Operating margins in care homes improved to (2.7%) (2023: (5.1%). This improvement reflects a full year’s contribution from the 10 Halcyon care homes acquired in November 2022 together with the impact of the one-off, non- consolidated cost-of-living payment made in the prior year which was not repeated. When calculating interest cover, higher EBITDA (earnings before interest, taxation, depreciation, and amortisation) combined with a small decrease in spend on major repairs has been offset by higher interest payable from a combination of higher interest rates and borrowings. This has resulted in a decrease in our interest cover ratio at a Group level from 180.2% to 155.3%. Interest cover on a covenant (Association only) basis was 165.7% (2023: 225.0%) and remains significantly above the covenant threshold. The year-on-year reduction in the Association interest cover is the result of a one-off other financing cost of £15.0m in the year arising from a provision against the intragroup loan to a subsidiary company, Anchor Lifestyle Developments Limited.
In new developments, we closed the year having sold 38 new units generating an operating deficit of £8.1m (2023: 54 units, surplus of £0.3m). The operating deficit is stated after a £9.6m impairment charge (2023: £0.8m) relating to a development where the primary contractor went into liquidation and additional costs were incurred to complete the build and rectify defects. As a result of ongoing reviews of our portfolio, we made ad-hoc disposals of assets which generated a surplus on disposal of £2.4m (2023: surplus £3.1m). Overall Group operating margin was 5.8% (2023: 6.8%), with the reduction primarily caused by a decline in the operating margin from property sales where we recorded a deficit after a one-off impairment charge of £9.6m (2023: £0.8m). Operating margin in retirement housing to let declined marginally to 20.2% (2023: 21.7%). This was a modest decline given significant inflationary pressures on repairs and utility costs.
SERVICE ANALYSIS £M
Operating surplus Year ending March 2024
Operating margin Year ending March 2024
Operating surplus Year ending March 2023
Operating margin Year ending March 2023
Retirement housing to let Residential care homes
61.8 (7.8) (0.5) (2.5)
20.2% (2.7%) (13.6%) (82.5%) (20.0%)
57.3 (12.5)
21.7% (5.1%) (17.0%)
Home care
(0.6)
Other social housing activities Non-social housing activities Central overheads and income
0.1 1.9
4.1% 7.3%
(5.1) (11.6)
– –
(11.8)
– –
Disposals
2.4
3.1
Total
36.7
5.8%
37.5
6.8%
Capital expenditure Total capital expenditure on major works and improvements to our existing properties was £45.5m (2023: £47.1m) and £12.9m of capital expenditure was made on offices and equipment (2023: £2.2m). At 31 March 2024, Anchor’s total assets less current liabilities were £1,631.9m (2023: £1,580.5m), and net assets were £592.3m (2023: £592.0m). The increase of £0.3m is due to the surplus generated during the year along with an actuarial gain of £0.1m on the annual valuation of Anchor’s defined benefit pension schemes and a £0.9m transfer to designated reserves.
Interest payable Interest payable has increased by £10.5m from £28.9m to £39.4m. This reflects the general shift to a higher interest rate environment which is impacting both the cost of new funding compared with previous years and increasing SONIA (Sterling Overnight Index Average) rates on floating rate drawings. During the year a further £46.9m was drawn from the revolving credit facility to fund the acquisition of two new turnkey care homes and £25m from the newly established shelf facilities to support our development plans.
16 Anchor Hanover Group Annual Report & Financial Statements 2024
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