TIDM87ZW
Flagship Finance PLC
01 October 2021
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 GBP200.2m (2020 GBP188.2m)
-- Annual Operating surpluses decreased by 2.9% to GBP69.5m (2020: GBP71.7m)
-- 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 GBP46.1m 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 GBP417k 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. GBP130 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
2020 2021
GBP'000 GBP'000
Turnover 188,248 200 ,150
Operating costs (124,927) (140,530)
Gain on disposal of property, plant
and equipment 8,580 9,353
Share of operating profit / (loss)
in joint ventures (244) 480
--------------------------------------------------- -------------------- --------------------
Operating surplus 71,657 69,453
--------------------------------------------------- -------------------- --------------------
Interest receivable and similar income 647 352
Interest payable and similar charges (24,377) (25,533)
Increase / (deficit) on revaluation
of investment properties (974) 1,824
Gift on acquisition 15,339 -
-------------------------------------------------- -------------------- --------------------
Surplus for the year before taxation 62,292 46,096
--------------------------------------------------- -------------------- --------------------
Taxation (21) 33
--------------------------------------------------- -------------------- --------------------
Surplus for the year 62,271 46,129
--------------------------------------------------- -------------------- --------------------
Actuarial gain / (loss) in respect
of pension schemes 5,718 (8,188)
--------------------------------------------------- -------------------- --------------------
Total comprehensive income for the
year 67,989 37,941
--------------------------------------------------- -------------------- --------------------
Statement of Financial Position as at 31 March 2021
2020 2021
Fixed assets GBP'000 GBP'000
Intangible assets 8,199 7,520
Housing properties 1,699,510 1,754,927
Oher property, plant & equipment 11,163 10,489
Investment properties 72,724 74,274
Investments - joint ventures 7,210 13,119
Investments - other 13,388 13,440
Non-current debtors 90 90
-------------------------------------------------- -------------------- --------------------
1,812,284 1,873,859
------------------------------------------------- -------------------- --------------------
Current assets
Inventories 32,590 54,842
Debtors due within one year 20,288 16,023
Cash at bank and in hand 31,755 11,408
-------------------------------------------------- -------------------- --------------------
84,633 82,273
------------------------------------------------- -------------------- --------------------
Creditors: amounts falling due within
one year (99,011) (112,685)
-------------------------------------------------- -------------------- --------------------
Net current (liabilities) / assets (14,378) (30,412)
-------------------------------------------------- -------------------- --------------------
Total assets less current liabilities 1,797,906 1,843,447
-------------------------------------------------- -------------------- --------------------
Creditors: amounts falling due after
one year (957,681) (958,716)
Post-employment benefits (12,618) (19,219)
Provision for other liabilities (136) (100)
-------------------------------------------------- -------------------- --------------------
Net assets 827,471 865,412
-------------------------------------------------- -------------------- --------------------
Capital and reserves
Retained earnings 430,406 472,954
Revaluation reserves 397,065 392,458
-------------------------------------------------- -------------------- --------------------
Total reserves 827,471 865,412
-------------------------------------------------- -------------------- --------------------
Consolidated Statement of Cash Flows as at 31 March 2021
2020 2021
GBP'000 GBP'000
Net cash from operating activities 68,193 76,072
Taxation 171 (3)
--------------------------------------------------------- ------------------- -------------------
Net cash generated from operating activities 68,364 76,069
--------------------------------------------------------- ------------------- -------------------
Cash flows from investing activities
Purchase of and works to housing properties (98,019) (86,386)
Purchase of other assets (3,187) (2,292)
Proceeds from the sale of housing properties 13,390 14,560
Proceeds from the sale of other fixed
assets 430 16
Purchase of investments (16) (52)
Grant received 2,250 7,044
Cash acquired on acquisition of subsidiary 4,517 -
Loans made to joint venture undertakings (6,204) (5,429)
Interest received 647 352
Net cash from investing activities (86,192) (72,187)
--------------------------------------------------------- ------------------- -------------------
Cash flows from financing activities
Proceeds from issue of bank borrowings 38,365 49,698
Repayment of bank borrowings (33,812) (42,925)
Capital element of finance lease rental
payments (1,474) (1,623)
Interest paid (27,618) (29,379)
-------------------
Net cash from financing activities (24,539) (24,229)
--------------------------------------------------------- ------------------- -------------------
Net (decrease) / increase in cash and
cash equivalents (42,367) (20,347)
--------------------------------------------------------- ------------------- -------------------
Cash and cash equivalents at beginning
of year 74,122 31,755
--------------------------------------------------------- ------------------- -------------------
Cash and cash equivalents at end of
year 31,755 11,408
--------------------------------------------------------- ------------------- -------------------
Other key operational metrics and indicators as at 31 March
2021
Key Performance Indicators 2020 2021
Homes in management 31,529 31,825
Net Promoter Score N/A +26
Current tenant rental arrears (GBPm) 5.3 5.5
Current tenant rent arrears (%) 3.8% 3.9%
Average weekly gross rent (52 weeks) (3) 90.39 92.68
Re-let times (all standard re-lets) (days) 47.0 63.0
Rent loss from voids as a % of income 0.90% 1.10%
New affordable homes delivered 579 460
First tranche shared ownership sales 104 139
Staircasing shared ownership sales 38 32
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: Alex.Fitzgerald@flagship-group.co.uk
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.
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END
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