Decision

Previous regulatory judgement: Flagship Housing Group Limited (14 December 2022)

Updated 5 July 2023

Applies to England

RSH Narrative Regulatory Judgement

• Provider: Flagship Housing Group Limited

• Regulatory code: 4651

• Publication date: 14 December 2022

• Governance grade: G1

• Viability grade: V2

• Reason for publication: Viability regrade

• Regulatory route: Stability Check and Reactive Engagement

Regulatory judgement

This regulatory judgement regrades our previous published assessment of Flagship Housing Group Limited’s financial viability from V1 to V2 and confirms its G1 grade for governance.

The regulator has assurance that Flagship Housing Group Limited (Flagship) complies with the financial viability element of the Governance and Financial Viability Standard and that its financial plans are consistent with, and support, its financial strategy. Flagship has an adequately funded business plan, sufficient security and is forecast to continue to meet its financial covenants.

Flagship has material risks and exposures that it needs to manage. It is increasing investment in its existing homes while at the same time undertaking a development and sales programme. In the current economic environment, with uncertainty in relation to wider inflation and interest rate risks, these factors place pressure on financial performance, reducing Flagship’s covenant headroom and its capacity to respond to adverse events.

The regulator’s assessment of Flagship’s compliance with the governance elements of the Governance and Financial Viability standard remains unchanged. On the basis of the Stability Check, the regulator has concluded that there is no evidence to indicate a change to Flagship’s current governance grading.

Other providers included in the judgement

None

About the provider

Origins

Flagship is a community benefit society and exempt charity. The group’s principal activity is the provision of social housing.

Registered Entities

Flagship is the only registered entity in the group.

Unregistered Entities

There are four active unregistered entities in the group:

• Flagship Housing Developments Limited provides development services to the group and holds Flagship’s investments in joint venture undertakings;

• Gasway Services Limited delivers gas servicing and installations;

• Hopestead CIO is a registered charity focussed on tackling homelessness; and

• Flagship Finance plc was incorporated to issue a bond on the capital market.

Flagship also has five dormant subsidiary companies.

Geographic Spread and Scale

Flagship owns and manages around 32,000 homes across the East of England.

Staffing and Turnover

For the year ended 31 March 2022 Flagship’s turnover was £231.9m. It employed 1,392 full-time equivalent staff.

About our judgements

Key to Grades

Governance:

	Compliant
G1	The provider meets our governance requirements.
G2	The provider meets our governance requirements but needs to improve some aspects of its governance arrangements to support continued compliance.

	Non-compliant
G3	The provider does not meet our governance requirements. There are issues of serious regulatory concern and in agreement with us the provider is working to improve its position.
G4	The provider does not meet our governance requirements. There are issues of serious regulatory concern, and the provider is subject to regulatory intervention or enforcement action.

Viability:

	Compliant
V1	The provider meets our viability requirements and has the financial capacity to deal with a wide range of adverse scenarios.
V2	The provider meets our viability requirements. It has the financial capacity to deal with a reasonable range of adverse scenarios but needs to manage material risks to ensure continued compliance.

	Non-compliant
V3	The provider does not meet our viability requirements. There are issues of serious regulatory concern and, in agreement with us, the provider is working to improve its position.
V4	The provider does not meet our viability requirements. There are issues of serious regulatory concern, and the provider is subject to regulatory intervention or enforcement action.

Definitions of Regulatory Routes

In Depth Assessment (IDA): An IDA is a bespoke assessment of a provider’s viability and governance, including its approach to value for money. It involves on-site work and considers in detail a provider’s ability to meet its financial obligations and the effectiveness of its governance structures and processes.

Stability Checks: Based primarily on information supplied through regulatory returns, a Stability Check is an annual review of a provider’s financial position and its latest business plan. The review is focused on determining if there is evidence to indicate a provider’s current judgements merit reconsideration.

Reactive Engagement: Reactive engagement is unplanned work which is triggered by new information or a developing situation which may have implications for a provider’s current regulatory judgement.

Stability Checks and Reactive Engagement: In some cases, we will publish narrative regulatory judgements which combine evidence gained from both Stability Checks and Reactive Engagement.

For further details about these processes, please see Regulating the Standards.