Bromford maintains Moody’s A2 rating and announces strong financial results for first half of year
Bromford has announced another set of strong trading results for the first half of the year despite the uncertainty and challenges caused by the coronavirus pandemic.
In a trading update for the period to the end of September, the housing association announced turnover from social housing lettings, which constitutes 85% of its total turnover, of £110m at an operating margin of 35% in line with budget. Operating surplus for the first six months of the year is £46m (2019 HY: £50m), down from the same period last year and budget, mainly due to the fall in house sales during the lockdown at the start of the period. Sales are now back to pre-covid levels with performance expected to improve in the second half of the year.
Bromford, which owns 44,641 homes across central and south west England, also continues with its focus on core geographies. Over the past 18 months it has successfully disposed of 393 homes in eight local authority areas which were on the periphery of its core area.
Chief executive Robert Nettleton said: “These are clearly challenging and uncertain times for people. We have and continue to focus on the safety and wellbeing of our customers and colleagues as we deliver our strategy and work through the impact of the coronavirus outbreak.
“We are proud to announce another period of strong performance. We continue to focus on our core business of social housing, which met budget. Whilst we saw a natural peak in arrears following a spike in Universal Credit applications at the onset of the national lockdown, we have worked with our customers and supported them through transition to effectively bring net arrears back down to pre-Covid levels of around 2%. We will continue to provide pro-active support to customers as government support for household income reduces and employment is expected to rise.”
Chief finance officer Lee Gibson added: “Our pro-active approach to development saw us back on all land led and partner sites by the end of June 2020 and we are on track to deliver 1,000 new homes by the year-end, around 90% of which will be social and affordable tenures. As lockdown restrictions created a break in our sales activity, we anticipated a lower sales out-turn for the period and for the year. This is the key driver for our operating surplus being under budget for the period. We have revamped our sales strategy with a new digital platform offering virtual viewings and are pleased that sales have now returned to pre-Covid levels of approximately 30 homes a month.”
Our confidence in our financial strength was reflected in the retention of our A2 rating with Moody’s which was announced last week and which praised our “strong market position and continued focus on core business” and “its strong liquidity coverage.”
The Moody’s report states: “Bromford’s current stable outlook reflects an expectation that Bromford is well positioned in the A2 category in the medium term, based on our assessment of the current business plan.”
The agency also commended Bromford’s recent ESG activity, hailing the association as “a leader in ESG-linked lending as the first housing association to agree on an ESG-wrapped sustainability loan, linked to delivering on environmental objectives”.
Head of treasury Imran Mubeen said: “We are delighted to have once again maintained our Moody’s rating despite the current market uncertainty and the agency’s recent downgrade of the sovereign. Our strong liquidity position reflects our pro-active approach in securing future funding to leverage the low rate environment. We are delighted to have issued a further £200m of funding in the period through two new deferred deals at record low coupons, which will support our ongoing development aspirations. We have further optimised our loan book and are pleased to be introducing a fourth RCF provider to support our liquidity requirements. This new loan will also build on the success of our inaugural SLL established earlier in the year, and we look forward to launching our ESG framework by the year end.”