Flagship Annual Accounts

Flagship Finance Plc

Flagship Housing Group Limited (Flagship') trading update and audited financial statements for the year ended 31 March 2021

Flagship, the parent company of Flagship Finance Plc and a Registered Provider owning and managing 31,825 homes in the East of England, announces its trading highlights and summary audited financial results for the 2020/21 financial year.

Headline results and highlights

· Flagship, own and manage 31,825 homes (31,529 as of 31 March 2020) - the largest landlord in the East of England, bringing significant regional influence

· Flagship benefit from a G1 / V1 rating from the Regulator of Social Housing - last IDA completed 28 October 2020

· Flagship has maintained its credit rating of A2 (Stable) from Moody's

· Financial performance remains robust with annual turnover increasing by 6.3% to £200.2m (2020 £188.2m)

· Annual Operating surpluses decreased by 2.9% to £69.5m (2020: £71.7m)

· Flagship has delivered an operating margin, including gains on disposal, of 34.7% (2020: 38.0%).

· Hopestead was launched, a charity focussed on eradicating homeless in the East of England. During the year it was able to help 700 families at risk of losing their homes

Full year results demonstrate strong financial performance and commitment to sustainability

Flagship has reported a surplus of £46.1m for the 2020/21 financial year despite a very challenging operating environment due to the impact from COVID-19 and a cyber-attack.

Alongside the financial statements, Flagship has also published our first Environmental, Social and Governance (ESG) report, setting out how the Group is performing against the ESG measures in the Sustainability Reporting Standard for social housing published.

Both documents are available on our website: www.flagship-group.co.uk/about-us/investors-hub/

David Armstrong, Chief Financial Officer at Flagship said: despite the challenges of COVID-19 and a cyberattack we delivered some very solid results. Our agile infrastructure, culture and great people have enabled us to adapt quickly to the pandemic and our core financial strength has allowed us to provide a lot of support to tenants and staff through this tremendously difficult time. I look back on the year with great pride at a very solid year due to the adaptability, hard work and empathy shown by all our staff.

COVID-19 impacts

Flagship's agile working approach meant the Group was well prepared for the sudden transition to working from home. Rapid action was taken across the Group to address the impact of COVID-19 on tenants and the business.

Actions:

• COBRA team formed to co-ordinate operations- meeting 2-3 times a week

• Emergency budget and business plan created to forecast the likely impact

• Utilised government support to help manage the impact of staff and finances

• Residents/staff at the heart of the strategy providing support and only continuing development/maintenance where safe to do so

Impact:

• Up to 500 staff were furloughed (zero at 31 May) - salaries topped up to 100% to protect staff and ensure no-one was financially impacted

• >900 tenants sought pandemic help with Flagship writing off £417k of COVID related arrears

• Some development and repairs delay due to social distancing requirements

• Rigorous planning helped ensure that sales continued throughout COVID-19

• Since the easing of lockdown effective business planning has helped restore services to pre-covid levels

Keeping COVID-19 in perspective

Whilst many things have stopped due to COVID-19, the housing crisis in the East of England hasn't gone away. In fact, for many, incomes are under considerable pressure and the social housing sector has an integral role in ensuring that no-one is left without a home. Delivering our purpose is therefore more important now than ever before.

One thing we can be sure of, is that at some point the pandemic will pass and when the dust settles it will be the work put into (1) maintaining working capital; (2) investing in our people and (3) moving the business forward that will make the difference to the long-term future of the Group. The current economic, political, and societal conditions because of COVID-19 still continue to create a degree of uncertainty. However, the Group has demonstrated its robust management, financial strength and agility to position it well to cater for uncertainty and enable it to continue to safely deliver services and growth.

The Group has embraced change and quickly adapted to the needs of tenants, developed new ways to collaborate with its partners and work with its employees. It is likely the future delivery of our business will be enduringly different, but the foundations built before the pandemic, and further adapted during it, will allow the Group to continue to prosper as the pandemic passes.

Development Review

Flagship is an experienced developer having delivered 1,486 affordable homes over the last three years and with a strong focus on social housing tenures. Flagship completed 478 new homes in the full year ending 31 March 2021 (460 affordable housing tenure and 18 open market sales).

Our growth strategy delivers a balanced portfolio of residential development and improvements to our existing housing stock. To serve the needs of a range of tenants and private customers, we will put our finances to good use by maintaining and improving our stock as well as adding to our asset base. We will build the right homes in the right places and will invest approx. £130 million building 826 new homes comprising of 547 for affordable / intermediate rent, 146 shared ownership and 133 open market sales during the year ended 31 March 2022. This is an increase of 346 new homes when compared to the year ended 31 March 2021.

Flagship has a development plan targeting 4,000 new Affordable Homes over the next five years and 51% of development pipeline is already secured.

ESG

Our Environmental, Social and Governance (ESG) report gives Flagship the opportunity to showcase

the positive impact of its work. The Group has an ambitious programme to deliver c.4,000 affordable homes over the next five years and it wants to build them to high environmental standards. Flagship knows that a decent safe home has a positive impact on its tenant's quality of life. The Group is committed to tackling the environmental agenda and plans to retrofit c.2,000 of our existing homes every year through a fabric-first programme, focusing on thermal improvements, digital heating controls and installing renewable heating technology.

Tenants are at the heart of Flagship's decision making and through our green investment plans, it will make its homes safer and cheaper to run, which ultimately tackles fuel poverty and enhances quality of life for its tenants.

Statement of Comprehensive Income to 31 March 2021

Statement of Financial Position as at 31 March 2021

Consolidated Statement of Cash Flows as at 31 March 2021

Other key operational metrics and indicators as at 31 March 2021

Enquiries

All enquiries in relation to this trading update should be directed to:

Alex Fitzgerald, Head of Treasury and Regulation

Tel: 0845 258 6175

email: [email protected] 

Disclaimer

The information in this announcement of results has been prepared by Flagship Housing Group Limited and is for information purposes only. The announcement should not be construed as an offer or solicitation to buy or sell any securities issued by Flagship Finance Plc or any other member of the Group, or any interest in such securities, and nothing herein should be construed as a recommendation or advice to invest in any such securities.

This announcement contains certain forward-looking statements reflecting, among other things, our current views on markets, activities and prospects. By their nature, forward looking statements involve a number of risks, uncertainties or assumptions that could cause actual results to differ materially from those expressed or implied by those statements. Actual and audited outcomes may differ materially. Such statements are a correct reflection of our views only on the publication date and no representation or warranty is given in relation to them, including as to their completeness or accuracy or the basis on which they were prepared. Financial results quoted are audited. We do not undertake to update or revise such public statements as our expectations change in response to events. Accordingly, undue reliance should not be placed on forward looking statements.