2 Strategic Report including Operating and Financial Review Net debt (excluding finance lease obligations) at 31 March 2024 was £562.8m and gearing calculated in accordance with loan agreements but applied to the Group was 28.9% (2023: £514.4m, 28.5%). The undrawn facilities, together with substantial unencumbered assets and a strong credit rating ensure that we remain in a strong position to fund future growth plans and investment opportunities. Anchor remains compliant with its financial covenants, which are primarily based on interest cover and gearing. These covenants continue to be met with considerable headroom. ESG investment proposition Environmental sustainability underpins Anchor’s Business Plan, ensuring that we provide good quality affordable homes and services fit for the future to support our residents and their communities. Anchor’s Environmental Sustainability and Net Zero Carbon Strategy sets out how we will deliver on our commitment to reducing carbon so that we are operating at net zero by 2050, identifying risk and mitigating the impacts of climate change (such as flooding and overheating risks), reducing pollution, waste, waste water and increasing biodiversity, and supporting the wellbeing of Anchor’s residents and colleagues through sustainable lifestyles. As well as mitigating the environmental impacts of our operations, we are committed to creating social value and have implemented the TOMs (Themes, Outcomes and Measures) framework to ensure delivery. We are also committed to continuing to operate to high standards of governance and financial control. Our Environmental, Social & Governance (ESG) approach is underpinned by our Sustainability Financing Framework, which is aligned to the UN’s Sustainable Development Goals and the Loan Market Authority (LMA) Sustainability Linked Loan principles, under which we established our £300m Sustainability-Linked Loan (SLL) in 2021. The SLL is linked to five ESG key performance indicators (KPI) which reflect the broad, positive effects of our Business Plan and day-to-day activities: building new affordable and green homes, maintaining the affordability of housing for older people, and supporting resident wellbeing and colleague diversity, reflecting the diversity of our residents and the communities in which they live. New homes were delivered to an average SAP score of 84.5 (2023: 82), or EPC B. The increase in energy efficiency from 2023 maintained our overall band for new homes at band B. We also maintained 86.4% of our existing homes to EPC C or above and commenced a programme of retrofitting works which aims to bring 341
Golden Principles Deliver strong and sustainable operating cashflows and maintain sufficient liquidity to meet stress tested spending commitments on an on-going basis. Increase borrowing only as underpinned by strengthening of the underlying business and improved efficiency, using synergy savings for debt service. Maintain an efficient and effective capital structure with the flexibility to deploy funds around the Group when and where needed to support strategy. Golden Rules Interest cover will be met excluding contribution from property sales. Income from property sales will not exceed 20% of Group revenue in any given year. At least 60% of debt will be on a fixed rate basis. Expenditure on existing assets will be within the envelope of the net contribution generated by those assets. We maintain a long-term A+ credit rating from Standard & Poor’s, which despite challenging operating conditions was reaffirmed in March 2024 with a stable outlook. Anchor has in issue a £350m secured public sterling bond due in July 2051, with a further £100m being retained. It pays a 2% all-in coupon which, once the discount on issue and transaction costs are taken into consideration, is an effective interest rate cost to us of 2.277%. It is a Sustainability Linked Use of Proceeds bond; proceeds are used for general corporate purposes in line with our Sustainability Financing Framework and to support delivery of our strategic plan. All funds raised from the bond were allocated by the end of March 2023 and reported in our Bond Allocation report along with the Second Party Opinion from DNV, appended to our Sustainability Report 2022-23 (available at www.anchor. org.uk/about-anchor/publications). In December 2023 we agreed two bilateral shelf facilities via private placement. £25m of new funding was drawn at completion with the capacity to draw up to a further £125m over the next five years, supporting our policy to maintain prudent levels of liquidity and provide cash to support our business plans. As at 31 March 2024, Anchor had access to undrawn committed borrowing facilities of £144.6m from total facilities of £764.0m (2023: £185.6m undrawn committed borrowing facilities from total facilities of £735.4m).
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1 SLL is linked to five ESG key performance indicators
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