TIDM56TE
RNS Number : 2025A
Sovereign Housing Capital Plc
31 January 2022
Sovereign Housing Association's Quarterly Performance Update
covering the 9-month period to 31 December 2021
2022 Q3 Trading Update 31 December 2021
During this busy quarter, we have seen an improvement in our
customer satisfaction scores to 79% over the period and our
Customer Service Centre has seen a strong performance, with
customer call wait times reduced to less than a minute from a
target of fewer than two minutes.
We are also pleased to publish our inaugural Environmental,
Social and Governance (ESG) report . We believe we are performing
well against the measures set out in the Sustainability Reporting
Standard for Social Housing. This is only the start of our ESG
journey, by further embedding ESG within the business we will make
good progress through the delivery of our Homes and Place
Standard.
Despite the difficult environment our Operations teams are
working hard to get our empty homes into a lettable condition for
our customers and Development teams are working with our
contractors to take delivery of new houses. The programmes continue
to face headwinds with specific risks around materials shortages
and increased prices, along with longer lead times to fill
vacancies.
In September 2021, we identified gaps in our historical data
relating to statutory safety checks for communal areas. We
immediately established a recovery programme to establish which
blocks required up-to-date safety checks and those programmes are
now complete or scheduled to be completed by the end of February
2022. We referred ourselves to the Regulator and on 26 January 2022
we were issued with a Regulatory notice.
For more details see our full statement .
Quarter 3 Performance Update
Our unaudited management accounts for Q3 2021/22 show operating
surplus and overall surplus declining slightly, as expected, as we
continue to face headwinds as mentioned above (Q2 GBP36.4m and
GBP21.9m, Q3 GBP32.5m and GBP19.6m).
The development programme has continued to be slower than
expected due primarily to resource and material availability issues
impacting the whole of the building sector, we are monitoring
closely and expecting to be slightly ahead of last year's 1,099
units, with current full year expectations to deliver close to
1,200 units.
-- Homes in management of 60,607
-- Turnover was GBP106.0m (Q2 21/22: GBP104.9m) +1%
-- Operating surplus was GBP32.5m (Q2 21/22: GBP36.4m) -11%
-- Overall surplus was GBP19.6m (Q2 21/22: GBP21.9m) -11%
-- New homes completions YTD of 751 driven by the impact of the
Covid variant, resource and material shortages
-- Current development pipeline of 8,513 homes
-- 121 sales completions (Q2 21/22: 121 sales) unchanged.
Treasury and Golden Rules
Sovereign operates within a number of Financial Golden Rules
that underpin our treasury and risk management. We have a minimum
liquidity Golden Rule, instantly available financing was GBP508m
which equates to 35 months of forecast headroom. Considering the
cashflow requirements included in the latest business plan we
expect to need extra financing in the next financial year to fund
development spend and maintain liquidity in line with our Golden
Rule. There is significant headroom against our Interest Cover and
Gearing Golden Rules, creating protection against our underlying
debt facility covenants.
We continue to maintain headroom against all our Golden
Rules.
Protection Forecast Trend Threshold Headroom Definition
principle
Liquidity 35 18 months 17 months 18 months as a minimum,
where available cash
plus committed and
ready-to-draw borrowing
facilities (excluding
retained bonds) must
exceed forecast cash
flows excluding all
uncommitted development
spend and all income
from development
sales and asset sales.
---------- ------ ---------- ----------- ----------------------------
24.4%
Market risk 15.6% 40% GBP101.7m Sales / turnover
---------- ------ ---------- ----------- ----------------------------
Operating surplus
(excluding all development
and asset sales)
2.9% / turnover on rolling
Performance 32.9% 30% GBP10.1m three year basis
---------- ------ ---------- ----------- ----------------------------
Sustainability 234.3% 121% 113% 10% minimum level
- interest GBP68m of headroom against
cover all lenders' interest
GBP141m 110% 124% cover covenants
GBP75m
Tightest covenant
---------- ------ ---------- ----------- ----------------------------
Sustainability 44.6% v 71.25% 27% 5% minimum headroom
- gearing GBP1221m against all lenders'
gearing covenants
GBP2048m 75% 30%
GBP1393m Tightest covenant
---------- ------ ---------- ----------- ----------------------------
Corporate Affairs
Sovereign is actively engaging with political stakeholders on
social housing regulation, including submissions to the
Levelling-Up, Housing and Communities Select Committee inquiry into
the regulation of social housing and the government's consultation
on new Tenant Satisfaction Measures.
We are working closely with Homes England to address the
challenges faced by leaseholders in buildings requiring fire safety
remediation or the removal of unsafe cladding and we were recently
successful in a bid for funding to support this work. We await the
outcome of the government's recent commitment that leaseholders
should not have to pay for this work themselves.
In January 2022, Mark Washer met with Steve Brine MP to visit a
new scheme in Winchester, along with development partners
Berkeley.
The Chair of our Resident Board Partnership, Joyce Ward, was
awarded an MBE in the New Year's Honours List, in recognition of
her contribution to the social housing sector.
S
For more information, please contact:
Graeme Gilbert, Treasury Director, Sovereign Housing Association
07392130856 Graeme.Gilbert@Sovereign.org.uk
Jane Carmichael, PR Specialist, Sovereign Housing
Association
07825 054673 Jane.Carmichael@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
Note: Figures quoted in the update are based on unaudited
management accounts which are subject to review and further
adjustments, for example in the areas of pensions, investment
property valuation and taxation.
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