TIDM56TE
RNS Number : 3987O
Sovereign Housing Capital Plc
29 May 2020
Sovereign Housing Association's Quarterly Performance Update
covering the 12-month period to 31 March 2020
One of England's largest housing associations, Sovereign owns
and manages about 60,000 homes across the south. It is also a
leading provider of new affordable homes, with a target to deliver
1,900 homes a year through a mix of section 106 opportunities,
direct delivery through land-led developments and regeneration
schemes.
While not-for-profit, Sovereign is a major business. The
organisation has increased annual turnover to GBP407m and its asset
base would be worth over GBP11bn on the open market. Investment is
secured from government through loans and capital grant, supported
by long-term debt, with GBP375m raised through the UK public debt
market in the past year and revolving credit facilities and term
debt from a group of core relationship banks and investors.
Ratings 2020 Q4 2019 Q4 Outlook Change
---------------------------- -------- -------- --------- -------
Regulator of Social Housing G1/V1 G1/V1 -
S&P A+ Negative
Moody's A2 Stable
---------------------------- -------- -------- --------- -------
S&P and Moody's reaffirmed their ratings following the
annual review held in October 2019.
The Regulator of Social Housing maintained our G1/V1 rating in a
'stability check' in December 2019
2020 Q4 Trading Update
Highlights
-- Sovereign completed 1,770 homes (1,702 of which were
affordable) in the twelve months to March 2020 (2019: 1,549)
+14.5%
-- There are 59,382 homes in management (2019: 57,742)
-- Turnover for the year was GBP406.9m (2019: GBP402.1m) +1.2%
-- Operating surplus for the year was GBP137.6m (2019: GBP150.8m) -8.7%
-- Net margin on sales was 23.5% (2019: 23.9%)
-- The surplus for the year was GBP80.9m (2019: GBP93.8m)
-- GBP125m retained bond due 2048 issued at record breaking all-in price of 1.974%
Performance Update
Sovereign's o perational and financial performance continued to
meet expectations over the fourth quarter of 2019/20, achieving a
surplus of GBP80.9m for the year (GBP4.4m favourable to
budget).
During the twelve months to March 2020, we completed 1,770 new
homes, of which 1,702 (96.2%) were affordable housing tenures. We
invested GBP368m (2019: GBP270m) developing new homes. We are
delighted that we were able to complete this many homes and
increase our delivery year-on-year despite poor site conditions due
to the severe storms in January and February and then the early
impact of COVID19 site closures in March.
We had a very strong year in sales completing 648 (2019: 486)
shared ownership first tranche sales (vs 19/20 budget 525) and a
further 16 open market sales in the twelve months to March. We
achieved a net margin on sales (including asset disposals) of
23.5%.
The reduction in operating surplus from the same period last
year is driven by our increased focus and investment in our
existing homes and our commitment to invest in digital and
technology transformation.
Housing fixed assets stands at GBP3.9bn up from GBP3.7bn at 31
March 2019. Net Interest YTD was (GBP56.8m) which is GBP6m lower
than budget, principally driven by lower variable interest rates
and lower fixed rates achieved on the bond issuance during the
year. Sovereign remains in a strong financial position with net
debt of GBP1.8bn and available cash and committed liquidity
facilities of GBP650m at the end of March 2020, providing
sufficient liquidity to support our short term future development
plans. Our liquidity position was further improved with the
issuance of our Retained bond in April 2020.
Sovereign is part of a group that published a white paper aiming
to deliver a framework for Housing Associations to report on their
Environmental, Social and Governance credentials. This group
includes representatives from housing associations, investors,
banks and lawyers.
COVID business update:
Once Covid-19 began to take a grip throughout the country we
immediately made a promise: no one would be evicted from a
Sovereign home because of financial difficulties brought about by
this virus. We didn't wait to be told.
It was part of our message to our customers: we are here for
you; we will keep you safe; we are by your side.
We knew that keeping in touch with people was vital. That's why
we called 10,000 elderly and vulnerable residents in the first week
and we have continued a cycle of welfare calls for those who need
it - around 1,000 calls a week
We've brought forward GBP200k funding from the Communities,
helping charities to assist vulnerable people with food packages
and medication runs during isolation. We've changed our provision
for those at risk of domestic abuse - creating a partnership with
domestic abuse charity WomanKind
Key workers are at the fore front of all our minds. We provide
homes for thousands of people who have been working on the front
line during Covid 19. That's why we suspended car parking payments
and a rent increase for those living in our NHS keyworker
properties.
Throughout this crisis we have continued to provide essential
services for our customers, like gas checks and fire and safety
works. In accordance with government and safety guidelines we
continued to work on empty homes and we also housed four long term
homeless people through our Housing First provision.
We've made fuel vouchers available to those who need them and
safely renovated void properties, making them ready for families in
need.
Development sites: Despite work on sites slowing, ten of our 83
sites (where we have contracted to acquire or have homes built)
remained open throughout the crisis, with a further 24 reopening
since the first May bank holiday. As we use a network of smaller
firms to help unlock sites in villages and towns we've pledged to
honour all our commitments, working closely with them to ensure
that, where we can, we do our bit to ensure that this economic
shock does not ripple out and cause those in our supply chain to
suffer unnecessarily.
We have run various stress test scenario's and are confident
that we have the financial strength to sustain business operations
through lockdown and recovery, despite the significant level of
unpredictability of variables.
Impact on our staff: Working from home soon became the new
business as usual for the vast majority of Sovereign employees and
the expertise and innovative thinking to make this happen in a
really challenging time was a really great effort. The IT
infrastructure has performed well and 100 call centre staff have
been setup with home working capability so that our customers
continued to receive the service they deserve during the lockdown
period. Our contingency plans have been robust and worked really
well.
Like many other housing associations, and business across the
country, we've also furloughed members of the Sovereign team on a
rolling three-week rota - re-deploying colleagues to other areas of
the business wherever possible - and still ensuring we delivered on
all essential services.
S
For more information, please contact:
Graeme Gilbert, Treasury Director, Sovereign Housing Association
- 01635 275109 / 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.
www.sovereign.org.uk/investors
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END
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