4.3
Metric 3: Gearing %
The regulatory definition of this metric is: “This metric assesses how much of the adjusted assets are made up of debt and the
degree of dependence on debt finance. It is often a key indicator of a registered provider’s appetite for growth”.
Metric 3 - Gearing (%)
55%
53%
51%
Metric 3 -
Gearing %
49%
47%
45%
2015
2016
2017
2018
As a result of Accord’s commitment to increase profitability (see Metrics 4 and 6) and associated cash generation, there has
been reduced reliance on debt to fund the development of new homes. This has resulted in an increase in overall capacity and
headroom in gearing. Accord continues to balance ambitions to develop more new homes with ensuring sufficient underlying
financial resilience. Accord’s gearing metric result is favourable when compared to the benchmark cohort of peers. Accord
outperforms the average of 49% at 46% confirming good levels of headroom against covenant and financial resilience.
Metric 3 - Gearing (%)
60%
50%
Metric 3 -
Gearing %
40%
30%
20%
Accord
2018
Accord
2017
RP1
(2017)
RP2
(2017)
RP3
(2017)
RP4
(2017)
RP5
(2017)
RP6
(2017)
RP7
(2017)
RP8
(2017)
RP9
(2017)
Did Accord meet its VFM target/objectives?
Yes – as part of the budget setting and business planning process Accord sets a target gearing outcome to be achieved at the
year end. Gearing performance as at 31 March 2018 identified that target gearing rates had been achieved. This performance
is even further encouraging when 2017/18 Homes England targets were exceeded (see metrics 1 and 2).
Future performance aspirations for this metric
Accord’s commitment to delivering more new homes whilst increasing profitability and cash generation together have an
offset effect on the gearing metric measurement. Accord remains responsibly ambitious in its development programme
and shall continue to ensure net operating cash generated through core activities continues to contribute to the cost of
development. Gearing is therefore forecast to remain relatively static ensuring ongoing financial resilience and sufficient
headroom against financial covenants.
Financial Statements 2018
15