Investing in A2Dominion Group bonds

In 2022/23 we recorded a turnover of £389.1m and a net deficit of £12.8m. This has come at a time when we have been increasing our investment in our existing homes, while being impacted by huge increases in operational costs, and a planned fall in sales income. We achieved an operating margin of 11.2%.

A significant part of our reduced operating margin and operating surplus comes as a result of the economic conditions we and the sector are now facing. This includes £16.9m of impairments of active development schemes, £7.9m of abortive costs for schemes deemed no longer viable, and a further £7.6m of scheme write-downs within cost of sales.

Combined, these £32.4m of costs have contributed towards the Group’s reduced operating margin of 11.2% (2022: 20.1%), which would otherwise have been 19.5%.

Notwithstanding, our balance sheet remains strong, with £1.04bn of net assets and over £350m of available undrawn facilities, demonstrating our ability to weather the current and future challenges the economic environment presents.

Fitch maintained our A credit rating in October 2023. In January 2024, we were graded G3/V2 by the Regulator of Social Housing (RSH).

We have 38,244 homes in management, and we continue to grow our development portfolio. At present, we have 1,748 new homes in our two-year development pipeline, and we continue to look for opportunities to deliver high-quality, affordable homes where they are needed.

Our Funding

We have £695m (31 March 2022: £770m) of unsecured funding through the retail and wholesale markets. These funds support the delivery of our development programme and our investment in market rented housing. across London and southern England.

As at 31 March 2023, we had £512m of revolving credit facilities (of which £386m was undrawn), our total loan book stood at £2.0 billion of which £1.6 billion was drawn, and the Group held cash of £40m.

External funding and liquidity

We continue to enjoy good access to funds via banks and capital markets. We repaid in full a £150m retail bond that was issued in 2013 and are reviewing a number of initiatives to reduce our average cost of funds.

Financial planning for the future

Our priority is to safeguard the organisation for the benefit of our customers, so we take action to help protect the organisation from the impact of external economic conditions. We also have a commitment to protect our customers’ homes and the services we offer them, so we will be investing in these as a priority.

Retail bond 2022

Our first retail bond was released in September 2013 and closed within two days, raising £150m towards building new homes. In April 2022, we prepaid half of this bond. The remaining £75m matured on 18 October 2022. The 4.75% unsecured sterling bonds, were guaranteed by A2Dominion Housing Group Limited (A2Dominion), and the proceeds were on-lent to members of the A2Dominion Group.

Retail bond prospectus 2022

Retail bond 2026

We issued a retail bond in 2014. The offer period closed after just one day and raised £150m towards building new homes.

The 4.50% unsecured sterling bonds, due 2026, broke new ground with a maturity of 12 years, the longest ever in the retail bond market.

Euro Medium Term Note Programme

In 2016 we set up an unsecured £1bn EMTN Programme to facilitate our future funding requirements.

To date we have issued a total of £485m. The issues have all been rated at A+ or A by Fitch Ratings, mirroring both the programme and our long-term corporate rating.

Our issues:

£250m 12-year unsecured sterling wholesale bond with a 3.5% coupon
£75m 10-year bond with a coupon of 2.605% issued in December 2019
£85m 11-year bond with a coupon of 2.625% issued in December 2019
£75m deferred bond issued in March 2022 at a coupon of 4.25%

Our Board approved Business Plan shows that we do not need to raise new finance in the capital markets over the next 12-months. Consequently, we have allowed our existing Listing Particulars to lapse, but intend to reinstate our EMTN programme again at a future date when funding is required.