PARADIGM HOUSING GROUP
LIMITED
TRADING
UPDATE
Nine Months ended 31 December
2023
The following trading update compares
Paradigm Housing Group Limited's ("the Group") unaudited accounts
for the nine months ended 31 December 2023 with the unaudited
equivalent position for the nine months ended 31 December
2022.
Overview
·
An increase in rental income and a higher surplus
on new home sales has been offset by lower surplus on existing
homes and higher interest costs. As operating costs have been
broadly consistent, the Group has seen an increase of £7.3m in the
operating surplus.
·
Rental income has increased due to the annual rent
increase that was capped at 7%, along with additional homes
delivered moving into operations.
·
Operating costs remain broadly consistent, with
inflationary pressures offset by reduced investment required to
meet our EPC C targets for the year. Property lease costs
have also reduced as we wind down our Private Sector Leasing
activity.
·
First tranche sales performed well with 161 homes
sold in the nine months to 31 December 2023 (31 December 2022: 81
homes), resulting in an increase of £4.5m in the
surplus.
·
Sales of existing homes and staircasing volumes
have dropped resulting in a decrease of £4.4m in the
surplus.
·
Our first jointly controlled operation commenced
in September 2022 and has resulted in a surplus for the period of
£0.3m.
·
The Group continues to invest in our assets,
spending £31.4m (31 December 2022: £16.9m) investing in and
maintaining our existing homes and £98m on completing new homes
delivering 354 homes (31 December 2022: 237) for rent or shared
ownership.
Nicola Ewen, Chief Financial Officer
said: "We have delivered a strong performance
against a challenging economic background. Our rental income
remains stable, and our operating margin remains strong enabling us
to continue to deliver against our corporate plan
objectives.
Our financial strength is a key
driver in enabling us to continue to build new homes and invest in
existing homes. We expect to deliver over 500 new homes by the end
of the year and spend over £40m investing in and maintaining our
homes.
We continue to provide support and
help to our residents in these challenging economic times through
both our customer support team and our hardship fund."
Statement of Comprehensive Income
|
£'m
|
Nine months
ending
31 December
2023
|
Nine months
ending
31 December
2022
|
Movement
|
|
Turnover - rent, service charge &
other income
|
86.9
|
79.9
|
7.0
|
|
Turnover - 1st tranche
sales
|
23.0
|
12.5
|
10.5
|
|
Total turnover
|
109.9
|
92.4
|
17.5
|
|
Operating costs
|
(51.7)
|
(51.6)
|
(0.1)
|
|
Cost of 1st tranche sales
|
(16.3)
|
(10.2)
|
(6.1)
|
|
Total operating costs
|
(68.0)
|
(61.8)
|
(6.2)
|
|
Surplus on disposal of fixed
assets
|
2.5
|
6.8
|
(4.3)
|
|
Gains from jointly controlled
operations
|
0.3
|
0.0
|
0.3
|
|
Operating surplus
|
44.7
|
37.4
|
7.3
|
|
Net interest payable
|
(24.5)
|
(21.4)
|
(3.1)
|
|
Movement in fair value of
investments
|
(0.4)
|
(1.3)
|
0.9
|
|
Surplus to 31 December
|
19.8
|
14.7
|
5.1
|
Trading update
Turnover from rents and other income
increased by 8.8% to £86.9m.
Turnover from 1st tranche property
sales increased from £12.5m to £23.0m as the number of homes sold
increased from 81 to 161 during the nine months ending 31 December
2023, in line with our development programme. The number of unsold
homes at 31 December 2023 was 42 (31 December 2022: 26).
Operating costs remain broadly the
same at £51.7m.
Cost of 1st tranche sales increased
by 59.4% to £16.3m as a result of the increased number of homes
sold.
As a result of the economic pressures
facing our customers, we have a seen a reduction in the number of
existing homes sold and tenants purchasing additional shares
(staircasing) resulting in a 63.9% reduction in the surplus on sale
of fixed assets from £6.8m to £2.5m.
Our jointly controlled operation (a
208 home development with a mix of affordable rental homes, shared
ownership homes and open market sale homes) commenced in September
2022, with the first outright sale homes being sold in September
2023. For the nine months ending 31 December 2023, the jointly
controlled operation has seen 13 outright sales and generated a net
surplus for the group of £0.3m.
We continue to see the impact of
higher interest rates with 15.4% of our debt at floating rates as
at 31 December 2023 (31 December 2022: 8.2%), resulting in 14.7%
increase in net interest payable from £21.4m to £24.5m.
Statement of Financial Position
|
£'m
|
As at
31 December
2023
|
As at
31 December
2022
|
Movement
|
|
Housing properties
|
1,599.6
|
1,505.0
|
94.6
|
|
Other assets
|
12.7
|
18.1
|
(5.4)
|
|
Investments
|
21.2
|
20.6
|
0.6
|
|
Net current assets
|
28.2
|
22.9
|
5.3
|
|
Total assets less current liabilities
|
1,661.7
|
1,566.6
|
95.1
|
|
Loans due in more than one
year
|
908.4
|
843.5
|
64.9
|
|
Unamortised grant
liability
|
45.2
|
37.7
|
7.5
|
|
Other long-term
liabilities
|
14.7
|
15.4
|
(0.7)
|
|
Capital and reserves
|
693.4
|
670.0
|
23.4
|
|
Total Funding
|
1,661.7
|
1,566.6
|
95.1
|
Investment & Debt Analysis
Housing properties have increased by
£94.6m to £1,599.6m as at 31 December 2023. This is due to the
£131.4m spent on building new homes and £13.1m of property
improvements over the 12 month period, offset by depreciation and
existing home disposals.
Group debt (net of loan premium
costs) was £912.5m (31 December 2022: £847.3m) as we have drawn
down £72.9m (net) on our revolving credit facility during 2023 and
repaid £7.7m of borrowings. Undrawn facilities stand at £140.0m (31
December 2022: 134.1m).
We continue to build new homes with
367 homes across all tenures completed in the nine months to 31
December 2023 (31 December 2022: 237).
Key
performance statistics
|
|
As at
31 December
2023
|
As at
31 December
2022
|
|
Surplus as % of turnover
|
18.0%
|
15.9%
|
|
Operating Margin (overall)
|
40.7%
|
40.5%
|
|
Operating Margin (excluding
sales)
|
40.5%
|
35.4%
|
|
Rent loss % (voids as % of rent and
service charge receivable)
|
0.92%
|
0.98%
|
|
Bad debt % (Bad debt charge as % of
rent and service charge receivable)
|
0.53%
|
0.42%
|
|
Rent arrears (gross arrears as % of
rent and service charges receivable)
|
3.24%
|
3.34%
|
|
Interest cover (operating surplus
before interest payable, depreciation and amortisation as % of
interest payable)
|
197.7%
|
198.2%
|
|
Gearing (total loans less cash as %
of housing properties at cost)
|
56.3%
|
54.8%
|
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