REG - Sovereign Housing - 2022 Q2 Trading Update 30 September 2021

LMS CapitalAnnouncement

15/11/2021 11:15

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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
£37.6m and £23m vs Q2 £36.4m and £21.9m). 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 £104.9m (Q1 21/22: £102.7m) +2%

·    Operating surplus was £36.4m (Q1 21/22: £37.6m) -3%

·    Overall surplus was £21.9m (Q1 21/22: £23m) -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
(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 £684m 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 principle             Forecast  Trend  Threshold     Headroom   Definition
 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.
 Market risk                      16.5%     ˅      ˂ 40%         23.5%      Sales / turnover

                                                                 £98.8m
 Performance                      32.2%     ˄      ˃ 30%         2.8%       Operating surplus (excluding all development and asset sales) / turnover

                                                                 £9.7m
 Sustainability - interest cover  272.5%    ˅      ˃121%         152%       10% minimum level of headroom against all lenders' interest cover covenants

                                                                 £92m

                                                                            Tightest covenant

                                  £166m            ˃110%         163%

                                                                 £99m
 Sustainability - gearing         45.1%     ˄      ˂71.25%       26%        10% minimum level of headroom against all lenders' interest cover covenants

                                                                 £1202m

                                                                            Tightest covenant

                                  £2068m           ˂75%          30%

                                                                 £1374m

 

 

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.

 

ENDS

For more information, please contact:

Graeme Gilbert, Treasury Director, Sovereign Housing Association
07392130856 Graeme.Gilbert@Sovereign.org.uk (about:blank)

Jane Carmichael, PR Specialist, Sovereign Housing Association

07825 054673 Jane.Carmichael@Sovereign.org.uk (about:blank)

 

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 (http://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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