Bromford has retained its A2 credit rating with Moody’s for a fifth consecutive year.
The global ratings agency published its latest assessment of us yesterday saying our A2 stable rating “reflects its strong and consistent financial management, financial performance and liquidity, as well as its large development programme.”
In its assessment Moody’s highlighted that Bromford’s operating margin is set to slowly strengthen to support debt growth over the medium term. The report states:
“Bromford has executed consistently its financial strategy, managed risk effectively and controlled its cost base, leading to stable and strong financial performance. Bromford has maintained its operating margin over the past five years, despite the rent cut, disruption posed by the COVID pandemic, increased building safety costs and high inflation over the past two years. In fiscal 2024, Bromford's operating margin decreased marginally to 30% from 31% in fiscal 2023 due to increase spending on repairs and maintenance, particularly on damp and mould cases. Its operating margin remains much stronger than A2-rated peers median at 24% in fiscal 2024.”
It continued: “Bromford's social housing letting interest coverage (SHLIC) was maintained at 1.9x in fiscal 2024 and is above the A2 peer median of 1.6x. Bromford's forward looking three year average SHLIC is expected at 1.6x, in line with A2-rated peer medians, driven by improvements in the SHL operating margin against rising interest burden as debt increases.”
Director of Treasury Matthew Rose said: “We’re incredibly pleased to have retained our A2 rating with Moody’s for a fifth year during a period where the sector has been facing a number of external challenges from rising costs and the need to invest more in existing homes.
“Maintaining sector-leading credit ratings, alongside our G1 / V1 ratings from the regulator provides us with a very strong foundation on which to deliver our ambitious strategic objectives over the years ahead and to not only improve our existing homes but to build new ones and support even more customers to thrive. We’re aiming to improve the energy efficiency of our homes and have close to all of them with at least an EPC C rating by 2028. We also want to build an additional 11,000 new homes by 2032 to help tackle the shortage of affordable housing in the country and expect to return to the market over the next year for new funding to support this work.”
In reaffirming Bromford’s rating, Moody’s considered the proposed merger with Norwich-based housing association Flagship Group, which also has an A2 stable rating with the agency, which will create one of the largest housing associations in the country with around 80,000 homes. Looking forward Moody’s said: “The credit quality of the merged entity will be determined by the strategy for the new organisation, in addition to the historical performance of each of the merger partners, including intended debt structure, development programme, proposed efficiencies and management and governance considerations.”
Last month we reported our unaudited six month results for the period to the end of September 2024, which revealed a 9% year-on-year increase in turnover to £167m, an operating surplus of £50m and surplus after tax of £36m. During this period we completed more than 450 new homes, including 220 for social rent, and expect to complete nearly 1,200 in the year to the end of March 2025.
