Financing our priorities

Over the next five years we have committed to investing over £1bn to improve our services, tenant’s homes and neighbourhoods as well as the delivery of new affordable homes. To deliver these commitments we have a robust financial plan in place which was approved by the Board in May 2021. The plan includes significant investment in our existing homes and services, as well as delivery of our ambitious development programme to deliver over 7,000 new homes over the next eight years, through a combination of new build and stock acquisition, including delivery through our strategic partnership with Homes England. Currently, the plan does not include the cost of de-carbonising our existing homes as there is presently a lack of clarity on the technology, timing and cost to deliver this objective to be able to model the implications in the plan. We intend to develop a five-year strategy for incorporation into the financial plan once further data becomes available. The financial plan is loan covenant compliant each year with headroom to our golden rules. Stress testing has been carried out with the Board, including several single factor and multivariant scenarios, which demonstrates the robustness and resilience of the financial plan. For multi-variant scenarios which could ‘break’ the plan, mitigating actions are identified, with these mitigations being tested routinely throughout the year with the results shared with the Audit & Risk Committee.

We continue to focus on VFM, keeping VFM principles at the core of all our activity to ensure resources are allocated and used appropriately. The plan includes for stretching efficiency targets which will enable us to deliver the priorities in the strategic plan and make efficient use of our available resources, whilst providing the capability to react to market conditions and external influences and continue to remain compliant with loan covenants and key financial measures.

The financial plan delivers a robust set of VFM metrics and delivers an EBITDA MRI margin of 22.2% in 2021/22 demonstrating the level of surplus generated from turnover.

The group’s financial position remains strong in a challenging economic environment with the financial plan demonstrating our ability to achieve our strategic priorities, and continue to expand housing provision to meet customer need, whilst continuing to support and deliver quality services to our existing customer base.

Value for Money Metrics Financial Plan Target Actual

2026 2025 2024 2023 2022 2021 2021

Reinvestment % 12.1% 11.7% 11.0% 9.7% 13.3% 8.3% 5.7%

New supply delivered (Social housing units) % 2.7% 2.7% 2.5% 2.0% 5.3% 1.5% 0.9%

New supply delivered (Non-social housing units) % 0.0% 1.1% 0.0% 0.0% 0.1% 0.0% 0.1%

Gearing %

EBITDA MRI Interest Cover % 33% 31% 29% 28% 27% 23% 22.2%

213% 263% 309% 277% 306% 274% 315.3%

Headline Social Housing Cost per Unit £4,160 £3,955 £3,769 £3,838 £3,511 £3,370 £3,264

Operating Margin (social housing lettings) % 28.1% 29.0% 29.8% 27.6% 27.4% 29.1% 29.7%

Operating Margin (overall) % 20.9% 21.5% 22.5% 20.3% 19.8% 20.6% 19.4%