Sage expands losses and builds more homes in 2023

In each separate report, John Goodey, group chief financial officer of Sage, said the RP’s current debt levels, which partially finance operations, combined with elevated interest rates, led to a loss before tax.

 

“The company’s core business remains robust and effective, and it benefits from guarantees as to financial support from its shareholders,” he said in each set of results.

 

“This support ensures the company’s ability to deliver on strategic plans and navigate through the current challenging financing environment.”

 

Development

 

The group posted the pre-tax losses despite growing its turnover from £254.2m to £309.2m over the same period.

 

The group’s investment in new homes dropped slightly, from £538.5m in 2022 (figure provided by Sage, which represents a previous period adjustment), to £528m in 2023. (Gross expenditure, reported at the RP level, was £531.4m in 2022 and £557.9m in 2023.)

 

A total of 4,177 new homes were delivered in 2023, an increase from 3,447 the previous year. The group also reported it committed to 2,589 additional new home builds in 2023, with 7,637 homes under development. This compared with 2,008 homes committed to, and 8,978 homes under construction, in 2022.

 

Sage Homes RP started delivering new homes at scale for the first time, with an increase in investment from £6.3m to £101.9m.

 

Sage Rented does not invest in new homes but manages existing ones, while Sage Housing invested £456m in new homes in 2023, a drop from £525m in the previous year.

 

Sage Housing delivered 3,774 new homes, an increase of 327 homes from 3,447 the previous year.

 

Sage Homes RP delivered 402 new homes, an increase from four the previous year. This was mostly down to the transfer of homes from Sage Housing increasing the number of its homes during the year.

 

The group completed 1,674 shared ownership first-tranche sales during 2023, an increase from 1,482 the previous year.

Mark Sater, chief executive of Sage Homes (the group), said: “We are proud that Sage Homes has reported another year of strong operational and financial performance.

 

“In a year where we received a fully compliant G1/V2 rating from the Regulator of Social Housing, we have also demonstrated our ability to adapt quickly to changing economic conditions through innovative and agile partnerships with developers to bring much-needed additionality to the sector and continuing to deliver affordable homes at scale.

 

“Another major achievement has been our rapid scaling up as we prepared to take over the management of all our homes.

 

“We developed brand-new teams to work in our new customer-care centre, serving customers across the country, and I am incredibly proud of our team’s hard work and innovation as they continue to put our customers at the heart of everything we do.”

 

Sage Housing RP

 

In August this year, Sage Housing was sold to the USSL and renamed Sparrow Shared Ownership Limited, but this was after the reporting period of the calendar year of 2023.

 

Sage Housing’s operating profit rose from £35.2m in 2022 to £48.2m in 2023, while turnover fell from £227.2m to £217m and operating costs dropped from £46.4m to £45m. The provider’s loss before tax was £46.6m, up from a loss of £6.2m in 2023.

 

Mr Goodey said the rise in operating profit was attributed to the larger portfolio driving an increase in social housing rental income of £20m, offset by a drop in shared ownership sales of £8m. This income comprised £12m in affordable rent and £8m in shared ownership.

 

“Throughout a year marked by considerable obstacles and decreased opportunities for growth, Sage Housing Limited has shown exceptional operational execution and endurance, leading to significant advancement in financial and operational measures,” he said.

 

Sage Rented

 

The operating profit of Sage Rented, which had the majority of its homes managed by Places for People during the year, fell from £9.2m to £6.6m.

 

Mr Goodey said this decline was attributed to the larger portfolio driving an increase in operating costs from £17.8m to £30.6m and turnover only rising from £27m to £37.2m. Loss before tax was £37m, an increase from a loss of £8.5m in 2023.

 

He said: “As the largest affordable rent portfolio in our group, Sage Rented now absorbs a higher proportion of the group’s overhead expenses.

 

“As with all businesses and individual borrowers, Sage Rented saw a significant increase in interest rates and similar charges on external loans. In total, these costs increased to £32m from £20m in 2022, due to expanded debt facilities and rising interest rates.”

 

Sage Homes RP

 

Sage Homes RP’s operating loss rose from £401,000 to £5.4m, which Mr Goodey put down to an increase in operating costs, from £474,000 to £10.5m, which it incurred because of a “large amount of delivery costs as it establishes a sizeable portfolio”. The loss before tax was £6.3m, an increase from a loss of £440,000 in 2023.

 

He said: “Once up to scale, the entity will have sufficient rental income to offset the delivery costs.”

 

Turnover grew from £33m to £54.9m.

 

Mr Goodey said: “The surge in turnover in the year is predominately a result of our Home Stepper programme, whereby we have committed to delivering 1,412 new shared ownership homes while simultaneously completing on the first-tranche sale, which has given Sage Homes RP Limited a great rental platform to deliver further growth in its future.”