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Bromford and Flagship see turnovers rise amid ‘significant progress’ on merger plans
Bromford and Flagship have reported rising half-year revenues, but are facing spending pressures on improving existing homes as they prepare to merge next year.
The two landlords revealed plans for a tie-up in June, which will create an 80,000 home landlord.
In an update today, Jonathan McManus, chief financial officer at Flagship, said: “Significant progress has been made by both parties with an expected merger date in the first half of 2025.”
The landlords had previously said they expected the merger to complete by next spring.
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Under the plans, 48,000-home Bromford will become the group parent and be renamed Bromford Flagship.
Bromford revealed today that its post-tax surplus in the six months to the end of September rose by 9% year on year, to £36m. It was helped by group turnover increasing by the same proportion, to £167m.
However, the group flagged that its overall operating margin was down slightly, to 30%, compared with 31% at last year’s half-year.
“This is in part due to increased demand for repairs, with 20% more demand year on year in the first six months,” said Paul Walsh, chief finance officer at Bromford, pointing to a similar picture across the sector.
“We expect this to continue into the second half of the year.”
Mr Walsh said £34m was spent on existing homes in the six months to “respond to this demand and significantly reduce our repairs backlog”.
He also pointed to a drop in margin on first-tranche shared ownership sales, which was 15% compared with 21% in last year’s first half.
Bromford also revealed it completed 457 homes in the first half of its current financial year, which was 15 fewer year on year. Of the 457, nearly half were for social rent.
Norwich-based Flagship, which has nearly 34,000 homes, reported an 11% rise in operating surplus, to £57.3m, in the six months to the end of September.
It came after a 9% rise in group turnover to £139.8m. Flagship did not disclose a pre-tax or post-tax surplus figure.
The group spent £47.5m on improving existing stock, compared with £46.8m in the previous half-year.
The group’s half-year margin, including asset disposals and gain on joint ventures, was 41%. This compared with 40% at the same point last year.
Flagship completed 162 homes of affordable tenures in its half-year, but said it is “on track” to hand over around 500 by the end of its financial year.
However, Mr McManus added: “The broader economic environment remains tough. Interest costs aren’t falling as quickly as predicted, and sector-wide cost pressures are impacting operating margins.”
Flagship currently has a G2/V2 rating with the English regulator, while Bromford is graded G1/V1.
As part of the merger, Flagship will become a subsidiary of the new group.
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