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Slides from our investors' seminar held on 6th Oct
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Chris PhillipsGroup Chairman
Financial Performance 2010/11
Steve BinksGroup Director, Finance & IT
Headline Figures
2010/11 2009/10
Turnover £340m £312mIncome from lettings £232m £228mOp Profit before interest £80.3m £83.5mProvision for impairmentof land values £0m £25.1mFair value adjustment on acquisition £0m £36.3mProfit after Tax £20.5m £22.5m
Treasury Highlights• Credit Ratings - Moody’s Aa3 / stable
- Standard & Poor’s A+ / stable• Interest Cover - 1.5x• Interest rate risk - continued to 25%• Gearing - 51.1%• Liquidity - 3.3x• Continue to match spending to available funding• Undrawn committed facilities £547M in place• Investors continue to support Places for People
notwithstanding volatility in financial markets
Results Analysis 2010/11Housing Stock
56,500
57,500
58,500
59,500
60,500
61,500
62,500
2005
2006
2007
2008
2009
2010
2011
Housing stock ownedor managed
�� Growth in housing stock owned or managed Growth in housing stock owned or managed supporting longsupporting long--term rental income streams.term rental income streams.
�� At 1 April 2011, 62,034 homes owned or managed. At 1 April 2011, 62,034 homes owned or managed.
Units
Results Analysis 2010/11Revenue Reserves excluding pension liability
0
50
100
150
200
250
2005 2007 2009 2011
Revenue Reserves(ex pension liability)
£’m
Key Achievements –Gross Fixed Asset Base
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
2005 2007 2009 2011
GrossAssets(£bn)
• 7 years of sustained growth• Fixed Asset base remains at £3.1bn• £3,075k in 2010 to £3,060k in 2011
£’bn
Innovative Funding Strategy
Core funding strategy to: • Diversify Investor Base• Rebalance Debt Portfolio to targeted 60% unsecured
Successfully achieved by:• £175M 20 yr Unsecured Bonds• £140M 5½ yr Retail Bonds• US Private Placements
Pensions
2011 2010Pension deficit £28.2m £33.1m
• Pension scheme has been closed to future accrual as of October 2010
• Plan agreed to eliminate deficit in the next 15 years.
2011/12
• Another Challenging Year• Robust Liquidity• Cashflow, Investment & Cost Control• Short Term Refinancing Secured
Operations and Service Delivery
2010/11
Kieran KeaneGroup Director, Operations
Operations and Service Delivery Performance for 2010/11
The Operations Business
• 62,000 properties
• Lettings activity £232m
• > 7000 property lettings
• > 2,000 staff across operations
Housing Management
• We provide a dedicated housing management service to customers living in our 62,000 homes in England, Wales and Scotland
• We have experienced teams on the ground as well as a 24-hour Customer Contact Centre which deals with around 1,500 calls each day
Repairs and Stock Investment
We have an in-house property maintenance, repairs and gas servicing team which operates 365 days a year
• This covers c. 90% and all of our gas servicing and property repairs needs
• This year 232,000 repairs were carried out
• We have a £150 million five year stock investment programme underway
Care and Support Services
• We have been providing high-quality care and support services for over 40 years
• Working with around 200 local authorities across England and Scotland we provide homes and services to 6,752 people
• We also provide services to private individuals who buy tailored care and support packages from us to help them live independently in their own home.
Key Highlights for the Year
Rental and Other Income
• The Group has a large customer base of long term renters
• Our housing stock generated over £232m of gross rental income
• Operating margin pre interest was 36%.
March 2010 March 2011
Group 3.24 3.19
Homes 2.94 2.90
Individual Support 0.54 1.40
Castle Rock Edinvar 4.10 3.71
Cotman HA 5.26 4.01
Outstanding Rent Owed by Customers(Arrears as a % of total rent)
Time Taken to Relet an Empty Property (days)
March 2010
March 2011
Group 44.4 28.7
Homes 39.0 21.0
Individual Support 33.0 37.0
Cotman HA 24.0 25.0
Castle Rock Edinvar 30.1 29.4
Total Void Loss (% of total rent)
March 2010
March2011
Group 2.13 1.36
Homes 1.78 0.89
Individual Support 4.32 3.82
Castle Rock Edinvar 0.96 0.80
Cotman HA 0.82 0.75
Mar ’10 Mar ‘11
Emergency Repairs 96.13% 98.40%
Urgent Repairs 94.31% 98.38%
Routine Repairs 98.14% 98.97%
Gas Servicing Compliance 99.60% 99.70%
Property Maintenance - % of Repairs Completed Within Target
Customer Satisfaction
• 80% of customers would recommend Places for People as a landlord
• 97% of customers satisfied or very satisfied with the repairs service(34% / 66%)
“Decent Homes” Achieved
• By the December 2010 deadline, following an ambitious programme of investment, all of our homes met the Government’s Decent Homes Standard
• The programme has brought improvements to around 10,000 homes
Health & Safety
• Seeking to improve employee health and safety risk and minimise the risk to our customers
* RIDDOR - Reporting of Injuries, Diseases and Dangerous Occurrences Regulations
Year Staff RIDDORs
Customer RIDDORs
Contractor RIDDORs
2010/11 30 10 1
2009/10 21 4 1
Create Social Value for our Customerse.g. Employment Training
Year People accessing services
People into learning and training
People into employment
Business start up
Business supported
2010/11 4527 1184 623 32 348
2009/10 3647 655 290 63 109
Places for People secured funding of £2.25m from th e Future Jobs Fund to provide opportunities for 325 y oung people aged 18-24 to gain valuable experience in th e workplace
Controlling Costs• Reduction of operational costs
• Managing / influencing repairs volumes
• Improvements in operating efficiencies
• Simplifying management structures
• These continue to flow through to the bottom line
• These remain key objectives continuing during the current year.
Development Review
David ShawGroup Director of Development
Last year versus this year…….
• Last year we told you what we were going to do on our Major Developments
• This year I am going to show you what we have achieved
• But first to recap these were our objectives
Strategic Response to a Changing Marketplace
• Investment model focuses on long term returns over whole life of a development
• Developed Flexible tenure options • Revised programme and resources • Focusing on Strategic Projects to deliver Group
placemaking vision • Integrated development with PfP Group offer• Use available existing funding streams more
imaginatively
Investment ModelWhole life approach• Asset Creation: DEVELOPMENT APPRAISAL
– Land purchase/trading– Planning– Construction– Sales and Marketing – including flexible tenure offer
• Asset Performance: LONG TERM RETURNS– Interim Land Uses– Return on investment portfolio– Rental Streams– Affordable Housing/retained equity– ESCO’s/Infrastructure returns– Mortgages/Financial Services
• Asset Management: PLACE OFFER– Life Cycle Costings– Service delivery– Management & maintenance– Energy/utilities– Domiciliary care– Childcare/nursery services
Investment Model
DEVELOPMENT APPRAISAL: COSTS/INCOMES
IMPACT OF MULTIPLE/ FLEXIBLE
TENURES
SENSITIVITY ANALYSIS ON
COSTS/INCOMES
MULTI-PHASE/ IMPACT ON OVERALL
PROGRAMME
ECONOMIC SENSITIVITY:
HPI/BCIS
OPTMISATION OF MIX/TENURES
APPORTIONMENT OF INFRASTRUCTURE
IMPACT OF LAND SALES
SALE OR RENT?
CASHFLOWED: 25 YEAR+ IMPACT TO THE GROUP
NPV/IRR & ROCE
WHOLE LIFE BUSINESS PLAN
Balanced Portfolio: Strategic Projects Tenure Profile
2,721 50%
1,481 27%
424 8%
811 15%
Market Sale/Flexible Tenure
Market Rent
S106 Affordable Rent
S106 Low Cost Home Ownership(all models)
2,721 50%
1,481 27%
424 8%
811 15%
Market Sale/Flexible Tenure
Market Rent
S106 Affordable Rent
S106 Low Cost Home Ownership(all models)
Marketing Strategy
• Stimulate market demand• Improve Customer Access to
a new home• Simplify customer journey
Key issues/barriers for Customers
• Affordability is not now, in many cases, the major constraint– The majority of people continue to aspire to home
ownership– More affordable rent alone is not a long term sustainable
solution– Eligibility criteria for “affordable housing”– Need for intermediate tenures– Too many different products and options?= Flexible tenure approach
• Access to mortgages remain the primary issue– LTV’s continue to fall– FTB’s trying to save 25% deposits – Lack of mortgage provider confidence in shared ownership
(shared equity less of an issue)= PfP Mortgages & equity loans
So what does this look like…….
Brooklands• Phase 1 no of units196• Sales/Occupation rate 4.5 per month• Average Selling price £215,462 • Occupations on site 40
–Shared Ownership 37–Outright Sale 3
• Income per sq ft average PfP in Milton Keynes = £229• Income per sq ft average new build in Milton Keynes = £180
Brooklands
Marlborough Park• Phase 1 no of units 216• Sales/Occupation rate 3.9 per month• Average Selling price £150,673• Occupations on site 47
–12 Market Rent–Shared Ownership 29–Outright Sale 6
• Income per sq ft average PfP in Marlborough Park = £194• Income per sq ft average New build in Swindon = £188
Marlborough Park
Marlborough Park
Wolverton
• Strong demand for market rent• 110 Market Rent units
Scotland• Entered LLP with Edinburgh City Council to develop
188 mid market rent units under the National Housing Trust initiative
Homes & Communties Agency
• Bid for and allocated 249 units under the Affordable Homes programme
Business Development
Mary ParsonsGroup Director – Business Development
Strategic Business Development Goals
• Increase the amount of new services provided to existing and new customers
• Future investment in new assets and business development to focus on short and longer term profitable projects and business propositions
• Achieve growth and generate returns from revenue based activities
• Clear focus on marketing and driving commercial returns for our internal expertise
UNDERSTANDING THE EXTERNAL ENVIRONMENTCompetition Political
Legislation
Availability of Labour & Supply Chain
Env
ironm
ent
TECHNOLOGICALGlobal market placeOnline tracking of bidding opportunitiesCustomer relationship management systemsRemote working technologySocial mediaOnline spend transparencySystem compatibility (NHS / partners)Contact centreTelecare
SOCIALHigh unemployment / lack of vocational skillsLack of community engagementAging populationEquity sat with older generationsYoung unable to buyWealth gapEnvironmentally friendly consumersHouseholds set to growHouse building low, waiting lists high
ECONOMICSlashing the deficitPublic spending at all levels cutLocal Authority social spend “un ring fenced”Authorities combining for outsourcing units of scaleAffordable rentVAT increaseLow lending, high depositsInterest in UK property investment from overseasRaising energy costsHouse price inflation / future market shiftsWage growth / high inflation
POLITICALDevolution of power to Local Authorities and communitiesRight to build / neighbourhood planningGP led commissioningPublic spending cutsReduced regulationEnergy incentives – Green DealCode for Sustainable Homes commitmentVocational skills buildSecurity of coalitionLocal politics vs central (local mayors)Big Society – local charity
Business Development Strategy
Existing homes & services
Existing customer base
Existing customer base
@ home/Financial Services
@hand/ Dom Care
Assistive Technology
Leaseholders
Retirement proposition
Housing & Tenancy Management to Third Parties
Gas servicing & maintenance –B2B and B2C
Domicillary Care
Social Alarms
Public & Private sector
Energy Services?
Non-Residential FM?
Expanding our Core Business
Business to Business Opportunities
Homes & Neighbourhoods• Housing & Tenancy Management:
– 2*+ service with excellent prospects– Year on year performance
improvements– Market rent/investment portfolios
• Community Safety• Income Collection• Contact Centre/Social Alarms• Neighbourhood Planning
• Target Markets– Public Sector/ALMO Out-sourcing– Other Registered Providers– Private Sector Landlords– Investment Funds
• Live major opportunities include Cheshire West & MOD large scale out-sourcing
Property Maintenance
• Gas Servicing/CP12• Property Maintenance & repairs• Landscaping• Handyman• New installs
• Target Markets– Local Authorities – Residential contracts– Other Registered Providers– Private Sector Landlords
• Secured first gas servicing contract for Managing Agent for 2000+ units
Services / Activities / Products
Track Record
Housing Related Support and Floating Support
Verified as excellent
Domiciliary and Personal Care
CQC verified as excellent
Domestic Services Good
Assisted Technology Good
• Target Markets– Bidding for the retention of existing
services– Services being tendered to for
Business to Business – Growth of Personalisation business
to customers including self -directed services and private payers
Care & Support
New Routes to Market
Business Development priorities
Green Services
• Containerised Plant (Biomass & Gas) – “Biomass in a Box” – RHI
• Feed In Tariff – c. £250k revenue pa from rent a roof programme
• Green Deal?• Energy Performance Contracting• Environmental Consultancy
• Target Markets– Local Authorities – Other RSL’s– Private Sector Landlords– Housing Developers– Individual Customers
Business to Customer Model
Retirement market
Retirement Proposition
• In the next 15 years, the number of 50-69year olds in the UK will increase by 3million.
• 2/3 of people who have ever reached the age of 65 are alive today
• 10m people – 20% of the population – will be over 65 in 4 years’time
• 1.3m people over retirement age are still working – a 50% increase since 2000
• The first baby boomers retire in 2012
but ….• Over half will be living alone by the age of 75• But 2/3 will suffer a limiting illness in their later years• Demand for long term care will rise by 70% over next 2 decades
The Charmed Generation: What can we offer?
• Our Target customer has“A non-ageing mind, in an ageing body – with a maturing
wallet”
• Aspirational – not a distress choice• Financial & tenure models that work for our customers• Lifestyle premium – not just care but “hotel” services as
well?• All inclusive rent packages?; Lifestyle Bonds?• Flexibly designed homes that meet their needs at 55 and
can be readily adapted for assisted living from 70’s+ • Assistive technology & Telecare services
Conclusions: Developing our business
• Maximising new market opportunities to grow the business by creating profitable revenue streams
• Leverage existing products & services to enhance efficiency
• Structure ourselves to respond to B2B and B2C emerging markets
• Building on the Group’s current market strength and reputation to deliver to a wider customer base through new and innovative routes to market
• Generate sustainable enterprises within the Group and new investment opportunities
• Ensure a balanced portfolio in terms of market sectors, risk, returns and timescales to help underpin the Group’s future growth ambitions
• Bring together the Group’s strength in terms of financial innovation, quality of housing offer and service excellence
FUTURE CHALLENGES
David CowansGroup Chief Executive
The World is Changing• House building is at its lowest level since
1923 - in 2010, only 103,000 homes were built with 50% funded by the public sector
• Average age of first time buyers without assistance from parents is now 37
• 25% of 25 to 29 year old men and 13% of 25 to 29 year old women live with their parents
The UK Housing Challenge• Home ownership in England is predicted to
decline to 64% • Steep rises in private rentals are forecast as
mortgage lending is constrained and deposits remain high
• Social housing waiting lists are at a record high
The UK Housing Challenge• In Quarter 2 this year 25,000 residential
permissions were granted • This is the second lowest number of
permissions granted in a quarter in the last 5 years
• To meet projected household formations 60,000 permissions are required per quarter
National Planning Policy Framework• Simplifies the planning regime
• Promotes sustainable development
• Designed to promote economic growth
“The best way to predict the future is to invent it.”
Our Aim• Enable access to housing in places that meet
people’s aspirations, in a way that suits their circumstances:–New build housing–Flexible housing products–Decent Neighbourhoods–Place Management
A range of requirements
A range of solutions
Affordable Rent
Market Rent
“Try
before you buy”
Share
d ow
ners
hip
Sha
red
equi
tyStaircasing
Supported HousingEquity ReleaseBuy outright
• Decent Neighbourhoods Standard developed to help deliver on the Big Society agenda
• Working to a standard strips out waste and duplication, empowering local residents
• Starting to see the results in our neighbourhoods where we have adopted this approach
• New work streams in regeneration
Place Management
DevelopmentMasterplanningPartnerships & JVs
AccessAffordable rent
Rent conversionSave a deposit scheme
Try before you BuyMarket rent
ServicesPlace Management
Facilities ManagementAsset Management
Care and Support Ensuring
Successful Places
FacilitiesManagement
Sales Regeneration
Working to provide aspirational homes and inspirational places
Corporate Responsibility• Gold Award in the BiTC 2011 Corporate
Responsibility Index – the best performance of any organisation in our sector
• Neighbourhood plans are in place covering over 15,000 homes
• Energy saving measures installed in nearly 4000 homes
• Over 40% of people we employed through the Future Jobs Fund went on to secure employment
Getting maximum value from our current strengths•Development of Places
•Property Management
•Leveraging our products and services
•Selling our products and services into new markets
•New services
Getting maximum value from our current strengths•Long term investment in places
•Strong Management
•Diversity of business
•Creating value
•Our people
Delivering our Vision
• Deliver 2011/12 Business Plan and budgets
• Long-term strategy
• Opportunities arising from changes in the Housing Market and Government Policy
Q & A
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