Our Governance and Viability ratings have changed
Every so often our regulator, the Homes and Communities Agency (HCA) assesses our performance against its Governance and Financial Viability standards. They publish these in a Regulatory Judgement, which is a public document. There are four rating levels – levels 1 and 2 comply with the HCA standards, levels 3 and 4 don’t.
The HCA have reviewed our ratings and has changed them to G2 and V2. This means we continue to comply with the standards but have some improvements to make to our governance and to the management of financial risk.
The HCA have changed our ratings because for the next few weeks our cash balance plus available borrowings will fall below the level that we, and they, expect to see for a business of our size and shape. Whilst our cash and borrowing position are completely sufficient to meet our day to day business needs and contractual commitments, the amount of headroom we have over and above this level is relatively low.
There are a number of reasons for this:
- we have unusually high levels of expenditure as we complete our very successful 2011/15 development programme and our cashflow forecasting was not as good as it should have been
- new loans that we’ve been negotiating have taken longer than we expected to complete so we’ve not had access to the borrowings we planned to have during a period of exceptionally high development expenditure
- along with some other housing associations we’ve been affected by adverse financial market movements mostly because of the Eurozone crisis.
We’re obviously disappointed to be in this position. There are things we need to improve to make sure this doesn’t happen again and we’ve commissioned a review by independent consultants to ensure we learn lessons and improve governance and management controls.
We told the HCA about our cash position early in January, we’ve been keeping them informed regularly since then and they’re satisfied we’re managing the situation effectively.
Importantly, there’s nothing for you to be concerned about. Knightstone continues to be financially very sound and there will be no impact on your tenancy or on the services you receive.
We’ll keep you updated on the website. If you have any questions, please contact our Customer Contact team on 08458 729729 or email us at email@example.com and we'll get back to you.