunities for this to be included elsewhere. Despite the difficulties the Modern Methods of Construction (MMC) market has experienced, Platform remain committed to delivering MMC homes and are exploring several opportunities with providers.

Build cost inflation has stabilised somewhat and there has been an increase in market confidence overall, which has helped to support a consistent level of new development opportunities from both housebuilders and developers. This has been further helped by a level of political stability and Homes England announcing a 'top-up' of £500million to fund new affordable homes. 

The development programme continues to progress well, despite some challenges which impact the pace of completions. Our main challenges remain the time it takes to negotiate and conclude highways section agreements with local authorities as well as a wide range of third-party agreements required to bring utilities to site. The impact on the pace of work has resulted in a slight decrease in year-on-year development expenditures, which were £231m (Dec-23: £244m), but is not expected to have a material effect on completions, which were slightly up to 732 (Dec-23: 713). Of the 732 completions, 203 (28%) were built for social rent, 218 (30%) for affordable rent and 311 (42%) for shared ownership. As at 31 December 2024, Platform owned a total of 49,823 homes (Dec-23: 48,858).

Outlook

Platform remains committed to developing in a prudent and sustainable manner, without compromising financial strength. We project that completions for the year to March 2025 will be broadly in-line with the prior year.

Platform does not invest in speculative land and has no material actual or expected impairment in development sites.

Treasury review

Ratings activity

Platform is rated A+ (stable outlook) by S&P and A+ (negative outlook) by Fitch. The rating with Fitch was affirmed in October 2023 and the rating with S&P affirmed in January 2025, shortly after the quarter end. 

Debt and liquidity

Net debt was £1,526m (Dec-23: £1,406m). 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 £51m and non-cash accounting adjustments of £14m.

Platform's weighted average cost of finance was 3.57% (Dec-23: 3.44%). 

Platform had liquidity as at 31 December 2024 of £556m (including undrawn committed facilities, short term investments and cash and cash equivalents), which is sufficient to meet all forecast needs until into 2026 (with new finance required at that point to maintain 18 months of liquidity in line with policy).

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 44.9% (Dec-23: 45.1%). 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 132% (Dec-23: 201%). The year-on-year movement is driven by a planned increase in investment into existing homes, combined with increases in interest expense due to the bond issuance in April 2024, as we push ahead with quality and sustainability improvements. 

Outlook

Some upwards pressure in gearing and downwards pressure to interest cover is expected as Platform pushes ahead with its strategic development and sustainability objectives. However, such objectives will be completed in a controlled way, ensuring that these key credit ratios remain well within Platform's targets.

For more information please contact:

Investor enquiries

Ben Colyer - +44 7918 160990

[email protected]

Media enquiries

[email protected]

Disclaimer

These materials have been prepared by Platform Housing solely for use in publishing and presenting its results in respect of the nine months ended 31 December 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.