Platform sees surplus fall as it ramps up stock investment by a third

Platform’s operating surplus excluding fixed asset sales remained the same at £67.7m while the operating surplus including fixed asset sales dropped by 6.7 per cent from £75.8m to £70.7m.

The housing association saw its operating margin, excluding fixed asset sales, fall from 29.2 to 26.7 per cent.

Platform said that operating surpluses and margins have been affected by “higher levels of investment into existing homes, improving services for customers and cost inflation”.

“Whilst the world around us remains difficult, Platform is well placed to continue navigating it, whilst protecting the underlying financial strength of the organisation,” said Elizabeth Froude, chief executive at Platform.

“Our focus on keeping controllable costs under tight review is a constant to offset the continuing high demand and cost of property maintenance, with the majority being delivered in-house, giving better efficiency and strong compliance standards.”

She added: “Whilst current expectations are to see a final full year [of] margins broadly consistent with or slightly below the previous year, the level of ongoing investment in our stock is felt to be a good and purposeful investment for the future but will allow Platform’s financial metrics to remain among the strongest in the sector. 

“We continue to balance doing the right thing for our residents and working hard to deliver a degree of solid financial performance in a complex environment, and are proud that we remain the good organisation our stakeholders have invested in.”

Investment in existing homes

Platform increased its investment in existing homes by 33.3 per cent from £13.8m in the first nine months of 2022-23 to £18.4m in the nine months to December 2023.

“Our commitment to improving the standards of our customers’ homes, both new and existing, is a key priority in our strategy, including both standard investment works as well as sustainability energy standard improvements,” Ms Froude said.

“Whilst we have a well-structured process for capturing, identifying and dealing with damp and condensation mould, the ongoing level of cases raised for investigation have added a layer of cost to our business which has been higher than anticipated in our budgets. 

“The introduction of Awaab’s Law is anticipated to add further costs as the current scope in consultation is much wider than damp and mould and will potentially add further operational costs to our business.

“As has always been the case, we continue to do all we can to resolve cases as quickly as possible, to ensure our residents’ safety and well-being.”

Development

Platform spent £244m on development in the first nine months of the year, a 49.4 per cent rise from £160m in the same period in 2022-23.

The housing association delivered 713 new homes in the nine months to December, a slight drop from 775 in the same period last year. 

Of the total 713 homes, 137 (19 per cent) were built for social rent, 188 (26 per cent) for affordable rent, 376 (53 per cent) for shared ownership and 12 (two per cent) for Rent to Buy. 

“We continue to deliver our development programme in a sustainable way, as we progress the transition to a more land-led portfolio,” Ms Froude said.

“We see good demand in our sales programme this year, with reservations, margins and first tranche percentages remaining consistent.”

Platform said in the results: “The development programme has continued to see improvement in market conditions, with continued easing in build cost inflation. 

“However, there is a legacy from cost inflation to date, adversely affecting a small number of development partners.”

Elsewhere, Platform’s gearing rose slightly from 43.5 per cent in December 2022 to 45.1 per cent in December last year as large cash balances, following bond issuances, have been deployed to fund development, maintenance and sustainability expenditures.

Gearing was still within the housing association’s target of below 55 per cent, according to the housing association.