TIDM56TE
RNS Number : 3816S
Sovereign Housing Capital Plc
15 November 2021
Sovereign Housing Association's Quarterly Performance Update
covering the 6-month period to 30 September 2021
2022 Q2 Trading Update 30 September 2021
Sovereign is pleased to report good progress for the first half
of the new 2021/22 financial year based on unaudited management
accounts, although headwinds continue with specific risks around
materials shortages and increased prices, along with longer lead
times to fill vacancies.
Quarter 2 Performance Update
Our unaudited management accounts for the first half of 2021/22
show operating surplus and overall surplus declining marginally
versus the last quarter (Q1 GBP37.6m and GBP23m vs Q2 GBP36.4m and
GBP21.9m). 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 more in line with last
year's 1,099 units.
-- Homes in management 60,572
-- Turnover was GBP104.9m (Q1 21/22: GBP102.7m) +2%
-- Operating surplus was GBP36.4m (Q1 21/22: GBP37.6m) -3%
-- Overall surplus was GBP21.9m (Q1 21/22: GBP23m) -5%
-- New homes completions YTD of 458 against a budget of 857,
driven by the impact of the Covid variant, resource and material
shortages
-- Current development pipeline of 7,175 homes
-- 121 sales completions (Q1 21/22: 116 sales) +4%.
-- Highest ratings for Governance and Viability from the
Regulator of Social Housing's stability check, G1/V1 status. We
received confirmation of A+ outlook stable by S&P with the
latest available report found on our
Investor page. https://www.sovereign.org.uk/investors
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 GBP684m
which equates to 50 months of forecast headroom. This continues to
be high due to delays in development caused primarily by resource
and material constraints. Considering the cashflow requirements
included in the latest business plan we expect to need extra
financing in the next financial year. There is significant headroom
against our Interest Cover and Gearing Golden Rules creating
protection against our underlying debt facility covenants.
We continue to maintain significant headroom against all our
Golden Rules.
Protection Forecast Trend Threshold Headroom Definition
principle
Liquidity 50 18 months 32 months 18 months as a minimum,
where available case
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.
---------- ------ ---------- ---------- ----------------------------
23.5%
Market risk 16.5% 40% GBP98.8m Sales / turnover
---------- ------ ---------- ---------- ----------------------------
Operating surplus
(excluding all development
2.8% and asset sales)
Performance 32.2% 30% GBP9.7m / turnover
---------- ------ ---------- ---------- ----------------------------
Sustainability 272.5% 121% 152% 10% minimum level
- interest GBP92m of headroom against
cover all lenders' interest
GBP166m 110% 163% cover covenants
GBP99m
Tightest covenant
---------- ------ ---------- ---------- ----------------------------
Sustainability 45.1% 71.25% 26% 10% minimum level
- gearing GBP1202m of headroom against
all lenders' interest
GBP2068m 75% 30% cover covenants
GBP1374m
Tightest covenant
---------- ------ ---------- ---------- ----------------------------
Environmental, Social and Governance (ESG)
We look forward to publishing our inaugural Environmental,
Social and Governance (ESG) report, which is at final draft stage
and is going through its Governance review process. Once signed off
we will publish this on our website, expected December 2021.
Corporate Affairs
Given the importance Sovereign is placing on decarbonisation, we
have been keen to positively influence the national agenda by
speaking at a number of key events. Sovereign was present at the
Labour and Conservative Party Conferences. Tom Titherington, Chief
Investment and Development Officer spoke on a panel at Labour
Conference 'A net zero future: Leading the decarbonisation of the
UK's homes' alongside the Shadow Housing Minister Mike Amesbury MP,
Deputy Mayor of London Tom Copley, Chief Executive of the National
Housing Federation Kate Henderson and the Chair of the G15, Geeta
Nandy. Sovereign CEO Mark Washer represented Sovereign on the same
panel at the Conservative Conference alongside Lord Callanan,
Parliamentary Under Secretary of State at the Department for
Business, Energy and Climate Change (BEIS).
On Tuesday 19 October, Sovereign's Chair hosted a dinner at One
Great George Street, Westminster to discuss decarbonisation of
social housing. Guests included Matt Harrison, the lead civil
servant for the Decarbonisation of Social Housing at BEIS. He
briefed the guests on the government's new Heat and Building's
strategy.
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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