Strategic report. Value for Money. 17 Peabody Annual Report and Financial Statements Financial review

Transcription

1 Strategic report Value for Money 17 Peabody Annual Report and Financial Statements 2017

2 Our Group Value for Money (VfM) self-assessment This self-assessment covers the performance of the Peabody Group as a whole, and Peabody as a landlord. Value for Money strategy Our Group-wide Value for Money Strategy is reviewed annually and sets out our approach to delivering excellent value for money in all our activities and services. We report against progress for the Group and for each housing subsidiary in our value for money self-assessments. Copies of the strategy and subsidiary reports are available on the Peabody website at On 30 June 2017, Peabody and Family Mosaic merged to form a new, larger Group. From onwards, the new Peabody will put in place a revised programme of efficiencies to deliver additional benefits from the merger which will reduce unit costs, improve services and reduce the relative size of the corporate centre. A new Peabody Group strategy will be published during the financial year. What we have achieved in This report focuses on the achievements of the Peabody Group to 31 March The existing Group Strategy set out stretching efficiency targets enabling delivery of our business priorities whilst mitigating the impact of new policies such as the 1% annual reduction in social and affordable rents. These targets focused on reducing costs, increasing revenue and maximising value from our existing asset base. We have met our budget targets for , realising around 6m of efficiencies through a combination of more effective delivery, robust scrutiny of spending to avoid unnecessary cost, and re-phasing some projects according to business need. We also wanted to ensure that our managers were equipped to not only identify opportunities for better ways of working, but also learned the right skills to deliver the change within their teams. Goals Achieve around 4m efficiency savings in housing services, from a combination of cost savings and increased revenues Achieve around 1m cost reduction in the corporate centre, with better business processes and reduced use of consultants Complete a programme of operating model reviews to support our plans to deliver efficiency targets from 2017 onwards Ensure that employees have the capability and tools to deliver the change required. Outcomes Housing met its budget reduction targets in through increased income (including Right to Light settlements), reductions in expenditure through improved contract negotiation (particularly on scaffolding), service restructures and a variety of smaller operational measures. The savings target was achieved. Main areas of efficiency were through the reduced use of consultants in IT and through the introduction of more efficient digital ways of working, for example in HR with more use of online learning and in Communications, moving to digital platforms for our main resident communications. Preliminary operating reviews were undertaken for Finance, Housing Services and Corporate Services. This process validated our efficiency plans by benchmarking with external organisations and the findings have contributed to our savings plans for 2017 onwards. From autumn 2016, this work was integrated into the work to prepare for the merger of Peabody and Family Mosaic. The new operating model for the merged Peabody will ensure that existing and additional efficiency savings are built in and monitored as part of the merger implementation. During , we introduced a Benefits Realisation approach for senior leaders and project managers, to improve the focus on measurable outcomes. Managers in Housing Services participated in the Fit for the Future programme, a tailored programme of coaching and personal project delivery to enable managers to develop skills through working on a personal business improvement project. Projects were selected both for business improvement and for efficiency savings potential, and have contributed to ongoing efficiencies. The Project Managers Network continued to support individual managers to share best practice and develop skills. Peabody Annual Report and Financial Statements

3 Where we saved 6m The table below provides the broad themes of how efficiencies were generated, with case studies provided to give additional depth to some of the specific efficiency projects implemented during the year: Saving Themes million Contract efficiencies 1.5 Demand reduction 2.0 Increased income 1.4 Restructures 1.0 Service reductions 0.2 Total recurring savings identified 6.1 Case study - digital communications Through our enhanced digital offer, we are encouraging more residents to go online, visit our website, and increasingly access information and services there. The number of visits to our website has increased by 32% over the year to 792,281, of which 463,859 were new visitors. We have made a number of improvements to the site, including making sure it s more accessible to those using tablet computers and mobile devices, which make up almost 50% of visitors. Our social media communications around the event generated over 10,000 impressions and 200+ engagements on Twitter. We reached 461 people on Facebook, and received 80 click-throughs. Our event on 17 February was the biggest ever, attracting over 1,000 Londoners and media interest, with London Live broadcasting from the event during their lunchtime bulletin. Case study - rents and service charges Over the past months, there has been a continuous transformation of Peabody s Rent and Service Charge Team. This has primarily been underpinned by a focus on process improvement, multi-skilling staff and outsourcing non-core activities. In addition, a rent and service system has been procured which will enable further efficiency opportunities as many existing processes that are currently undertaken by members of the service charge team will be automated. In addition to achieving cost savings of around 350,000 as a result of these efficiencies, performance has remained high. Key output targets have been met, collection rates are high and our last customer survey in December 2016 stated that 76% of our customers would buy our service, a significantly improved position compared with a year ago. In 2016, we developed our e-newsletter, supported by a printed copy on request for our residents who need a choice of formats. The number of subscribers to the e-newsletter has increased from 8,619 in March 2016, to almost 12,000 in March We sent out six issues of the newsletter in , with 7,500 readers choosing to click on an article to find out more. We are now starting to target content geographically to help us to better meet the diverse needs and preferences of our residents. The top story in our January newsletter aimed to encourage residents to attend our rehousing options event, which offers advice on the options available for people looking to move or buy a home. This resulted in an open rate of over 50% and almost 2,000 unique click-throughs, which is strong compared to an average open rate of 25% (cited by Smartsights) for marketing by non-profit organisations. 19 Peabody Annual Report and Financial Statements 2017

4 Sector benchmarking standards In order to improve comparability, the sector in general and the G15 in particular, have agreed to trial a standard set of measures and statistics known as the Sector Scorecard. These are set out below with peer comparatives where available. Business health G average Peabody rank 2016 (out of 15) 1 Operating margin excluding sale of fixed assets 31% 34% 32% =4 2 Operating margin - social housing lettings 32% 35% 36% =5 3 EDITDA MRI % interest cover 229% 207% 192% 6 Development 4 Units developed 426 1, Units developed % units owned 2% 4% 2% =2 6 Gearing (debt: fixed assets only) 41% 42% 45% 6 Outcomes delivered 7 Satisfaction with service provided by landlord 76% 74% 76% 9 8 s invested for every generated in new supply s invested for every generated in communities Effective asset management 10 Return on capital employed 3.3% 3.9% 4.5% Occupancy 99.76% 99.61% Ratio of responsive repairs to planned maintenance spend Operating efficiencies 13 Headline social housing cost per unit 5,207 5,388 4, Rent collected 99.44% 99.65% 98% =6 Peabody Annual Report and Financial Statements

5 What do these indicators tell us? Peabody is reasonably placed compared with peers. Where this is not the case, explanations are provided below. On satisfaction, we are in the lower part of the data set in 2016 but have improved by 2 percentage points in The improvement in our overall customer satisfaction score is testament to the sustained efforts that employees have made over the past year to ensure that our services are responsive to the needs of customers and delivered to the highest standards. This has been matched by improvements in satisfaction with repairs and maintenance. These improvements have been delivered against a background of change and uncertainty for both employees and customers. Achieving lasting improvements will take time and we are confident that the recent merger will provide fresh impetus to continue the improvements we have seen this year. Although not in the Sector Scorecard, residents continue to report that our rents and service charges provide good value for money and satisfaction has increased during the year to 81% (2016: 76%), as set out in the table below. Keeping rents affordable is at the heart of our social purpose, and this principle will be fundamental to our new organisation in future. Compared with peers, social housing cost per unit is high, owing to our central London location and ongoing investment in the housing portfolio. As expected, benchmarks for Peabody as a landlord are in line with Group performance. We have maintained our excellent performance in letting vacant properties as quickly as possible; although rent arrears have increased slightly, the increase has been contained by our focus on efficient rent collection and the wide range of support we provide to help residents who are in financial difficulty. Looking ahead Value for Money in the new Peabody Both Peabody and Family Mosaic already had efficiency gains targeted in existing business plans, focused on tackling the minus 1% rent cuts and other efforts to improve value for money. The merger is an opportunity to create benefits from consolidation and scale, in addition to pre-existing planned savings. Business areas, supported by colleagues in the Finance directorate, will deliver value for money in the new organisation through procurement, budget management and sound financial planning. The Peabody Group continues with an ambitious programme of growth through development. It is expected that the number of homes built will vary from year to year we remain on track to meet our goal of delivering an average of 1,000 new homes a year. The Sector Scorecard shows a low position in 2016 for investment compared with cash generated ( 0.48) and this is because of the timing of new build sales and the high levels of sales made in the year. In 2017 the metric returns to 1.48 in line with peer averages. In future, the new organisation will have even greater capacity to develop new homes and we are excited by the opportunities that major infrastructure projects will bring to Thamesmead. Peabody and Group All % Social % All % Social % Satisfaction that rent provides Value for Money 81% 85% 76% 81% Satisfaction that service charges provide Value for Money 70% 78% 67% 74% 21 Peabody Annual Report and Financial Statements 2017