TIDM56TE
RNS Number : 7056V
Sovereign Housing Capital Plc
10 August 2020
Sovereign Housing Association's Quarterly Performance Update
covering the 3-month period to 30 June 2020
2021 Q1 Trading update at 30 June 2020
This has been a difficult quarter impacted by the global
coronavirus pandemic. However Sovereign has continued to operate
strongly by tackling the direct and indirect effects of the virus
head on.
The results presented here highlight the effect the Coronavirus
has had on us and on the building industry. It has adversely
impacted our ability to deliver our plan of building 1900 houses
for this year but it has also demonstrated our financial
resilience. The results also reflect our commitment to keeping
residents safe while still operating essential services, our
agility in responding quickly to changing circumstances, and our
focus on doing the right thing by promising that no Sovereign
resident will lose their home as a result of Covid-19.
Highlights
-- Sovereign completed 135 homes, 132 of which were affordable,
in the three months to June 2020 (2019: 484) -72.1%
-- We have 59,648 homes in management (2020 Q1: 58,163)
-- Turnover for the year to date was GBP91.5m (2020 Q1: GBP100.5m), -9.0%
-- Operating surplus for the year to date was GBP37.4m (2020 Q1: GBP38.9m), -3.9%
-- Net margin on sales was 20.4% (2020 Q1: 24.6%)
-- The surplus for the year to date was GBP22.8m (2020 Q1: GBP25.6m), -10.9%
-- GBP125m retained bond due 2048 issued at all-in price of 1.974%
Performance update
Sovereign's o perational and financial performance,
unsurprisingly, has declined during the first quarter of 2020/21,
which coincided with the UK's lockdown period in response to the
Covid-19 pandemic but remains robust. Sovereign achieved a surplus
of GBP22.8m for the quarter, impacted by a lower turnover and loss
of sales but offset by lower repair costs.
The lockdown saw most of our development contractor partners
shutting down their sites between March and May. Despite this
disruption, in the three months to June 2020 we completed 135 new
homes, of which 132 (97.8%) were for affordable housing tenures. In
the same period we invested GBP30.6m (2019: GBP95.7m) in developing
new homes.
We also completed 50 (2019: 137) shared ownership first tranche
sales (vs 20/21 budget 197) and a further four open market sales in
the three months to June. We achieved a net margin on all sales -
including asset disposals - of 20.4%. Buyer demand remains strong
demonstrated by high levels of reservations since the market
re-opened.
Housing fixed assets stand at GBP3.9bn up from GBP3.7bn at 30
June 2019. The net interest expense for the period was GBP15.0m.
Sovereign remains in a strong financial position with net debt of
GBP1.9bn and available cash and committed liquidity facilities of
GBP931m at the end of June 2020, which provide sufficient liquidity
to support our short-to-medium term development plans. We increased
our liquidity position during the period by issuing GBP125m of
retained bonds and by arranging access to a GBP175m facility
provided under the Bank of England CCFF (which remains undrawn).
This is a strong position enabling us to support the business
evaluating opportunities to acquire land and take ownership of new
houses as building sites come back on line.
Environment Social Governance (ESG)
As part of the consortium working to standardise approaches to
ESG in the social housing sector, we've been reporting on,
contributing to and publicising a White Paper on the subject.
We've reinforced our strong social credentials over the past
year to the 31(st) March 2020, of the GBP368m spent on around 1,800
new homes, 96% of these were affordable. We continue to invest in
our existing homes too, with GBP109m spent in maintaining and
improving our existing properties. Under our Home and Place
standard we are looking to make all our homes more environmentally
friendly at the same time as tackling fuel poverty. We have also
approved a major new approach to Strategic Asset Management.
We've also teamed up with social value broker The Social Value
Exchange to ensure that the businesses we work with meet our
expectations when it comes to giving back - to people and to the
planet - by maximising social value from our procurement spend.
We continue to listen to our customers, shown clearly through
our improving Customer Satisfaction scores rising up to 81% in
March 2020. In addition, we have three separate ways to represent
the views of our customers - our Resident and Board Partnership,
Scrutiny Coordination Group and Communities Groups. We've
accelerated our communities strategy to do more sooner, committing
to investing GBP3.5m in our communities every year for the next
five years, with a clear strategy in place that focuses on three
strands: Communities, Money & Digital and Employment &
Training. Last year alone we supported 1,461 residents with
training, helped 277 people into work or better work and recruited
11 new apprentices.
Board changes
We welcomed our new Chair Paul Massara at the end of July. Paul
joins us to take over from Gordon Holdcroft after 10 years on the
board. We express our appreciation to Gordon for his strong
Chairmanship since 2017 and for ensuring that the benefits of the
previous merger were realised for Sovereign and its residents.
Paul is an experienced Non-Executive and Executive Board
director across a range of industries with particular experience in
the energy sector in both Europe and North America. He was CEO of
RWE Npower and on the executive committee of both RWE and
Centrica/Direct Energy. He is a member of the Business, Energy and
Industrial Strategy (BEIS) Committee on Fuel Poverty and a
Non-Executive director of a series of energytech start-ups
including Zeigo, Isize Technologies and Utonomy. He also Chairs
Medicinema, a charity which provides films in hospitals.
ENDS
For more information, please contact:
Graeme Gilbert, Treasury Director, Sovereign Housing Association
- 07392130856 Graeme.Gilbert@Sovereign.org.uk
Richard Radcliffe , Head of External Affairs, Sovereign Housing
Association -07876847032 Richard.Radcliffe@sovereign.org.uk
Disclaimer The information contained herein (the "Trading
Update") has been prepared by Sovereign Housing Association Limited
(the "Parent") and its subsidiaries (the "Group"), including
Sovereign Advances Ltd, Sovereign Housing Capital PLC (the
"Issuers") and is for information purposes only.
The Trading Update should not be construed as an offer or
solicitation to buy or sell any securities issued by the Parent,
the Issuers or any other member of the Group, or any interest in
any such securities, and nothing herein should be construed as a
recommendation or advice to invest in any such securities.
Statements in the Trading Update, including those regarding
possible or assumed future or other performance of the Group as a
whole or any member of it, industry growth or other trend
projections may constitute forward-looking statements and as such
involve risks and uncertainties that may cause actual results,
performance or developments to differ materially from those
expressed or implied by such forward-looking statements.
Accordingly, no assurance is given that such forward-looking
statements will prove to have been correct. They speak only as at
the date of the Trading Update and neither the Parent nor any other
member of the Group undertakes any obligation to update or revise
any forward-looking statements, whether as a result of new
information, future developments, occurrence of unanticipated
events or otherwise.
None of the Parent, any member of the Group or anyone else is
under any obligation to update or keep current the information
contained in the Trading Update. The information in the Trading
Update is subject to verification, does not purport to be
comprehensive, is provided as at the date of the Trading Update and
is subject to change without notice.
No reliance should be placed on the information or any
projections, targets, estimates or forecasts and nothing in the
Trading Update is or should be relied on as a promise or
representation as to the future. No statement in the Trading Update
is intended to be an estimate or forecast. No representation or
warranty, express or implied, is given by or on behalf of the
Parent, any other member of the Group or any of their respective
directors, officers, employees, advisers, agents or any other
persons as to the accuracy or validity of the information or
opinions contained in the Trading Update (and whether any
information has been omitted from the Trading Update). The Trading
Update does not constitute legal, tax, accounting or investment
advice.
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END
QRFBRGDISGBDGGG
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