SNG sees pre-tax surplus fall 12% amid merger costs

Turnover was up by £16.5m (24 per cent) on the equivalent figure for 2023, to reach £707.8m, while operating surplus rose by £8.4m to reach £171.5m. Operating margin was 21.1 per cent – up from 19.5 per cent in 2023.

Debt and assets

EBITDA MRI interest cover also climbed one percentage point to reach 104 per cent.

As at 31 March 2024, the group has fixed assets totalling £7.3bn (2022-23: £7.0bn) and net assets totalling £2.7bn. Net debt stood at £3.6bn, with available cash and undrawn facilities of £983m, which the group said would ensure its “ongoing ability to support both operational cash requirements and development plans”.

SNG has a golden rule of 18 months liquidity covering its net funding requirement.

It is currently rated G1/V2, after the Regulator of Social Housing upgraded the governance grading of legacy organisation Sovereign (from G2) in June 2023. The regulator found that the landlord had addressed historic issues in its building safety data.

Higher costs

Operating costs increased eight per cent in the 2024 financial year, driven by both management and maintenance costs.

An increase of £12.1m saw maintenance costs reach £138.6m as the group continued to invest in its existing stock, while management costs grew £21.4m to reach £141.9m, excluding depreciation. That contributed to total operating costs during the year of £466.6m, which is £34.1m higher than last year.

Meanwhile, the group’s reinvestment score rose 2.2 percentage points to reach 7.8 per cent in 2024.

The group plans to invest a total of £9.2bn over the next 10 years into new and existing homes, with ambitions to improve 15,000 existing homes and to deliver 25,000 new homes within the period.

Development and sales

The combined group delivered 2,015 new homes in 2024 and invested £488m in development, a rise from 1,879 homes and investment of £481m in 2023.

Of the homes delivered this year, 96 per cent were affordable tenures and 55.2 per cent were either affordable rent (681 homes), social rent (252), London Affordable Rent (105) or London Living Rent (54).

Turnover from sales was down almost a third on the prior year, with just £10.2m of revenue compared with £41.7m in 2023, which the group attributed to the timing of sales receipts in London during 2023. Meanwhile, shared ownership first tranche sales fell slightly to £87.6m in 2024, compared with £89.4m in 2023.

However, net margins on sales improved during the year, to reach 22.4 per cent – up from just 2.4 per cent in 2023. This was explained by large land sales at cost price in the prior year, which deflated the 2023 overall margin.

Elsewhere, the group generated £33.1m of surplus from the sale of housing properties, a rise from £29.2m in 2023. These sales were driven by the group’s strategic asset management programme, leading to “higher volumes of core stock disposals” compared to the previous year.

The group said that the 411 homes disposed of were “largely poor-performing stock” that did not meet the group’s new ‘Homes and Place Standard’ for its customers. SNG’s new internal stock condition survey team has to date carried out 8,000 surveys, it said.

Commenting on the results, Mark Washer, group chief executive of SNG, said: “These results are a testament to our disciplined long-term approach as separate organisations before we merged, and the hard work of our people to successfully implement the process of bringing us together.

“We have ambitious plans to use our combined strength to invest in improving the experience for our existing customers, and to build the good, affordable homes that are urgently needed for our customers in the future.”

Alongside its results, the group published its impact report for the 2024 year, and the first as a merged entity.

This adopts the Sustainability Reporting Standard for Social Housing, overseen by Sustainability for Housing. The report concludes that SNG generated £102.3m of social value during the year. This is calculated in part using HACT’s ‘Wellbeing Calculator’.

In the publications, the group also set out plans to launch its own community foundation, through which it aims to generate £1bn of social well-being between 2024 and 2034, by investing £100m in “direct support”.

Mr Washer added: “SNG is driven by its social purpose, and a clear part of that purpose is for our customers to have the foundation for a better life. Our first report as a merged group shows that the work we do in the community makes a real difference and the impact of the Community Foundation will support communities to thrive over generations.”