Surplus down but turnover rises in SNG’s first post-merger financial accounts

Sovereign Network Group’s surplus dropped by £8.4m in the 2023/24 financial year.

The 84,000-home housing association, which was formed in October 2023 when Sovereign Housing Association and Network Homes merged, reported a decrease in its overall surplus from £71.3m in 2022/23 to £62.9m in 2023/24. 

SNG attributed the decrease to higher interest and maintenance costs as well as non-recurring merger costs and asset write-downs, but stated that it is partially offset by higher rental income. 

However, the housing association increased its operating surplus to £171.5m, compared to £163.1m in 2022/23, with a turnover increase of £16.5m.

The reported a turnover of £707.8m in the 2023/24 financial year, compared to £691.3m the previous year.

Its operating cash flow also went down slightly, from £264m in 2022/23 to £241m in the 2023/24 financial year.

SNG reported a strong financial and liquidity position with net debt of £3.6bn and available cash and undrawn facilities of £983m at the end of March 2024, which it said ensured its ongoing ability to support both operational cash requirements and development plans.

SNG completed 2,015 new homes in the year, 96% of which were affordable tenures, which it said places it as the second largest developer amongst housing associations.

SNG’s operating costs increased by 8% during the year, from £432m to £466m, which it said was driven by an increase in maintenance and management costs.

SNG committed £197.8m to maintaining and improving its existing stock over the last year, which represents an £11.3m increase compared to 2022/23.

The group expects to invest a total of £9.2bn over the next ten years in new and existing homes, which it said will deliver “a step-change for current and future customers”.

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The report added that increased capital investment in maintenance as well as improved data analytics and customer service software, are expected to reduce future costs while delivering better services to customers.

SNG reported that capital investment in repairs has increased productivity, stating that 98% of repairs are now completed on time and average repair times have gone down by four days compared to 2022/23.

The housing association has also introduced a localities model, tailoring services to specific geographical locations, which it said had brought its housing and repairs teams closer to the communities they serve.

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”.

He added: ”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.”

Washer continued: “SNG is driven by its social purpose, and a clear part of our purpose is for our customers to have the foundation for a better life.”

SNG also published its first impact and sustainability report, which showed that it generated £102.3m last year. The housing association also made a direct community investment of £3.5m in 2023/24, which was supported by bringing in partnership funding of a further £2.4m. 

The SNG Community Foundation, which is in the process of being set up, will reportedly result in £100m of investment into SNG communities over the next ten years.