Key highlights:
- Sanctuary reports revenue growth to £763m, up from £735.4m
- Homes in management growth to 102,686, up from 101,281
- Underlying operating surplus1 of £182.6m, up from £181.0m
- Cash generated from operating activities of £244.2m, up from £215.2m
- Strength of balance sheet reflected in cash reserves of £261.5m
- Interest cover 2.09
Sanctuary Group has issued its audited financial results for 2019/20 which shows improved underlying performance and demonstrates the Group’s strong financial position.
The Group, which manages 102,686 homes across England and Scotland, saw revenue grow to £763m, with an enhanced development programme and acquisitions offsetting the impact of the fourth year of the social housing rent reduction in England.
The underlying operating surplus of £182.6m represents a £1.6m improvement over the prior year (£181.0m in 18/19). Whilst this represents a slightly lower underlying operating surplus margin3 of 23.9% (24.6% in 18/19), this is a positive result when taking into account a further year of rent reductions, compliance expenditure, increased staff costs and an impact from COVID-19.
Sanctuary’s solid financial performance is built on its successful operations – key year highlights being rent arrears of 3.6% (3.8% in 18/19), void loss at 1.1% (1.1% in 18/19), 203 sales of new homes through the Group’s development programme (150 in 18/19), and improved maintenance performance with an increase in customer satisfaction to 94% (93% in 18/19).
Net finance cost on borrowings, before loan break costs, was £124.2m, a decrease of £1.5m from last year. A tranche of legacy debt was repaid during the year, which will lower the interest cost to the business in the long-term, even after considering the £8.6m loan break costs.
The underlying surplus for the year before tax of £57.4m is £3.2m ahead of last year, reflecting the good underlying operating performance in conjunction with a lower interest burden.
The strength of the Group’s balance sheet is reflected in the £261.5m of cash reserves (£150.1m in 18/19) which was increased by a £350m Bond Issue in April 2020 at a coupon of 2.375%. The Group has also maintained strong credit ratings of A2 stable and A+ stable from credit rating agencies Moody’s and Standard & Poor’s respectively.
Ed Lunt, Sanctuary Group Finance Director, commented: “Our financial results have been delivered through a strong operational performance reflecting the dedication of our people and the economic benefits of our national and diversified footprint. We remain in a strong position to face short-term challenges while continuing to deliver our long-term strategic objectives of investing in homes and providing housing and care to those in need.”
Notes:
1 Operating surplus before restructuring costs and other gains and losses
2 Surplus for the year before tax excluding restructuring costs, other gains and losses, and loan break costs
3 Underlying operating surplus as a percentage of revenue