A major business slide

A major business

Outstanding performance

An outstanding performance

Sovereign has delivered a strong operational performance with operating surplus up 1% to £137.3m (2017: £135.9m), reflecting strong performance from the Group’s core housing management operations and property sales activity.

The surplus before tax of £103.9m is up £14.8m on last year (2017: £89.1m), and reflects the surplus made on the sale of properties as we continue to rationalise our stock outside of our core geography, and lower interest and financing costs.

These results mean we can continue to invest in our homes and services, as well as raising additional funding to build much-needed new homes.

Turnover table


Our income increased, up £6.6m (1.8%) to £378.2m, primarily through an increase in receipts from open market sales of £7.0m to £16.1m.

Our social rent income has also increased by £2.7m (0.9%), despite the requirement to reduce rents for existing social and affordable tenancies by 1%. This is mainly due to building more homes as well as maintaining our upper quartile rent collection rates and re-let times. We also provide property maintenance services to other outside organisations. As we are doing more internal work in 2017/18 this means a lower capacity for external contracts, explaining the 12% reduction in income on last year.

Operating costs

Our operating costs have increased by 2.2% to £197.8m.

The increase reflects one off costs of £4.1m, increased depreciation of £2.1m and other costs of £1.4m offset by reduced operational and maintenance costs of £3.0m and £0.3m respectively. The operational cost reductions reflect net savings across our management and maintenance functions of £4.3m, through merger savings and also by improving the way we work, partially offset by the increased volume of properties in the year.

Operating costs table

These activities are just the beginning and lay the foundations for more efficiencies as we realise the full benefits of our modernisation work and the merger.

The one-off costs of £4.1m relate to work to replace cladding and upgrade fire prevention systems on one block of flats and to provide for additional costs in respect of a development scheme.

Other costs and activities

The surplus from sales of housing assets (disposals of property, plant and equipment) increased by £6.4m to £18.4m (2017: £12.0m). This was mainly through increased asset management

and stock rationalisation sales, as well as the final sales associated with the voluntary Right to Buy pilot.

The Group Statement of Financial Position

The Group Statement of Financial Position has continued to strengthen, reflecting our outstanding performance during the year and the ongoing investment programme. This strength remains a key part of the business strategy, ensuring resilience in the current policy environment. We continue to report a strong financial position with net assets of over £1.6bn.

At March 2018, fixed assets totalled £3,669m (2017: £3,561m), an increase of £108m on the previous year. The key elements of this increase include £181m invested in new developments, £13m of capitalised improvements on existing properties and revaluation gains of £2m on investment properties. These increases are partially offset by depreciation of £39m (2017: £37m) and disposal of properties to other housing associations with a total net value of £36m.