Sanctuary
publishes Annual Report and Financial Statements for
2023/2024
12 July
2024
Key financial
highlights:
·
Homes in management up 4.2% to 125,094
·
Group revenue up
15% to £1,085.4m
·
Operating
surplus up 4.8% to £215.2m
·
Underlying
operating surplus* increased by 6.3% to 206.7m
·
Operating margin
of 19.8% (2023: 21.8% restated)
·
Underlying
operating margin* of 19.0% (2023: 20.6% restated)
·
Social housing
operating surplus margin* of 31.1% (2023: 33.1%)
·
Surplus before
tax up 153.1% to £207.0m
·
Underlying
surplus* down 34.3% to £41.2m
·
EBITDA up to
£299.1m (£279.3m)
·
EBITDA MRI
interest cover* of 105.0% (2023: 119.4% restated)
·
Cash and undrawn
facilities of £611.3m (2023: £614.1m)
·
Credit ratings
of A (Negative) (Standard & Poor's) and A2 (Stable) (Moody's),
remain unchanged
Sanctuary is pleased to share
its
financial results for 2023/2024.
The last 12 months have seen the Group successfully navigate
through recent macro-economic challenges and achieve a sound
financial performance, while delivering record levels of
reinvestment in homes for the second consecutive year for the
benefit of customers.
Revenue growth across our business
areas, combined with a full year of Swan trading as part of the
Group, has resulted in total Group revenue surpassing £1 billion to
£1,085.4m, an increase of £141.6m (15%) from last year.
The Group's affordable housing
business benefited from an increase in revenue from existing homes,
which, together with additional revenue from new affordable homes,
resulted in growth of £37.5m (8.9%) from the prior year.
Revenue growth in the care business
of £42.5m (18.8%) was driven by a full year of income from 13
additional care homes added through the acquisition of Cornwall
Care, while the Group's supported living business saw revenue
increases of £8.6m (8.1%). The Group's student business also saw
revenue growth of £8.6m (14.2%).
Revenue from the sale of developed
properties of £59.8m (non-Swan) saw a decrease of £32.3m (35.1%) as
a result of reduced sales volumes, though gross development sales
margins increased from 17.3% to 20.1%, reflecting the mix of
properties sold. The Group continues to have a modest development
programme with only 8% (2023: 13%) of revenue being derived from
shared ownership and outright sales.
A full year of Swan trading as part
of the Group resulted in £114.2m of revenue (£30.5m of development
property sales and £83.7m of housing and other income), an increase
of £76.3m over the two-month post-acquisition period in the prior
year.
Strong and improving operational
metrics continue to underpin our financial performance, with sound
customer metrics across all areas of the business. Rent arrears
remained stable and low at 3.17% (2023: 3.25%) and void losses
improved
to 1.7% (2023: 1.8%). Within the
care business CQC scores improved to 95% (2023: 94%) and Sanctuary
Supported Living CQC scores achieved 98% (2023: 98%). Care
occupancy improved to 88% (2023: 86%) and student occupancy
increased to 93% (2023: 92%).
The Group operating surplus of
£215.2m is £9.9m (4.8%) higher than the prior year (2023 restated:
£205.3m) while the record underlying operating surplus of £206.7m
represents a £12.3m (6.3%) increase from the prior year, reflecting
continued growth across all businesses.
Operating margin is 19.8% compared
to 21.8% (restated) in the prior year, while the underlying
operating margin is 19% compared to 20.6% (restated) in 2023.
The
reduction in margin reflects
inflationary cost pressures experienced throughout the sector,
though the improved operational metrics and efficiencies have
partially mitigated the impact.
Surplus before tax of £207m is
£125.2m (153.1%) higher than the prior year (2023 restated: £81.8
million). This reflects a £162.7m net gain on acquisitions relating
to Johnnie Johnson. Underlying surplus for the year is £41.2m,
which is £21.5m (34.3%) lower than the prior year (2023 restated:
£62.7m). The primary driver for
this decrease is the impact of a
full year of Swan finance costs.
In the longer term, the Group will
see the benefits of the rescue of Swan, which has a strong social
housing business at its core. Much progress has been made to date
in stabilising Swan and limiting its losses and exposures.
Operational integration has already been achieved and overheads
notably reduced. Completion of remaining system integration
activities and debt reduction, through targeted disposals of
non-operational assets, will facilitate Swan transitioning to a
stable financial footing.
Cash generated from operating
activities was £286.6m (2023: £289.9m). The Group's predominantly
fixed rate debt coupled with timely accessing of the
capital
markets have minimised rising
interest costs in the year. EBITDA MRI interest cover was 105%
(2023 restated: 119.4%), maintaining solid cash interest cover
performance whilst delivering record levels of reinvestment
spend.
The continued strength of our
liquidity is highlighted by the Group's closing cash balance for
the year of £144.3m (2023: £180.1m) and undrawn facilities of £467m
(2023 £434m), which provides the Group with 23 months of financing
versus committed expenditure. Our total capacity (cash, undrawn
facilities and available security) has remained at £2 billion
providing a foundation for the Group to grow.
The Group continues to have strong
investment grade credit ratings of A (Negative) (Standard &
Poor's) and A2 (Stable) (Moody's). Highlighting the Group's
positive intervention, Swan's standalone credit rating has seen a
marked improvement from BB- to A following the rescue.
Ed Lunt, Chief Financial Officer,
said: "We are pleased with our financial results for the year and
the Group remains in robust financial health. We have
delivered record investment in our customers' homes, despite the
financial pressures, and have successfully undertaken the rescue of
a financially troubled peer for the benefit of residents and their
homes, as well as the wider social housing sector.
"A more stable economic landscape
combined with our investment grade credit ratings places the Group
in a strong, financially sustainable position to pursue our
strategic objectives, deliver to our customers and fulfil our wider
social purpose."
- Ends -
*In
the reporting of financial information, the Group uses various
Alternative Performance Measures (APMs). APMs are not intended to
be a substitute for, or superior to, IFRS measurement, but are
included to provide additional useful information on the underlying
trends, performance and position of the Group. Further information
about the APMs used by the Group, why they are used and how they
are calculated is included within Appendix 3 of the Group Financial
Statements.