Why we are engaging with Bield Housing & Care (Bield)
We are engaging with Bield about its governance, financial management and because it is a systemically important landlord.
We refer to a small number of RSLs as systemically important because of their stock size, turnover or level of debt or because of their significance within their area of operation. We need to maintain a comprehensive understanding of how their business models operate, and how they manage the risks they face and the impact these may have. So we seek some additional assurance each year through our engagement plans. Given Bield’s turnover we consider it to be systemically important.
In 2020/21 Bield advised us that it had identified weaknesses in the quality of the evidence underpinning some of the indicators in its Annual Return on the Charter. It shared its improvement plan with us and has given us quarterly updates on progress in addressing the weaknesses. The action plan is not yet complete and so we will continue to liaise with Bield on the progress they are making.
Bield is forecasting a significant cash outflow over the next five years and told us it needs to obtain new private finance to support its investment programme.
What Bield must do
- provide copies of its Board and audit committee minutes as they become available;
- send us by 30 June 2022:
- its approved business plan and updated risk register;
- evidence of how it demonstrates affordability for its tenants.
- send us by 30 September:
- 30 year financial projections consisting of statement of comprehensive income, statement of financial position and statement of cash flow complete with assumptions and explanatory narrative;
- a comparison of projected financial loan covenants against current covenant requirements;
- financial sensitivity analysis which considers the key risks, the mitigation strategies for these risks and a comparison of the resulting covenant calculations with the actual current covenant requirements;
- the report to the Board in respect of the approved 30 year projections, sensitivity analysis and covenant compliance;
- continue to send us quarterly updates on progress with its data verification improvement plan.
What we will do
- review the minutes of the Board and audit committee meetings and liaise as necessary;
- review the business plan and financial projections;
- review progress on the data verification improvement plan and liaise as necessary;
- meet with Bield’s senior staff to discuss the business plan, the financial information and any risks to the organisation; and
- update our published engagement plan in light of any material change to our planned engagement with Bield.
Bield must provide us with the following annual regulatory returns and alert us to notifiable events as appropriate:
- Annual Assurance Statement;
- audited financial statements and external auditor’s management letter;
- loan portfolio return;
- five year financial projections; and
- Annual Return on the Charter.
It should also notify us of any material changes to its Annual Assurance Statement, and any tenant and resident safety matter which has been reported to or is being investigated by the Health and Safety Executive or reports from regulatory or statutory authorities or insurance providers, relating to safety concerns.