4.6
Metric 6: Operating Margin (%)
The regulatory definition of this metric is: “The Operating Margin demonstrates the profitability of operating assets before
exceptional expenses are taken into account. Increasing margins are one way to improve the financial efficiency of a business.
In assessing this ratio, it is important that consideration is given to registered providers’ purpose and objectives (including
their social objectives). Further consideration should also be given to specialist providers who tend to have lower margins than
average”.
Registered providers will report on two Operating Margin ratios:
n A. Operating Margin (social housing lettings only)
n B. Operating Margin (overall)
Metric 6 - Operating margin (%)
40%
Metric 6A -
Operating
margin %
(social
housing
lettings only)
30%
20%
0%
2015
2016
2017
2018
Metric 6B -
Operating
margin %
(overall)
The four year trend period presented in the table above identifies continuing improvements in performance for both overall
operating margin and social housing operating margin. These specific metrics confirm Accord’s commitment to increasing
operating efficiency with both highlighting significant year-on-year improvements in measurement outputs. Accord is again one
of the top performers in the benchmarking peer cohort for metric 6A. For metric 6B Accord records comfortably above average
performance which is driven by year-on-year improvements in overall profitability.
Metric 6A - Operating margin % (social housing lettings only)
40%
30%
20%
10%
0%
Accord
2018
Accord
2017
RP1
(2017)
RP2
(2017)
RP3
(2017)
RP4
(2017)
RP5
(2017)
RP6
(2017)
RP7
(2017)
RP8
(2017)
RP9
(2017)
Metric 6B - Operating margin % (overall)
40%
30%
Metric 6B -
Operating
margin %
(overall)
20%
10%
0%
Metric 6A -
Operating
margin %
(social
housing
lettings only)
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 – in 2017/18 Accord has again improved its year-on-year performance for both of these operating metrics. This is
demonstrated by budget calculations informing the setting of these targets to be delivered against.
Future performance targets for this metric
Against the backdrop of a rising cost base and ongoing rent reductions Accord is committed to the continuing performance
improvement for these two profitability metrics whilst delivering excellent services to Accord’s customers and communities.
Performance targets for 2018/19 and subsequent years are embedded in the budget setting and business planning processes
respectively.
18
Accord Housing Association