4.4
Metric 4: Earnings before Interest, Tax, Depreciation, Amortisation, Major Repairs Included
(EBITDA MRI) Interest Cover %
The regulatory definition of this metric is: “The EBITDA MRI interest cover measure is a key indicator for liquidity and investment
capacity. It seeks to measure the level of surplus that a registered provider generates compared to interest payable; the measure
avoids any distortions stemming from the depreciation charge”.
Metric 4 - EBITDA MRI (%)
180%
160%
140%
Metric 4 -
EBITDA MRI
120%
100%
80%
2015
2016
2017
2018
EBITDA MRI is used to measure the overall cash generation of an organisation. Accord’s commitment to increase its overall
profitability is demonstrated in the chart above which clearly demonstrates year-on-year improvements in performance for this
metric. This increased profitability has led to increased cash generation which has supported the development of new homes
(see metrics 1 and 2) whilst drawing less loan debt than anticipated which has created additional headroom on balance sheet
gearing (see metric 3). The chart above demonstrates Accord’s clear intent to increase profitability and improvements in the
EBITDA MRI measurement. Over the last four financial years Accord has significantly improved its EBITDA MRI measurement by
35% which has coincided with increases in operating surpluses (see metric 6).
Accord has comparable performance in the context of the benchmarking peer group, but is not complacent regarding performance.
As outlined in the trend data above, there is a strong commitment to the continuing increase of profitability and underlying cash
generation.
Metric 4 - EBITDA MRI (%)
300%
200%
Metric 4 -
EBITDA MRI
100%
0%
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 – various profitability metrics, including EBITDA MRI, are considered as part of the budget setting and business planning
process. The EBITDA MRI measurement for Accord’s financial performance for the year ended 31 March 2018 performed in line
with expectations.
Future performance targets for this metric
Through the business planning process Accord has demonstrated its commitment to continuing to improve its operating
profitability. Accordingly there is a strong expectation that the EBITDA MRI measurement shall continue to increase going
forward. Measurements of performance against the 2018/19 budget and business plan will identify whether this has been
achieved.
16
Accord Housing Association