12th July 2024
Sanctuary Scotland
Sanctuary is pleased to share its financial results for 2023/2024 PDF (20.6MB). 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.
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
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.
“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.”
