Trading Update

Paragon Treasury PLC

30 May 2025

 

Paragon Treasury Plc

Paragon Asra Housing Limited ('PA Housing') trading update and unaudited financial results for the year ended 31 March 2025

PA Housing, the parent company of Paragon Treasury Plc and a Registered Provider owning and managing over 24,600 homes in the East Midlands, London and Surrey, announces its trading highlights and unaudited summary financial results for the 2024/25 financial year.

Headline results

The year was another year which focussed on delivering services and investments in existing residents' homes. This did create some pressure on some areas of expense, particularly responsive repairs. However, this was flagged early and managed through the year so that the year ended with stable performance.

Over the year, PA Housing has delivered an operating surplus of £43.4m (2024: 39.6m) from turnover of £223.7m (2024: £208.8m), equating to an operating margin of 19 per cent (2024: 16.5 per cent), including impairment adjustments. Total comprehensive income after loan interest and other adjustments was £9.7m (2024: £0.6m). Total available liquidity as at 31 March 2025 was £373m (2024: £612m).

Our non-recurring fire safety remediation expenditure to address historic defects at a small number of high rise blocks has continued to have a significant impact on headline results. Total expenditure on these activities in the year was £6.4m (2024: £5.3m). However, as planned, we recovered £3.5m fire remediation costs from contractors, setting an important precedent for PA and the broader sector. Our underlying social housing operating margin excluding these additional costs and income was 21.9 per cent (2024: 26 per cent).

As mentioned in the half year trading update there were some areas of performance that were not meeting budget but additional focus was applied and we saw performance improvement and plans to drive better outcomes.

We made significant progress with new build completions, delivering 407 new homes in the year, which is the highest number of new homes since PA was formed in 2017. Shared ownership sales performed strongly with higher than budgeted surpluses.

Property sales

During the year we completed 175 new build shared ownership sales, delivering proceeds of £23m and a surplus of £4.9m at an average sales margin of 21.5 per cent. This represents another strong year of sales income generation with surplus £0.5m above budget expectations. As at the year end we had 142 unsold homes but this is largely due to timing of handovers, with 43 handovers in March 2025. We are expecting a high number of additional handovers in Q1 2025/26 but prudent assumptions have been made in budgets and business plans for sales.

Asset disposals activities, comprising a mix of shared ownership staircasing, Right to Acquire sales, and ad hoc vacant possession sales in line with our asset management strategy, delivered a surplus of £4.7m. This was £1.5m favourable to budget expectations.

Other key areas

In other areas of core activity:

Ø   Rent collection was strong, and we ended the year with gross current resident rent arrears at 3.3% (2024: 3.8%). This represents our strongest performance since PA Housing commenced trading in 2017.

Ø   The rent collection work was supported by our expanded tenancy sustainment service cost of living pressures continued for our residents, with £10.1m in income gains secured for over 4000 of our residents.

Ø   Responsive repairs costs were above budget, due to a combination of higher volumes to clear prior year backlogs, increased numbers of communal area jobs in response to resident demand, and higher short-term costs as we have worked to mobilise our expanded in-house repairs team covering the whole of our Midlands region. Performance levels and resident satisfaction have improved as a result of the changes we made but we have more to do, we'll continue to strengthen contract management to drive better outcomes.

Ø   Temporary accommodation costs for residents who have left their homes while intrusive repair and maintenance work was carried out were also significantly above budget. In part this was volume driven, but the time being taken to complete repairs and return residents to their homes was also a factor. During the second half of the year we implemented changes to management responsibility and processes in this area and the overspend was brought under control.

Ø   We achieved almost 100% compliance with the Decent Homes Standard (with the exception of a very small number of properties where we were unable to gain access and carry out the work and six properties with work in progress, three with specialist windows being sourced from Germany and three needing additional loft insulation, all complete by end of May 2025). We continued our relentless focus on building safety compliance.

Ø   After making good progress to reduce our average re-let times in 2022/23, there has been some slippage in the last two years with the 2024/25 year ending with an average of 74 days. The main driver was turnaround times on works to empty homes, linking across to our ongoing work to remodel our service delivery in this crucial area.

It was a quieter year on the financing front, having completed on a £200m private placement and a £170m bank financing project in March 2024 we spent the 2024-25 financial year consolidating and getting best value on deposits and investments.

Areas of focus

During the year we have embedded our new business model, under the leadership of our CEO Mike McDonagh (appointed in December 2022) and our Chair Suki Kalirai (appointed in September 2022). We made good progress in the first year of our new five year Corporate Plan through to 2029, supported by a range of aligned Enabling Strategies covering our key service areas. A key running theme is to ensure that everything we do takes the local level and the resident lens as the starting point.

We have continued work to strengthen relationships with our residents through more regular communication (including all resident and leaseholder focussed calls), service improvement panels and work with our Residents Assembly, so that over time we will continue our journey to a trusting partnership with the people we house. We have invested in a significantly expanded neighbourhoods team with much smaller patch sizes, so that our people on the ground can truly get to know who lives behind all of our front doors and deliver a valued local service. Investing in our properties and estates is also critical, and in 2024/25 we increased our capital planned maintenance programmes by £10m (to £26m) compared to 2023/24. Alongside this we will start to accelerate our work to achieve at least EPC C rating for all our homes by 2029, a year ahead of the national target. As at March 2025 81% of our homes were at this level (2024:78%).

On fire safety, we have made considerable progress on negotiations with building contractors for the small number of blocks where significant remediation works are required. Works have started on a number of projects and we expect the remaining projects to get underway in 2025/26 and complete by 2027. Net remaining cost for PA's account for the required works are approximately £30m. We will also continue to seek full recovery of waking watch costs from the responsible contractors, having made good progress on this during 2024/25 with £3.5m recovered.

Development expenditure was below budget for the year, due to a combination of general delays on site and work being placed on hold at a small number of sites which have suffered contractor insolvency. We are progressing arrangements to bring the stalled sites back onstream with new contractors. Due to this slower spend loan drawdowns have been lower than anticipated and in turn this has reduced interest costs compared to budget assumptions.

Jessica Friend joined in March 2025 as Chief Financial Officer, freeing up Simon Hatchman to focus on our transformation journey and providing additional depth and strength to our Executive team. The Board remained stable and continues to benefit from insights from two resident Board members.

Statement of Comprehensive Income to 31 March 2025 (unaudited)

	2024/25 £m	2023/24 £m	Variance £m
Rent and service charges income	186.5	171.5	15.0
Shared ownership first tranche sales	24.3	25.6	(1.3)
Other income	6.9	6.2	0.7
Amortisation of Social Housing Grant	5.6	5.5	0.1
Turnover	223.7	208.8	14.9
Core operating costs	(136.1)	(116.0)	(20.1)
Depreciation	(24.1)	(23.2)	(0.9)
Impairment	(5.3)	(15.5)	10.2
Cost of first tranche sales	(19.7)	(18.4)	(1.3)
Surplus on fixed asset disposals	4.9	3.9	1.0
Operating surplus	43.4	39.6	3.8
Net interest	(42.7)	(39.6)	(3.1)
Taxation and other adjustments	3.3	(0.7)	4.0
Fair value accounting movements	4.5	3.7	0.8
Actuarial gain (loss) on pension scheme	1.3	(2.4)	3.7
Total comprehensive income	9.7	0.6	9.1

Statement of Financial Position as at 31 March 2025 (unaudited)

	31 Mar 25 £m	31 Mar 24 £m
Negative goodwill	(4.2)	(4.8)
Tangible fixed assets - housing properties	2,355.0	2,242.4
Fixed assets - other	24.3	24.7
Investments	28.0	25.6
Current assets	102.0	233.6
Current liabilities	(56.8)	(88.7)
Total assets less current liabilities	2,448.2	2,432.8
Creditors due after more than one year	(1,799.7)	(1,790.0)
Pension liabilities and other provisions	(9.2)	(13.1)
Total net assets	639.3	629.7
Reserves	639.3	629.7

Other key metrics and indicators as at 31 March 2025 (unaudited)

Headline financials	31 Mar 25	31 Mar 24
Operating margin (social housing lettings)	20%	23%
As above excluding fire safety remediation spend	22%	26%
Operating margin (all activities)	19%	16.5%
EBITDA interest cover (covenant basis)	158%	183%
Available liquidity	£373m	£612m
Cash	£21.1m	£122m
Total loans and borrowings	£1,304m	£1,314m
Net debt	£1,282.9	£1,192m
Gearing (loan covenant basis)	56%	55%
Core lettings business	31 Mar 25	31 Mar 24
Current resident rent arrears	3.3%	3.8%
Rent loss through voids	3.0%	2.7%
Average re-let time	74 days	54 days
Development and sales	31 Mar 25	31 Mar 24
Completed homes: rented social tenures	168	241
Completed homes: shared ownership	239	124
New build shared ownership homes sold	175	176
Unsold homes total	142	74
Unsold homes > 6 months	59	69
Average first tranche sales margin	22%	28%

Note: The above 2024/25 figures are based on unaudited management accounts and are subject to change following audit.

Enquiries

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

Jessica Friend, Chief Financial Officer

Tel: [phone]

email: [e-mail]

Disclaimer

The information in this preliminary announcement of results has been prepared by Paragon Asra Housing 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 Paragon Treasury 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 unaudited 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 unaudited. 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.

 

END