Regional housing association Bromford has published its trading update for the six months to September 2023 which continues to show sector leading financial performance, over £25m of investment in existing homes and successful delivery of 472 new affordable, energy-efficient homes.
During the period Bromford recorded turnover of £153m, while turnover from social housing lettings rose to £132m, which accounted for 86% of Bromford’s total turnover for the period. Bromford’s post-tax surplus was £33m, the same as in 2022, although its operating surplus (£54m) and overall operating margin on social housing lettings (34%) were slightly down on what it had budgeted, in part due to inflation and the rent cap but also because of an increased spend on investment in its existing homes as it continues to resolve damp and mould issues, investing £2.6m in the first six months of the year, against a full year budget of £1.8m.
The housing association expects to deliver £5m in efficiency savings this year through its strategic cost review, 80% of which have already been actioned, which will allow it to meet its budgeted social housing operating margin of 36% by year-end.
After becoming the first housing association to report its sustainability golden metrics in its trading update in the period to 31st March 2023, Bromford has continued its pioneering and transparent approach in its latest update. In addition to its previously reported metrics which included energy efficiency of its homes and gender pay gap, for this period the housing association has added colleague sick days as an additional sustainability golden metric as a key measure of colleague wellbeing.
Chief Executive Robert Nettleton said: “Our mid-year results demonstrate our operational and financial strength as we continue to respond to significant challenges in our sector and the wider economy. In the face of economic uncertainty and increasing focus on the condition of our homes, our priority is the wellbeing of our customers and our people. We are proud that our customer advocacy score has risen once again and is now at 89%; that we have invested over £25m in our existing homes; and that we have delivered 472 new affordable, energy-efficient homes.”
While customer advocacy has risen Mr Nettleton admitted there have been occasions where the organisation has failed to live up to the standards it aims to provide its customers.
“We have had two cases of severe maladministration upheld by the Ombudsman — failing in one case to respond to the needs of a vulnerable customer, and in another to adequately address historic damp and mould issues,” Robert explained. “We are reflecting on the lessons learnt from these cases and are embedding these lessons into our delivery model to improve our service.”
Of the 472 homes completed in the first half of the year, 212 were for social rent, and Bromford is on course to complete more than 1,200 homes by the end of March. All of these will either be for rent or shared ownership and in the first six month of the year Bromford achieved an operating margin on shared ownership first tranche sales of 21%. Going forward Bromford’s new corporate strategy has an increased focus on operating in a place-based way and investing at scale in new homes to help current and future customers to thrive. This focus on increased scale has led Bromford to secure planning permission for its biggest development to date for 180 new homes in Matson, Gloucestershire and to start work on development in Winchcombe and Cheltenham which will deliver 100 and 71 new homes respectively.
Chief Finance Officer Paul Walsh added: “We are determined to provide homes that our customers are proud to live in and at the same time, we are committed to financial discipline. The vast majority of our income is generated in our core business of social housing lettings, which makes up 86% of our turnover. At 34%, our social housing operating margin is amongst the highest in the sector, but we recognise that it is below budget. We have spent significantly more than budgeted on service delivery for our customers, most notably on tackling condensation, damp and mould.
“We will continue to invest in existing homes and will not compromise the safety and wellbeing of our customers.”
Over the first six months of the year Bromford has successfully secured more than £200m of new funding after recouponing a legacy private placement with LGIM to release £50m of embedded value, issued a £100 private placement with US and UK investors and entered into a new revolving credit facility (RCF) worth £75m with ABN AMRO. Director of Treasury Imran Mubeen said Bromford would be expanding its RCF base to £450m over the next six months.
Imran said: “The new loans will be sustainability-linked, with a unique social or customer themed KPI for each facility. Importantly, our new loans will also focus more holistically on our decarbonisation strategy with an aspiration to re-baseline our Scope 1, 2 & 3 emissions and set annualised targets, which will remain independent of any changes to government policy. We are committed to data integrity and quality and accept openly that we have made mistakes in our previous carbon disclosures, so we are now working through this re-baseline, with a third party audit, which will be completed and presented in our year-end update.”
Bromford’s S&P Global rating was upgraded to A+ (stable) and its Moody’s rating to A2 (stable) during the past six months, which provide a platform for Bromford to continue to deliver for its current and future customers.
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In September, Bromford secured £100m investment with UK and US investors. More on that story here.
