A record year of housebuilding for A2/A+ credit-rated Bromford

We have broken new ground in the UK social housing sector by posting a set of sustainability ‘golden metrics’ as part of our updates to the financial markets.

The 46,450-home housing association has today (16 May 2023) published our unaudited results for the year ended 31 March 2023, also revealing one of the sector’s leading social housing operating margin and a record year of delivering new homes.

In what marks a sector first, a range of environmental, governance and social (ESG) ‘golden metrics’ have been set out in the update, in response to investor demands and reflecting a commitment to strive for even more visibility and accountability as we reduce our carbon emissions, drive social value, safeguard our compliance record and creates a more diverse and inclusive organisation.

Two of the golden metrics are linked to revolving credit facilities with NatWest and SMBC, with the margins on the loans ratcheting down subject to KPIs being met on energy efficiency of our homes and reducing our gender pay gap. We have reported that 87% of its homes are now at EPC C or above, while the gender pay gap has fallen from 7.2% to 6.5%.

Progress has also been made across other key metrics, including a step change in the analysis of Scope 1, 2 and 3 emissions as we target overall emissions per home of three tonnes by 2027, and a further articulation of socially driven KPIs, with an aspiration to have 30% of new lettings each year offered to homeless families in communities in which we operate.

The new approach to reporting reflects three overarching frameworks which now guide all strategic decisions; Financial, Customer and Sustainability.

In line with this, we are updating our Sustainable Finance Framework, with a paradigm shift that commits to measuring the health of the organisation through sustainability, customer and place-shaping outcomes alongside financial performance.

Imran Mubeen, director of treasury, said: “This year’s trading update marks a step change in the way we are presenting our results, as we start to disclose our sustainability performance alongside our financial performance. It is really important that we continue to consider and communicate the impact we have on our people and places. We want to give this the highest visibility through these market updates so we are absolutely held to account on the progress we are making and the further work we need to do.

“We have presented our first set of sustainability golden metrics after consulting with our customers, colleagues and investors this year to ensure we capture the key metrics which drive ESG outcomes. We expect the list to be refined and developed over time as we continue to learn more.

“We are calling on Sustainability for Housing to promote a set of golden metrics within the sector’s Sustainability Reporting Standard to ensure that these key drivers are not lost in the detail of broader reporting, and so all of our stakeholders can identify with ease our core performance. We are also on a journey to have our golden metrics audited so the data underpinning our sustainability performance has the same veracity and credibility as our financial performance.

“Ultimately, for our customers to see the true benefits of our sustainability strategy, a shared purpose and commitment must run right through the organisation – including the way we are funded and financed. This step change in reporting brings together the shared objectives of our stakeholders and will help to co-create new linkages between our funding and what truly makes a difference to our people.”

During the last year, we delivered a record 1,265 new homes, of which 554 were social rent and one in five were built in-house. We continue to pursue an ambitious new homes plan with a pipeline of 12,000 new homes by 2031, over 90% of which will be affordable tenure.

The group also stepped up overall investment in existing homes to c.£50m for a second year in a row with plans for £2bn of investment in existing homes over the life of the business plan, which includes the full weight of its net zero carbon journey.

Turnover rose to £290m in the year (2022: £284m), with social housing operating margin remaining one of the best in sector at 34 per cent. Excluding one-off gains for strategic property disposals, overall surplus grew marginally year on year to £105m. We are targeting a return to the capital markets in the next 12 months and capacity for new funding remains strong, with significant headroom on funder covenants.

Robert Nettleton, chief executive officer, said: “Our year-end results reflect our continued operational and financial strength during a period that saw significant challenges to our sector and the wider economy.

“Against a backdrop of rising inflation and unpredictable financial markets, a continued cost-of-living crisis and uncertainty over social housing rents, our priority has always been the wellbeing of our customers and our people.  So we are proud that our customer advocacy score has increased by 4% to 83%; and that we retained our top G1/V1 ratings from the Regulator of Social Housing.

“We now look to the future with optimism, and a new financial year that marks the launch of our new 2023-2027 corporate strategy which puts place, scale and sustainability at the fore.”

Paul Walsh, chief financial officer, added: “We have responded to future pressures created by the rent cap and rising inflation, re-imaging our business plan through several iterations to once again maintain our A2 /A+ credit ratings. We continue to enjoy significant covenant headroom and the financial capacity to meet the investment needs of our existing and new homes programmes.”

Read the full trading update.