Investors seminar 2011 final presentation

Chris Phillips Group Chairman

Financial Performance 2010/11 Steve Binks Group Director, Finance & IT

Headline Figures 2010/11 2009/10Turnover £340m £312mIncome from lettings £232m £228mOp Profit before interest £80.3m £83.5mProvision for impairmentof land values £0m £25.1mFair value adjustment onacquisition £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 62,500 61,500 60,500 Housing stock ownedUnits 59,500 or managed 58,500 57,500 56,500 05 06 07 08 09 10 11 20 20 20 20 20 20 Growth in housing stock owned or managed 20 supporting long-term rental income streams. At 1 April 2011, 62,034 homes owned or managed.

Results Analysis 2010/11Revenue Reserves excluding pension liability £’m 250 200 150 Revenue Reserves 100 (ex pension liability) 50 0 2005 2007 2009 2011

Key Achievements –Gross Fixed Asset Base £’bn 3.5 3.0 2.5 Gross Assets 2.0 (£bn) 1.5 1.0 0.5 0.0 2005 2007 2009 2011• 7 years of sustained growth• Fixed Asset base remains at £3.1bn• £3,075k in 2010 to £3,060k in 2011

Innovative Funding StrategyCore funding strategy to:• Diversify Investor Base• Rebalance Debt Portfolio to targeted 60% unsecuredSuccessfully 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 DeliveryPerformance for 2010/11The 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%.

Outstanding Rent Owed by Customers(Arrears as a % of total rent) 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

Time Taken to Relet an EmptyProperty (days) March March 2010 2011Group 44.4 28.7Homes 39.0 21.0Individual Support 33.0 37.0Cotman HA 24.0 25.0Castle Rock Edinvar 30.1 29.4

Total Void Loss (% of total rent) March March 2010 2011Group 2.13 1.36Homes 1.78 0.89Individual Support 4.32 3.82Castle Rock Edinvar 0.96 0.80Cotman HA 0.82 0.75

Property Maintenance - % ofRepairs Completed Within Target Mar ’10 Mar ‘11Emergency Repairs 96.13% 98.40%Urgent Repairs 94.31% 98.38%Routine Repairs 98.14% 98.97%Gas Servicing Compliance 99.60% 99.70%

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 customersYear Staff Customer Contractor RIDDORs RIDDORs RIDDORs2010/11 30 10 12009/10 21 4 1 * RIDDOR - Reporting of Injuries, Diseases and Dangerous Occurrences Regulations

Create Social Value for our Customers e.g. Employment Training Year People People into People into Business Business accessing learning and employment start up supported services training 2010/11 4527 1184 623 32 348 2009/10 3647 655 290 63 109Places for People secured funding of £2.25m from theFuture Jobs Fund to provide opportunities for 325 youngpeople aged 18-24 to gain valuable experience in theworkplace

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 IMPACT OF SENSITIVITY MULTI-PHASE/ ECONOMICMULTIPLE/ FLEXIBLE ANALYSIS ON IMPACT ON SENSITIVITY: TENURES COSTS/INCOMES OVERALL HPI/BCIS PROGRAMME DEVELOPMENT APPRAISAL: COSTS/INCOMES OPTMISATION OF APPORTIONMENT OF IMPACT OF LAND SALE OR RENT? MIX/TENURES INFRASTRUCTURE SALES CASHFLOWED: 25 YEAR+ IMPACT TO THE GROUP NPV/IRR & ROCE WHOLE LIFE BUSINESS PLAN

Balanced Portfolio:Strategic Projects Tenure Profile 811 15%4248% 2,721 50% Market Sale/Flexible Tenure Market Rent 1,481 S106 Affordable Rent 27% 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

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 DevelopmentGoals• 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 ENVIRONMENT Competition Political POLITICAL ECONOMIC Devolution of power to Local Authorities and communities Slashing the deficit Right to build / neighbourhood planning Public spending at all levels cut GP led commissioning Local Authority social spend “un ring fenced” Public spending cuts Authorities combining for outsourcing units of scale Reduced regulation Affordable rent Energy incentives – Green Deal VAT increase Code for Sustainable Homes commitment Low lending, high deposits Vocational skills build Interest in UK property investment from overseas Security of coalition Raising energy costs Local politics vs central (local mayors) House price inflation / future market shiftsEnvironment Legislation Big Society – local charity Wage growth / high inflation SOCIAL TECHNOLOGICAL High unemployment / lack of vocational skills Global market place Lack of community engagement Online tracking of bidding opportunities Aging population Customer relationship management systems Equity sat with older generations Remote working technology Young unable to buy Social media Wealth gap Online spend transparency Environmentally friendly consumers System compatibility (NHS / partners) Households set to grow Contact centre House building low, waiting lists high Telecare Availability of Labour & Supply Chain

Business Development Strategy Existing customer baseExisting homes & @ home/Financialservices ServicesExisting customer @hand/ Dom Carebase Assistive Technology Leaseholders Retirement propositionHousing &TenancyManagement toThird PartiesGas servicing & Energy Services?maintenance – Non-Residential FM?B2B and B2CDomicillary CareSocial AlarmsPublic & Privatesector

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 outsourcing

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

Care & Support Services / Activities / Track Record Products Housing Related Support Verified as excellent and Floating Support Domiciliary and Personal CQC verified as excellent Care 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

New Routes to MarketBusiness 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 Cowans Group 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 PolicyFramework• 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 Su ppo n t solutions r ted le Re Eq Ho us ab u ity ing ord St ReAff t ai rc lea en as se et R uy ” Bu in rk b y g ip Ma u ou ity yo sh trig r equ re ne fo ht ow be d ry d are “T e ar Sh Sh

Place Management• 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

Working to provide aspirationalhomes and inspirational places Development Services Masterplanning Place Management Partnerships & JVs Facilities Facilities Management Management Asset Management Care and Support Ensuring Successful Places Sales Regeneration Access Affordable rent Rent conversion Save a deposit scheme Try before you Buy Market rent

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 ourcurrent 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 ourcurrent 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

Investors seminar 2011 final presentation

by Places for People on Oct 10, 2011

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Investors seminar 2011 final presentation — Presentation Transcript