Coronavirus – update for existing and prospective investors
With huge challenges facing every business across the UK, our commitment to strong governance and sound financial management is more crucial than ever. Our long-term strategic vision and our ability to harness flexible, dynamic governance and financial planning ensure that our business can adapt to a whole range of risks and opportunities.
With all that in place we are confident we are well placed to navigate through the current uncertainty and use the lessons learned to help shape new ways of working in the future. Below we have outlined more detail around our liquidity along with our approach to governance, and operational management and maintenance.
Operational
The group is well placed to manage the operational challenges that many businesses will face. We are supported, and have been for some time, by a strong transformation strategy which facilitates and promotes the ability to work flexibly. This includes our non-executive and independent members. As a result, we can continue to hold all our planned board and committee meetings, enabling “normal” governance business to continue planned as well as responding to any issues that arise in a timely manner.
We have set up a COVID-19 Response Group which consists of experts from business continuity, health and safety, operations and finance and is meeting on a regular basis to consider the latest government guidance and evidence around the pandemic and coordinating our response.
The group has maintained regular contact with the Regulator of Social Housing and our rating agency.
Liquidity
We have significant cash and committed facilities with further liquidity in the pipeline. The impact on the group is a developing picture, but we operate a prudent business model and mixed funding strategy to mitigate the risks to our business and have one of the strongest balance sheets in our sector. These aspects are reflected in our A+ rating from Standard & Poor’s as well as our G1 and V1 ratings from the regulator, which were announced on 25 March.
Our approach to liquidity management enables us to tolerate significant disruption to forecast cash flows before placing excessive strain on the business and its covenants.
The group routinely monitors its ability to manage a delay in sales of shared ownership and open market sale units by up to twelve months within its existing available cash and committed facilities.
Covenants
We expect to remain well within our financial covenant constraints despite the forecast impact from Coronavirus. The position will continue to be monitored.
The stress testing undertaken as part of the financial planning process considers a wide variety of scenarios which place the business under significant stress. Although not specific to the Coronavirus outbreak, many of the attributes are relevant.
Development
We operate a significant development programme that has inevitably faced disruption as a result of the pandemic. The impact of this is a deferral of income and expenditure into future periods. A comprehensive update to all development cashflow is underway to assess the full impact. This is coupled with close communication with our risk sharing joint venture partners. The development team remain focussed on delivery of new affordable homes and are ready to resume as restrictions are eased.
Management and Maintenance
Following government guidance, to deliver essential services and respond to emergencies, we have developed an essential services matrix, which describes in detail the services that are considered essential, and the required responses in each case. This is used by our operational teams and contact centre to ensure a clear and consistent approach, and messaging to our customers.
The health and safety of our customers and people is our priority. When attending emergencies, we have developed a three-stage risk assessment, which defines how we should approach customers according to their situation. If a customer has symptoms of Coronavirus, and is experiencing a critical emergency, we have provided training and field guidance to ensure that our operatives can attend while maintaining their own safety and that of our customers. This has involved training a significant number of our operatives in hospital standard PPE and infection control procedures. We have also secured a sufficient supply of the correct grade PPE.
We review our approach regularly in line with the latest government announcements and we have, and will continue to, keep our customers up to date with any changes that affect them. A service recovery plan is being developed, ready for implementation once lockdown starts to be relaxed. The plan covers a range of eventualities from immediate to phased relaxation of social distancing measures.