Financial Review
Five-year summary
The five-year summary shows our continually strong financial position. In the five years from 2020, the business has delivered strong operating surpluses through the landlord business. Changes in turnover between years primarily reflect first tranche and market sales activity that had been in our pipeline. We expect to see smoother growth in turnover as we deliver on our current development pipeline that provides a consistent number of new rented homes and those offering low-cost shared ownership options.
* £14m movement for financial instruments
Over the last five years, operating surpluses have been consistently over £20m. This represents a strong operating performance within a backdrop of economic and political uncertainty. Fundamental to this has been the delivery of our core social housing lettings activities which have maintained a strong performance, even though over 90% of our properties have genuinely low-cost social rents.
Long-term liabilities are detailed in the financial statements and reflect government grants, pension liabilities and the market value of financial instruments. The pension liability relates to our Local Government Pension Scheme, which has been closed to new members since 2003. While we are not in a deficit position, the inability to recoup any residual surplus once the scheme is finished means we cannot legally recognise the positive year-end position.
During the year, settle entered into a new admission agreement with the Fund with an effective date of 30 September 2023. From the 30 September 2023 the liabilities for active members were transferred to the new agreement, whilst the liabilities in respect of deferred and pensioner members were retained by the Fund, with the previous admission agreement being terminated.
The assets that were transferred to the new agreement is the share of assets that was attributed to settle in respect of the previous agreement less the cost of settling the deferred and pensioner liabilities.
settle now only retains responsibility for the liabilities in respect of those members who were active at the time the new admission agreement was put in place. settle’s share of assets in the Fund has also been reduced to reflect the “payment” of the cessation cost in respect of the deferred and pensioner liabilities that the Fund retained following the termination of the previous admission agreement. Cessation costs which one reported in other comprehensive income as a result of the partial exit is £2.7m.
The sections below provide a deeper analysis of the key financial elements of settle’s business:
Turnover and surplus
Turnover has remained strong with variances in earlier years largely driven by the timings of sales completions and varying levels of market sale.
Whilst the operating margin has remained healthy throughout the period and consistently above the sector’s global average, at 24.6% it has fallen below the budgeted position of 27%. During the past year this included increased spend on repairs due to higher costs and demand, increased investment in the quality of neighbourhoods, particularly to support grounds maintenance and cleaning of communal areas, and additional spend to proactively resolve damp and mould issues.
Turnover breakdown
81% of our turnover in 2024 relates to social housing lettings, reflecting the continued commitment we have to the provision of truly affordable rented properties.
Our conscious decision to move to a development strategy that focuses on affordable housing rather than market sale can be clearly seen from looking over the past 5-year performance. We have focussed our attention on delivering much-needed affordable housing which provides reliable income streams.
Assets and debt
During the year we have completed additional borrowing, which will allow us to continue our commitments to increase the supply of affordable homes in the areas in which we work, and to invest in existing homes and neighbourhoods that are great places to live in.
Liquidity
settle's treasury strategy includes strict targets to ensure that sufficient liquidity is in place to fund at least 18 months of future commitments. We continually review our position to ensure funding is available to achieve our development strategy.
As at 31st March 2024, our overall liquidity headroom was £157.6m, equating to 37 months of committed development spend against our policy target of a minimum of 18 months net development spend.
Drawn debt breakdown
settle currently has £425.6m of drawn debt, split between bank loans and bonds. The long-term nature of our debt portfolio ensures there is limited refinancing risk in the short to medium term.
88% of our portfolio is currently fixed by either stand-alone derivatives or fixed rate bonds. This represents a comfortable mixture of interest rate management and flexibility within the debt to take advantage of potential fundraising opportunities.
Operating Review
Investment in existing assets
As our financial review demonstrated, settle is a business that is fundamentally focused on affordable housing. The provision of genuinely affordable rented homes remains the core component of our business.
As our corporate strategy sets out, delivering good services is of huge importance to us and this means that we continue to invest in our existing stock. Providing safe, warm homes is central to all that we do.
An important aspect of this is through planned investment. We continued to invest in resident’s homes and spent as planned around £19.7m updating homes in 2023/24, with £14m spent in 2022/23, increased from £8.3m in 2021/22 and around £4m in 2020/21.
We finished the year on track replacing kitchens, bathrooms, windows, front doors, and heating systems. Across all properties, the completions for 23/24 were: 747 windows; 80 fire doors; 42 roofs; 236 kitchens; 126 bathrooms; and 638 heating systems. Customer satisfaction with the investment programme remained high at 97% satisfaction for the year.
Our long-term financial plan is aligned to the results of our stock condition surveys. A focus during the past year has been to increase the number of stock condition surveys we have across all properties, underpinning our knowledge of homes and investment plans. We met our targets for the number of surveys to be completed by the end of March, we completed a total of 2,814 surveys to the year ending 31st March 2024 and exceeded our target by 424 surveys. We are on track to complete our aim for all surveys to be within five years old by the end of this financial year.
Providing safe, warm homes is central to all that we do.
Service delivery
In 2023/24 we completed all emergency repairs within target throughout the year.
Our target for routine repairs was to complete 90% within 28 days. We ended the year having completed 72% of routine repairs within target, reducing the average days to complete from 29 days in 2022-23 to 26 days in 2023-24.
We can see that across the year orders were raised for just over 27,000 repairs; nearly 4,000 more repairs than the previous year. This increase was partly due to weather conditions and the increase in storms and floods during the winter months. Also, the proactive approaches we are taking to identifying and reporting repairs needed to properties, for example through increased stock condition surveys and visits by colleagues during our Big Door Knock, as part of which colleagues will also check if any works are needed to homes.
Throughout the year we have been working on improvements to help us complete repairs more quickly. As part of this, we have focussed on reducing the number of jobs we have open on our systems at any one time. Fewer jobs open means that we are able to complete new repairs more quickly.
The improvements we have put in place mean that we have been able to complete the majority of the additional repairs raised during the year, without a corresponding increase in the number of open jobs.
We have a repairs improvement plan in place and will continue our focus on delivering this. As part of the plan, we are reviewing our resourcing and will be making important changes to improve our use of technology for scheduling and reporting on work completed. We expect to increase the volume of repairs we complete within the 28-day target to 78% by September 2024.
Condensation, damp and mould
We have retained our focus throughout the year on proactively supporting residents to raise any requests for support with damp and mould. Our approach is to remain in touch with residents throughout the resolution process, until we are confident we have addressed the root cause of each issue.
As the year progressed, we saw a decrease in the number of cases being presented to us. The 6-month period over quarters 3 and 4 of 2023-24 showed a 48% decrease in cases raised compared with the same period in the previous year. With the support of our Board, we will continue to proactively identify and mitigate any cases of damp and mould and ensure support is in place for residents for as long as it is needed.
Voids performance
Voids performance in terms of turnaround times ended the year at 45 days for major voids (target 38 days) and 21 days for standard voids (target 14 days), both measured from possession to relet of tenancy. Void loss – our target for the year was 1.1% and we ended the year well within this, at 0.76%.
We continue to see an increasing number of homes returned requiring garden and home clearances, with the costs and scale of works involved causing delays. The period of measure combines the repair work required to bring the property to a settle Void Standard with the lettings and offer period through to commencement of a new tenancy. Major voids turnaround improved by 9 days compared with 2022/23 and minor voids by 2 days compared with 2022/23.
Decent Homes Standard
We finished the year with 99.9% of homes meeting the Decent Homes Standard at the end of March, against a target of 100%. Just 2 homes were non-decent, due to the discovery of two safety issues late in March via the stock condition surveying programme. These related to bannisters having been removed by the residents. Repair works to these two properties have now been completed.
Development and sales
We delivered 212 new homes last year (21 social rent, 105 affordable rent, and 86 shared ownership). This is consistent with the 218 new homes, and one commercial unit, delivered in 2022/23, and 182 homes delivered in 2021/22. The homes delivered in 2023/24 included the handover of one property for shared ownership that was completed in 2022/23.
Our development focus during the past year has remained on our current geography, properties within 45-minutes of our offices in Letchworth Garden City. This has included new homes in our North Hertfordshire-heartland and our first homes in East Hertfordshire, as well as completing new homes in growth areas including Central Bedfordshire.
We continue to see a high demand for our shared ownership product as a means for people to access home ownership in a market where they are priced out of purchasing on the open market. The quality of this product was recognised last year by our development team winning the award for Best Small Development at the First Time Buyer Readers Awards, for our development of homes at Iveldale Drive in Shefford, Central Bedfordshire. Last year we recorded average void sales times of 56 days (against a target of less than 90 days) and again saw over 40% average first tranche sales. This demand continues to help cross-subsidise the development of affordable low-cost rented properties as well.
We remain committed to increasing the supply of affordable homes in the areas in which we work, doing so in a financially responsible way that continues our focus on investing in quality homes and neighbourhoods. As of 31 March 2024, we are contractually committed to 743 of the homes we will be building over the next five years, with our target being to complete between 250 and 350 new homes during 2024/25.
A place where colleagues love to work
We are proud of the way in which colleagues have continued to support residents and each other. We have made great strides in progressing our people strategy that seeks to ensure that settle is seen as a great place to work. In particular, we have:
- Continued to support colleagues through the cost-of-living crisis, both financially and through wellbeing initiatives.
- Continued our focus on reward and recognition. We have completed a benchmark exercise to ensure our reward package remains competitive, in line with the sector and meets the recruitment challenges we may face.
- Established use of our Peakon survey tool, enabling regular pulse feedback and annual survey results which show that our colleagues are engaged at settle and think settle is a great place to work.
- Continued focus on performance and talent management, resulting in improved service delivery as demonstrated through stronger trust and effort scores from residents.
- Continued our journey on professionalism, working closely with the Chartered Institute of Housing (CIH). During the past year we began our organisation-wide CPR programme, through which all colleagues complete a minimum 12 hours of continued professional development in housing, and recruited graduates and apprentices into the business who are all undertaking CIH qualifications. We also have several colleagues signed up to study for CIH qualifications as part of their own development and clear plans for those who are required to complete the mandatory training.
- Worked with our colleague groups to continue supporting our culture and colleague wellbeing initiatives. This includes our together we care champions, value everyone group, colleague forum, mental health first aiders and innovation forum.
- Continued to find ways to automate and have improved our data and insight on colleagues through a new HR database, performance management system and engagement platform.
An environmentally sustainable business
Creating sustainable homes, neighbourhoods and a sustainable business are fundamental to delivering our purpose.During the year, we have continued work to deliver our sustainability plan, focussed on:
- Homes and places – with the overarching objective to reach Net Zero Carbon at the earliest opportunity;
- People and skills – ensuring we have the skills, influence and collaboration with partners in place to deliver our commitments; and
- Operations and supply chain – ensuring that our supply chain is committed to Net Zero Carbon.
During the year, we celebrated the UK-wide ‘Great Big Green Week’, a celebration of community action to tackle climate change and protect nature. We held a week of activities at settle including a lunch and learn for colleagues on work to deliver our sustainability plan, and a webinar for residents presented by our Executive team, with questions from members of our Voice of the Resident panel.
Our ongoing planned investment programme will also deliver energy efficiency improvements to properties, for example through new roofs and windows.
A focus of our work during the past year has been delivery of our first year of funding secured through
the Social Housing Decarbonisation Fund [SHDF] as part of our ‘Greener Herts’ partnership with Hertfordshire-based B3Living, Watford Community Housing and Dacorum Borough Council.
The funding secured by the consortium reflects a combined pledge of £25m from B3Living, Dacorum Borough Council, settle and Watford Community Housing, plus an additional £14m provided by the Social Housing Decarbonisation Fund. We have secured £5m of this funding to invest in settle properties during the two-year programme, moving them to EPC C.
During the past year, we completed assessments of 592 settle homes. We completed 443 measures in 198 homes, and fully completed improvement works to 45 properties. Full property completions were lower than we had hoped at the end of the year, as a result of continuous poor weather affecting completions of external works. At the start of 2024/25 we had a number of homes waiting on just one measure to be fully complete. We will continue momentum during the year ahead and with the strength of the partnerships we have in place, look forward to fully completing as many homes as possible during the year ahead.
SHIFT accreditation
During the year we also undertook our third SHIFT (Sustainable Homes Index For Tomorrow) accreditation and were pleased to again be awarded Silver. The analysis also identified where we could continue to progress, and we now have a clear plan in place to achieve SHIFT Gold status by 2027.
More information on our approach to environmental sustainability is provided in the ESG section of this report.
Social Purpose
Social purpose remains at the heart of settle. Through our giving something back approach, colleagues spent over 1,000 hours combined volunteering their time across a range of activities including volunteering with local schools, Scout groups and supporting local charities.
As part of our giving something back approach, we also continued our focus on neighbourhood action days. We completed these across neighbourhoods in Hitchin, Letchworth, Royston and surrounding villages. Activities focused on improving estate standards, with colleagues from teams across settle taking part. Activities including tidying communal areas, litter picking and planting flowers. We were pleased to be joined by local councillors and residents on some of these visits to support the work we were doing.
Giving Back Days have been an important part of our 2019-24 strategy and delivering our social purpose. With the hours completed during the past year, we are delighted to have achieved our overall corporate target of 3,000 Giving Back Hours delivered by the end of the plan.
Equality, Diversity and Inclusion
Through every part of our work at settle supporting our colleagues, residents and communities, we are committed to ensuring that all individuals have an equal opportunity to make the most of their lives. Equality, diversity and inclusion (EDI) plays a central role in supporting the delivery of our social purpose and sits at the heart of everything we do. Our culture at settle is inclusive and embraces and celebrates the differences in everyone.
We are clear that the promotion and awareness of diversity and inclusion at all levels of an organisation can bring many benefits such as higher performance, greater innovation, and a more positive environment for all. We continue to reflect this also in the services we provide, ensuring that these are inclusive and meet the needs of all residents. We continue to support the work of our ‘value everyone’ group which looks at celebrating diversity amongst our colleagues. Additionally, we continue to provide training and development opportunities to raise awareness of diversity and inclusion related topics. Some of our focus points over the next year include:
- Embed a culture of continuous learning around EDI.
- Review data to identify any bias, ensure equality and inclusivity in our processes and decision making.
- Expanding our network and working with local groups.
- Taking an open and unbiased approach to diversity and inclusion as part of our people strategy.
We continue to fully support the importance of greater transparency and disclosure on ethnicity pay as part of a business’s environmental, social and governance (ESG) reporting. We report on ethnicity pay in the same way that organisations are required to report on gender pay, using the same calculation methodology set out by the Government Equalities Office.
Some of our focus this year includes:
- Our flexible working offer, which means that colleagues have more freedom and support to attain a work-life balance that meets the needs of both their family and the business.
- We will be continuing with our Equality Impact Assessments when we review our policies and processes to make sure that the way we do things, such as recruitment, don’t unfairly disadvantage certain groups of people.
- We are continuing to invest in a learning culture that promotes and celebrates diversity and inclusion. The work of our value everyone group is a big part of this. We’ll be developing our relationship with WISH (the network for women working in social housing) to give female colleagues the opportunity to participate in and learn from a wider community of women working in the sector.
- We support all colleagues through every stage of their settle career. We offer opportunities in both personal and professional development which are fair, transparent and inclusive for all.
- We’ve appointed a managed service provider recruitment expert who will ensure our employer branding reflects settle’s commitment to equality, diversity and inclusion and attracts a broader range of applicants. They will also provide insight and data on our ED&I of applicants.
- We’re building relationships with nearby schools and other educational institutions to invest in our local recruitment pipeline and promote careers in housing among future generations. When we do this, we are active in encouraging young people to consider non-traditional roles for their gender.
- We’ve appointed three apprentices and three new graduates into the business to diversify our talent pipeline.
- We are actively participating in the National Housing Federation’s Equality, Diversity and Inclusion network to keep up to date with best practice among EDI professionals in the sector and bring that learning back to settle.
Gender and Ethnicity Pay Gap
The Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 require relevant UK employers with 250 or more employees to publish information on their pay gap. Although there is no legal requirement to publish an Ethnicity Pay Gap report settle began doing this voluntarily from last year in the spirit of transparency and in order to identify any inequalities and take meaningful actions to address them.
We know that to support the delivery of our purpose will require a diverse and inclusive workforce in which a wide range of different voices are being heard at every level of our business. We continue to make active efforts to address the gaps that exist in our business, striving to ensure that every colleague is able to succeed at settle. Our combined Gender and Ethnicity Pay Gap 2023 report can be found on the website at Our-pay-gap-report-2023.pdf and provides a snapshot of colleague data from 5th April 2023.