investors seminar 2011 final presentation

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Slides from our investors' seminar held on 6th Oct

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Page 1: Investors seminar 2011 final presentation
Page 2: Investors seminar 2011 final presentation

Chris PhillipsGroup Chairman

Page 3: Investors seminar 2011 final presentation

Financial Performance 2010/11

Steve BinksGroup Director, Finance & IT

Page 4: Investors seminar 2011 final presentation

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

Page 5: Investors seminar 2011 final presentation

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

Page 6: Investors seminar 2011 final presentation

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

Page 7: Investors seminar 2011 final presentation

Results Analysis 2010/11Revenue Reserves excluding pension liability

0

50

100

150

200

250

2005 2007 2009 2011

Revenue Reserves(ex pension liability)

£’m

Page 8: Investors seminar 2011 final presentation

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

Page 9: Investors seminar 2011 final presentation

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

Page 10: Investors seminar 2011 final presentation

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.

Page 11: Investors seminar 2011 final presentation

2011/12

• Another Challenging Year• Robust Liquidity• Cashflow, Investment & Cost Control• Short Term Refinancing Secured

Page 12: Investors seminar 2011 final presentation

Operations and Service Delivery

2010/11

Kieran KeaneGroup Director, Operations

Page 13: Investors seminar 2011 final presentation

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

Page 14: Investors seminar 2011 final presentation

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

Page 15: Investors seminar 2011 final presentation

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

Page 16: Investors seminar 2011 final presentation

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

Page 17: Investors seminar 2011 final presentation

• 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.

Page 18: Investors seminar 2011 final presentation

Key Highlights for the Year

Page 19: Investors seminar 2011 final presentation

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%.

Page 20: Investors seminar 2011 final presentation

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)

Page 21: Investors seminar 2011 final presentation

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

Page 22: Investors seminar 2011 final presentation

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

Page 23: Investors seminar 2011 final presentation

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

Page 24: Investors seminar 2011 final presentation

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%)

Page 25: Investors seminar 2011 final presentation

“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

Page 26: Investors seminar 2011 final presentation

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

Page 27: Investors seminar 2011 final presentation

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

Page 28: Investors seminar 2011 final presentation

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.

Page 29: Investors seminar 2011 final presentation

Development Review

David ShawGroup Director of Development

Page 30: Investors seminar 2011 final presentation

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

Page 31: Investors seminar 2011 final presentation

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

Page 32: Investors seminar 2011 final presentation

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

Page 33: Investors seminar 2011 final presentation

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

Page 34: Investors seminar 2011 final presentation

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)

Page 35: Investors seminar 2011 final presentation

Marketing Strategy

• Stimulate market demand• Improve Customer Access to

a new home• Simplify customer journey

Page 36: Investors seminar 2011 final presentation

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

Page 37: Investors seminar 2011 final presentation

So what does this look like…….

Page 38: Investors seminar 2011 final presentation

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

Page 39: Investors seminar 2011 final presentation

Brooklands

Page 40: Investors seminar 2011 final presentation

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

Page 41: Investors seminar 2011 final presentation

Marlborough Park

Page 42: Investors seminar 2011 final presentation

Marlborough Park

Page 43: Investors seminar 2011 final presentation

Wolverton

• Strong demand for market rent• 110 Market Rent units

Page 44: Investors seminar 2011 final presentation

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

Page 45: Investors seminar 2011 final presentation

Business Development

Mary ParsonsGroup Director – Business Development

Page 46: Investors seminar 2011 final presentation

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

Page 47: Investors seminar 2011 final presentation

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

Page 48: Investors seminar 2011 final presentation

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?

Page 49: Investors seminar 2011 final presentation

Expanding our Core Business

Business to Business Opportunities

Page 50: Investors seminar 2011 final presentation

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

Page 51: Investors seminar 2011 final presentation

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

Page 52: Investors seminar 2011 final presentation

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

Page 53: Investors seminar 2011 final presentation

New Routes to Market

Business Development priorities

Page 54: Investors seminar 2011 final presentation

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

Page 55: Investors seminar 2011 final presentation

Business to Customer Model

Page 56: Investors seminar 2011 final presentation

Retirement market

Page 57: Investors seminar 2011 final presentation

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

Page 58: Investors seminar 2011 final presentation

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

Page 59: Investors seminar 2011 final presentation

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

Page 60: Investors seminar 2011 final presentation

FUTURE CHALLENGES

David CowansGroup Chief Executive

Page 61: Investors seminar 2011 final presentation

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

Page 62: Investors seminar 2011 final presentation

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

Page 63: Investors seminar 2011 final presentation

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

Page 64: Investors seminar 2011 final presentation

National Planning Policy Framework• Simplifies the planning regime

• Promotes sustainable development

• Designed to promote economic growth

Page 65: Investors seminar 2011 final presentation

“The best way to predict the future is to invent it.”

Page 66: Investors seminar 2011 final presentation

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

Page 67: Investors seminar 2011 final presentation

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

Page 68: Investors seminar 2011 final presentation

• 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

Page 69: Investors seminar 2011 final presentation

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

Page 70: Investors seminar 2011 final presentation

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

Page 71: Investors seminar 2011 final presentation

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

Page 72: Investors seminar 2011 final presentation

Getting maximum value from our current strengths•Long term investment in places

•Strong Management

•Diversity of business

•Creating value

•Our people

Page 73: Investors seminar 2011 final presentation

Delivering our Vision

• Deliver 2011/12 Business Plan and budgets

• Long-term strategy

• Opportunities arising from changes in the Housing Market and Government Policy

Page 74: Investors seminar 2011 final presentation

Q & A