VALUE FOR MONEY SELF-ASSESSMENT STATEMENT FOR 2013/14

Transcription

1 VALUE FOR MONEY SELF-ASSESSMENT STATEMENT FOR 2013/14

2 2 VALUE FOR MONEY 1.0 Why Value for Money (VFM) is important to 1.1 The Board has given priority to delivering value for money within the Association. We believe that delivering VFM will drive the development of more homes and provide good quality services that matter most to our residents. We can only do this by linking VFM into our key corporate objectives and business planning framework. Looking back over our last plan, we have achieved a great deal and outcomes are described below. However, we believe we can and should do more. Our next corporate strategy will set clear forward targets and indicators which will be reported in future assessments. A Board working party has been specifically set up to work with the executive on producing this statement. 1.2 This VFM self-assessment is published on our website (at The 2013/14 annual accounts also include a VFM summary. 1.3 We recognise a range different stakeholders are interested in our VFM self-assessment: Customers, central government, the Homes & Communities Agency, Greater London Authority, Local Government, community & voluntary service organisations, lenders; and wider opinion formers. We also recognise that those different stakeholders will be interested in different aspects of VFM for example, customers are more focused on value and quality in service delivery, while government is interested in growth of new homes. This self-assessment addresses that range. 1.4 Our self-assessment indicates a strong organisation that delivers good VFM for the public purse through a business model of diversification and an active asset management strategy, as well as a solid focus on improving operational costs and maintaining service quality and outcomes for customers. 1.5 The following assessment is divided into three core areas: } Operational efficiency and good quality services. Our social rented housing performance has been good at median or upper quartile, but costs remain, as previously reported, lower quartile. Overheads as a percentage of turnover remain restrained and benchmark as top quartile. nvestment in employment & training has produced great results for our residents at low cost. The new repairs contract is now in place and has focussed performance on service areas of most importance to our residents. Our self-assessment identifies those relatively high cost/low performance areas that will be addressed in our future strategy. We believe our investment in online services will yield future improvements in reducing cost and improving service. Shared Ownership satisfaction has been identified as a key focus for the next corporate strategy cycle. } Asset management analysis and performance. Our asset management strategy has delivered efficiencies by either disposing of or re-configuring poor performing stock. Our cyclical and planned programmes will maintain retained stock at a high standard. We plan to review our model for the financial appraisal of our stock and focus plans on reviewing existing estates for development potential. } The diversification of our business model has enabled cross-subsidy to support the development of additional homes, including affordable rented homes, with less reliance on grant from the public purse. Our partnerships have been successful in significantly protecting the Group from potential risks.

3 SELF-ASSESSMENT STATEMENT FOR 2013/ Operational Efficiency and Quality Services 2.1 The Association aims to improve efficiency and provide good quality services by: } Reducing overheads; } Reducing costs and improving on services of most value to residents (repairs and estate services); } Focusing community investment on employment and training services and attracting funding to expand our work through partnership; } nvesting in online services. 2.2 Reducing overheads There has been an overall downward trend in overheads as a percentage of turnover over the last 5 years (chart 1). Chart 1 Overheads as % turnover 12.0% 10.0% 8.0% 6.0% Target 4.0% 2.0% 0.0% 2011/ / / / / /17 Our performance is benchmarked with the Housemark London and South East group of registered providers and in 2012/13 it was top quartile (second place) (chart 2): Chart 2 Overheads within the Housemark benchmarking group 30 Overheads % Dataset Adjusted turnover overheads costs %

4 4 VALUE FOR MONEY 2.2 Reducing overheads (cont d) An analysis of benchmarked overheads through Housemark is shown below. The analysis is for the last benchmarking period currently available (2012/13) but we believe results have improved since this data was published. Table 1 Overheads as % adjusted turnover and as % direct revenue costs Overhead costs as a % of adjusted turnover KP Sample Size Upper Median Lower Group (2012/2013) Group (2011/2012) Result Rank Quartile Result Rank Quartile T & communications Office premises Finance Central & other overheads Total overheads Overhead costs as a % of direct revenue costs KP Sample Size Upper Median Lower Group (2012/2013) Group (2011/2012) Result Rank Quartile Result Rank Quartile T & communications Office premises Finance Central & other overheads Total overheads Key: Upper Quartile Median Quartile Lower Quartile } All cost areas have reduced except for CT. Our CT costs benchmark as significantly higher than our peers as we have invested heavily in the Housing Management system (Universal Housing). This has been an investment for future capacity and growth as it can easily accommodate large increases in transaction volumes without significant increases in cost. At least 50% of our CT costs are fixed or stepped, rather than variable, hence an increase in unit volume served would be the only way to bring this individual cost category into a median or upper quartile benchmarking position Overheads are targeted to reduce from 7.8% in 2012/13 to 4.5% from 2015/16 onwards, due to the spreading of costs over a more diverse range of services including our Fizzy market rent management support services. As the Group grows, overhead costs as a proportion remain low.

5 SELF-ASSESSMENT STATEMENT FOR 2013/ mproving services to residents & reducing costs Social rented housing } Housing management costs per property benchmark high in the Housemark London and South East benchmarking group (table 2) but have reduced since 2010/11. High cost is largely because of the dispersed nature of our stock which is not typical of the benchmarking group. However, our costs are targeted to reduce in real terms (ie adjusting for RP) from 655 per property in 2012/13 to 591 per property in 2016/17 (chart 3). Reductions in costs have not been substantial as we have increased staffing to assist residents respond to welfare reform, and the growth in rented units has been small in recent years. Overheads are forecast to reduce from 286 per property in 2012/13 to 267 per property in 2016/17. Table 2 Housemark cost benchmarking data (not adjusted for RP) Housing Management - Cost Summary KP Total CPP of Housing Management Direct CPP of Housing Management Sample Size Upper Median Lower Group (2012/2013) Group (2011/2012) Result Rank Quartile Result Rank Quartile Key: Lower Quartile Chart 3 Housing management cost per property (adjusted for RP) Target / / / / / / /17 Overheads Direct management

6 6 VALUE FOR MONEY 2.3 mproving services to residents & reducing costs (cont d) } Efficiency savings have been made through: Outsourcing management of stock in boroughs furthest from the office, Taking on more units without a proportionate increase in resources, Disposal of inefficient stock, Disposal and re-configuration of 3 cluster schemes, reducing management costs. } Our shared ownership and rented stock is spread out across 40 boroughs and due to low densities, is expensive to service. We have made considerable improvements to efficiency by outsourcing the management stock in 4 boroughs which were outside our core areas of operation. This created an immediate efficiency worth 12,300 per annum in the cost of un-productive travel time (TVH staff) and was off-set by an increase of 400 units managed from the same resources. This and stock disposals have meant that development activity has subsequently been focused in core boroughs and has also been boosted with an additional 10m of funding raised through the disposal of inefficient to manage stock. We also undertook to re-configure 3 cluster schemes which were a drain on management resources and by taking these out of management we have raised revenue for new development, reduced costs by 65K on evictions and other casework and reduced void costs by circa 240K pa. A focus on reducing our overheads has allowed us to continue investment in front line services. } Service effectiveness (table 3) has either improved or been maintained. Performance is at median or upper quartile when benchmarked (table 4). Tenant satisfaction improved from 72% in 2010/11 to 79% (top quartile) in 2011/12 and 2012/13. t only dipped in the last quarter of 2013/14 due to repairs performance following the storms and floods, and the change over in contractor. We anticipate that satisfaction will be back at top quartile performance over the next year. Table 3 Service effectiveness (measured through following KPs) Social rented: housing management 2011/ / /14 Target 2014/15 Current tenant arrears 4.7% 4.8% 4.6% 5.0% Average re-let time (days) Tenant General Satisfaction Rate 79% 79% 74% 80%

7 SELF-ASSESSMENT STATEMENT FOR 2013/14 7 Table 4 Housemark performance benchmarking data KP Current tenant rent arrears net of unpaid HB as % of rent due (GN & HfOP) Sample Size Housing Management Performance Summary Upper Median Lower Group (2012/2013) Group (2011/2012) Result Rank Quartile Result Rank Quartile % of anti-social behaviour cases successfully resolved Average re-let time in days (standard re-lets) Tenancy Turnover (GN & HfOP) Key: Upper Quartile Median Quartile Lower Quartile } Our service model is based on direct contact with patch officers plus a smaller back up team for simple enquiries and office cover. This avoids the need for an extra layer of call centre staff to pass on messages. Officers are all equipped with mobile technology and are able to log work on site. We also have an active team of resident estate inspectors (covering over 120 sites) to be our eyes and ears and help manage contractors on site. ncreasingly our residents demand better online services, particularly those younger and busy shared owners and tenants. } With the introduction of the spare room subsidy (bedroom tax) and the benefit cap, we invested in staff to reduce the impact on residents and our income. Three extra staff were employed at a cost of 54,888 (over 15 months) and we achieved the following outcomes as a result of our pro-active approach: Arrears reduced by 0.2% (2012/13 to 2013/14) which equates to 72,117; The number of evictions reduced to 25 in 2013/14, compared to 33 the previous year and 37 in 2011/12; ncome from transitional housing benefit and other discretionary payments was 250,000 for 2013/14; We moved 52 households caught by the bedroom tax to smaller properties, avoiding 47,000 worth of benefit shortfall; We helped residents secure exemptions from the bedroom tax avoiding a further 11,000 worth of benefit shortfall. } This equates to a cash injection of 322,117 in a time of very challenging pressures on resident s incomes. Since April 2014 we have now reduced staffing costs in this area by 23,154 as the changes have now largely bedded in, although we will continue to support people with a benefit shortfall.

8 8 VALUE FOR MONEY 2.3 mproving services to residents & reducing costs (cont d) Repairs } We have targeted to achieve a median cost with good quality performance and satisfaction. The outsourced contract arrangements enable this to be achieved through a low overhead cost base. Chart 4 shows repair costs decreasing in 2014/15, which when compared with the benchmark in table 5 will show an improving position. Table 6 sets out service effectiveness KPs. Chart 4 Responsive repairs cost per property (adjusted for RP) Target / / / / / / /17 Overheads Direct management Table 5 Housemark cost benchmarking data (not adjusted for RP) Total Cost per Property Responsive Repairs & Void Works - Cost Summary KP Sample Size Upper Median Lower Group (2012/2013) Group (2011/2012) Result Rank Quartile Result Rank Quartile Responsive Repairs & Void Works Responsive Repairs (Service Provision) Responsive Repairs (Management) , Void Works (Service Provision) Void Works (Management) Key: Upper Quartile Median Quartile Lower Quartile

9 SELF-ASSESSMENT STATEMENT FOR 2013/14 9 Table 6 Service effectiveness (measured through following KPs) Social rented: responsive repairs 2011/ / /14 Target 2014/15 Emergency repairs response times 99% 97% 97% 99% % Gas safety checks completed 100.0% 100.0% 100.0% 100% Tenant overall satisfaction with repairs 93% 96% 96% 95% } A significant repairs service re-procurement took place in 2013/14 with the aim of testing the market, tightening the contract and putting resident priorities as key measurements in place. The Housemark data had previously put us in the high cost per property (lowest quartile) bracket. The contract has now commenced with the successful bidder winning on cost and quality. When benchmarked, the price per property for rented stock (the bulk of the contract) at 324 was slightly higher than the average for the sample of social landlords ( 312) but lower than the private rented sector ( 481). Overall, we believe this represents good value in the current market and we look forward to the service enhancements contained in the new contract coming through towards the end of 2014 and for some years to come. } Our targets are to continue to drive down costs through shared cost savings and to drive up performance through a broader range of KPs e.g. moving towards 5 day responses on communal repairs, reduced complaints (fewer sub-contractors) and a review of void costs at the end of year one. Our costs are targeted to reduce in real terms (i.e. adjusting for RP) from 918 per property in 2012/13 to 854 per property in 2016/17. } Residents identified the following areas as being the most important measures of success for them and the following targets are included in the contract: Repairs completed right first time: P of 95% (previous contractor performance was 96.6%); Completion of emergency jobs on time: P of 99% previous contractor performance was 96.7%); Completion of communal repairs on time: P of 95% (previous contractor performance was 80.6%); Overall satisfaction with the service: P of 95% (previous contractor performance was 96.1%) Planned repairs } Our planned repair costs per property are set out in chart 5 overleaf. Costs are currently low (upper quartile) when benchmarked in Housemark (table 7 overleaf), but are set to increase over the next two years. This is due to the planned cyclical renewals of bathrooms, kitchens, etc.

10 10 VALUE FOR MONEY 2.3 mproving services to residents & reducing costs (cont d) Chart 5 Planned repairs cost per property (adjusted for RP) 1200 Target / / / / / / /17 Overheads Direct management Table 7 Housemark cost benchmarking data (not adjusted for RP) Total Cost per Property KP Major Works & Cyclical Maintenance Major Works (Service Provision) Major Works & Cyclical Maintenance Cost Summary Sample Size Upper Median Lower Group (2012/2013) Group (2011/2012) Result Rank Quartile Result Rank Quartile ,231 1, , Major Works (Management) Cyclical Maintenance (Service Provision) Cyclical Maintenance (Management) Key: Upper Quartile Median Quartile Lower Quartile Table 8 Housemark performance benchmarking data Major Works & Cyclical Maintenance Performance Summary KP Average SAP rating of self-contained dwellings Percentage of dwellings with a valid gas safety certificate Sample Size Upper Median Lower Group (2012/2013) Group (2011/2012) Result Rank Quartile Result Rank Quartile Key: Upper Quartile Median Quartile

11 SELF-ASSESSMENT STATEMENT FOR 2013/14 11 } We have recently re-procured a range of professional services to improve quality and reduce cost. This has included fire safety risk assessments, building surveying, stock condition surveys and mechanical and electrical consultancy advice. As with responsive repairs, the outsourced contract arrangements have kept the overheads base low. } Key savings: Stock condition surveys reduced from 98 per survey in 2013/14 to 55 in 2014/15 an annual saving of 137,000. Contract administration 5,000 per annum saving Estate services } Estate contracts for cleaning and gardening were procured in 2012 leading to 17% savings in 2013/14 and increases in satisfaction of 8% with grounds and 18% cleaning. There has also been a significant drop in complaints relating to cleaning and gardening which has improved our efficiency and reduced compensation payments. The new contracts have also delivered a lot of added value with a free landscape design service, free labour and materials for make-over projects and taking on our residents as apprentices Shared ownership housing } The cost per property reduced in 2012/13 (chart 6) but is forecast to remain constant at current service delivery arrangements. There has been improved performance in key performance indicators but no improvement in satisfaction. There is very limited benchmarking data and so this has not been possible to compare meaningfully. Service effectiveness KPs are set out in table 9 overleaf. Chart 6 Shared ownership cost per property (adjusted for RP) Target / / / / / / /17 Overheads Direct management

12 12 VALUE FOR MONEY 2.3 mproving services to residents & reducing costs (cont d) Table 9 Service effectiveness (measured through following KPs) Shared Ownership & leasehold 2011/ / /14 Target 2014/15 % current rent arrears 2.5% 2.6% 1.7% 3.0% Leaseholder general satisfaction 43.6% 43.0% 43.0% 50% } We are carrying out a comprehensive review of the product and service delivery options during 2014/15. The overall business model is financially efficient for TVHA, with the receipts from sales and subsequent staircasing providing internal subsidy for the development of new homes. This far outweighs the subsidy required for the service, which is necessary to keep already high service charges paid by the residents from being even higher. However, our review will examine the way in which the product is marketed, the expectations raised and how this impacts on subsequent service satisfaction. Options for different models of service delivery will also be explored. } Our aim is to improve the quality of the service through improving self service through online services and a review of the product, costs and service offer Key worker housing } The costs of managing key worker housing reduced slightly since 2009/10 and maintained at the levels shown since then (chart 7). Service effectiveness KPs are set out in table 10 opposite. The number of units managed and staffing levels are forecast to remain at current levels and so there is no room currently for cost savings. The schemes achieve value for money by maintaining performance at a very high level, with corporate targets and contract obligations being comfortably exceeded. This has led to the overall operating surplus exceeding that in the original financial model for the schemes by 1.18m or 22.3% in 2012/13. } n summary, value for money is achieved through providing an efficient service and exceeding our forecast internal rate of return. Chart 7 NHS & student cost per property (adjusted for RP) 500 Target / / / / / / /17 Repairs Management

13 SELF-ASSESSMENT STATEMENT FOR 2013/14 13 Table 10 Service effectiveness (measured through following KPs) NHS & student 2011/ / /14 Target 2014/15 Current Tenant Arrears 0.6% 1.0% 0.9% 3.0% Repairs right first time 92% 93% 98% 90% Tenant Satisfaction 86% 86% 85% 82% 2.4 Community investment and resident training and employment } Through our community investment strategy we have sought to improve the life chances of residents and the quality of life across the wider community, to empower communities to make improvements and to increase our residents access to local community organisations. n 2013/14 we achieved 300% match funding for community investment projects and 400% for training and employment costs. We calculate match funding from the financial contribution made by partners to the projects we deliver. We will be expanding on this work through successful external fundraising (Big Lottery) and have recently completed research which shows that the long term impact of getting residents into work is significant in terms of health benefits and reduced arrears. } Table 11 /chart 8 sets out the inputs and outputs over the last four years. The increase in numbers of residents helped and number of projects and the leveraging of match funding provided significant value for money when compared to the TVH investment. Table 11/Chart 8 Return on investment in resident training & community projects nputs: TVH Funding Match Funding , , , , , , , ,440 Outputs: / / / /14 Numbers employed Numbers work experience Numbers trained Number of community projects

14 14 VALUE FOR MONEY 2.4 Community investment and resident training and employment (cont d) } 81.3% of residents in the Fifty Families project (a research project to assess the long term impact of TVH getting residents into employment) said that their financial position had improved since we helped them into employment. This is also shown in the arrears position for these families which dropped by 43% - a saving to TVH of 17,754. f this were extrapolated to all 97 families we got into employment in 2013/14 it would equate to 34,442. This and the wider community investment work will be expanded in the future with the following targets set for 2014/15: 150 people into employment (increased from 75 last year), external funding 100 people into employability training (new target), external funding 150 residents into training (the same as last year) 20 residents into full time employment (same as last year) external fundraising for various community projects 150% match funding for Community Chest projects (up from 100%) 750 young people engaged in community activities (up from 247 last year) 2.5 Online services } The CT strategy includes the provision of the digital platform to deliver good online customer services. n the medium term, this will enable channel shift for routine transactions away from higher cost face-to-face or telephone services, to much lower marginal cost online services. The approach is to build good quality services with responsive design, such that they work well on smartphones the internet channel with the highest growth amongst our customer base. The service launched in March 2014, and there is a programme of promotion throughout the coming year as new functionality is added. } Take up of the service will be measured (and published) in real-time from September 2014, using the gov.uk performance reporting framework for digital public services. t is too early in the innovation cycle to make bold claims for the savings from this approach it has not been done at scale in the social housing sector to date. However, the October 2009 Price Waterhouse Coopers report The Economic Case for digital inclusion cited average transaction costs based on 19 local authorities in London & South East. These were: Post Face to Face Phone 3.39 Online 0.08.

15 SELF-ASSESSMENT STATEMENT FOR 2013/ Asset Performance 3.1 Our Asset Management strategy has looked at an analysis of the performance of our stock. TVHA works in an area of high demand. Our strategy has thus looked at the performance of our stock and making best use of resources. Key aims have been to: } Appraise options for our poorest stock taking analysis of data; } Understand the condition of stock; } Review financial performance of the stock. 3.2 Option appraisals: Schemes with the highest expenditure, volume of repairs, planned repairs and void rates were analysed to highlight schemes which were problematic. An option appraisal was then carried out on each. This has led to: } A strategy for disposal and remodelling of cluster accommodation. Key outputs achieved: Reduction in void cost and saving a rent loss of 240k per annum mproved organisation void turn around times from 23.8 days (2009/10) to 18.7 days in 2013/14. Reduction in maintenance costs. Sales profits of 2.5m. Reduction in evictions from 50 to 24 per annum. } Sale of high cost (future repairs) portfolio of stock in non-core areas in two local authorities with proceeds of 14.6m. } Sale of remaining supported housing stock with proceeds of 3.2m. } Redevelopment of a site in Broadmoor to bring in sales profits of 630,000, a 17.5% margin. } Energy measures and grant for homes, including cavity wall insulation, renewal of boilers and heating installations. } Review of commercial units and garages let to increase revenue by 14,400 pa. 3.3 Future plans: Our next phase of appraisals will be completed once we have done the following in 2014/15: } A review of the criteria we use to assess the performance of our stock with additional financial information. Analysis of financial performance of stock on an NPV basis and a model for asset appraisal. } Reviewing sites for development potential. An initial analysis on site density, land holdings for development potential has identified 5 key sites for appraisal. 3.4 Stock Condition and location } The quality of the accommodation is good and we have very little stock which is un-economic to maintain. t is therefore unlikely that we will have a significant programme of disposals within our core areas. We also aim to increase stock in both locations with low density and core areas through either development or acquisition in order to increase our management efficiency.

16 16 VALUE FOR MONEY 3.5 Stock profile } Our rented, shared ownership and key worker stock is spread across 35 different local authorities in London and the South East. The majority of the stock is in good condition and is mainly estate based, with the rented (5591 homes) split between houses and flats, whilst the shared ownership (4651 homes) are mainly flats. The NHS and student properties (2019 homes) are managed on site and are purpose built, mostly with shared facilities. } A stock condition survey is completed on 20% of our stock annually and this information is used with component life cycles to produce a programme of planned works. Our planned repairs liability for general needs, homeowner and key worker stock has been analysed over a 30 year period in chart 9. Chart 9 Planned maintenance forecast 14,000,000 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000, GR Houses & Flats SO Blocks TOTAL GR Blocks Key Worker } The peaks occurring on general rented houses are driven by heating & hot water renewals in 2023 & 2038 in line with 15 year boiler lifecycle and kitchens in The peak in 2038 is also underpinned by the highest peak in bathroom renewals over the period. } The peaks occurring on shared ownership blocks in 2022, 2031 and 2037 are driven by communal lighting renewal and lift replacements. The stock condition data on shared ownership block data does not include agency managed blocks. } We currently have no non-decent stock (the Government s standard for social housing) and our planned programme ensures that this will remain the case. We have an average SAP rating of 71% against a national average of 50.6%. We have increased our void specification to introduce some energy efficiency works, including low energy lamps, thermostats and hot water cylinder jacked upgrades. } n preparation of increasing expenditure levels in the coming years we are currently procuring new long term arrangements for the four highest expenditure streams; kitchens, bathrooms, domestic boilers and electrical upgrade for general needs. On key worker we are preparing to procure floor coverings and white goods.

17 SELF-ASSESSMENT STATEMENT FOR 2013/ Delivering more affordable homes 4.1 The Group has over the past two years completed putting in place a strategy that provides for a significant uplift in the provision of new affordable homes from 2014/15 onwards, with a very modest contribution from government grant to fund this expansion. 4.2 This Strategy has three key aspects: } Restructuring of the debt and asset ownership in the Group to allow balance sheet capacity to take on more debt. This restructuring was completed two years ago. } Provision of new debt facilities to provide finance for the expansion. Facilities are now in place for the next three years development cost. } A carefully managed investment in a small number of diversified housing related activities. The purpose of this diversification is to generate profits to feed back into the housing charity to finance new affordable housing. These diversified activities are now successfully operating through one joint venture with the Galliford Try Group and through another joint venture with Silver Arrow, the Abu Dhabi nvestment Authority sovereign wealth fund. 4.3 With the financial resources now in place to fund expansion, the Board has targeted development of new affordable homes, set out in table 12: Table 12 - Development of new affordable homes Year 2014/ / / / /19 Total Completed Affordable Homes Cost ( m) Finance required for the provision of new affordable homes Over the five years through 2018/19 we expect to spend some 489 million in the provision of these new affordable homes. We believe we can produce this significant number of new homes with very little grant subsidy. n fact, we plan to do this with a grant approaching only 5%. We can do this because: } Our balance sheet strength now allows us to borrow more. } The surpluses and cash generated by our core social housing activities, especially shared ownership are strong. } Significant profits and positive cash flow are expected from our diversified activities.

18 18 VALUE FOR MONEY 4.5 The finance required over the next five years for the acquisition and development of these 2,585 new homes will be generated as set out in table 13: Table 13 Financing new homes M % of finance New debt Diversification Profits Shared Ownership Sales Operating Cash Flow Grant 23 4 Total The contribution to financing these new affordable homes from profits generated by our diversification into the Private Rental Sector and Build for Sale is expected to be 99 million, providing for 20% of the funding required by our expansion. Without these profits, our capacity for expansion would drop over the next five years reducing the potential new homes from 2,585 to about 2,000, a loss of 585 homes. 4.7 Financial efficiency The Association has, through leveraging its balance sheet and effective use of a strong operating surplus, produced a significant development programme of affordable homes. The strength of the balance sheet has also been used to invest in new Joint Ventures with carefully selected development partners to produce social homes through a PF in Woking, and Build for Sale homes. A 30m investment in Private Rented Homes through the Fizzy Living group has been leveraged through 200 million equity investment from a new investor. This leveraged investment will produce a planned portfolio of 1,500 homes within four years. Benchmarking against other associations through the Housemark London & South East group is set out in table 14. t shows: } An improving operating margin which is top quartile (3rd out of 40 associations) in the benchmark group. } High leverage of debt per unit (7th highest). This benchmarks as red (poor performance) but is in reality a good performance as we work within safe parameters to meet our development ambitions. } Low overheads costs as a % of turnover top quartile (3rd).

19 SELF-ASSESSMENT STATEMENT FOR 2013/14 19 Table 14 - Financial KPs and benchmarking Financial Ps KP Sample Size Upper Median Lower Group (2012/2013) Group (2011/2012) Result Rank Quartile Result Rank Quartile Operating margin Debt per unit owned 49 27,718 27,865 36,385 38, , Overheads as % adjusted turnover Key: Upper Quartile Median Quartile Lower Quartile } The strong operating margin and surplus achieved from 2011/12 to 2014/15 (chart 10) is improved further in subsequent years as larger numbers of Low Cost Home Ownership units are developed for sale. } TVHA has made use of its balance sheet to expand housing delivery significantly by raising 40m debt against keyworker accommodation. The 25 year facility from Legal and General involved TVCHA selling hospital schemes to TVHA and boosting TVCHA reserves and driving its gearing down to below 50%. Chart 10 Operating surplus and operating margin Operating surplus ( m) % 50.0% 40.0% 30.0% 20.0% 10.0% Operating margin % / / / / / /17 0.0% Operating surplus ( m) Operating margin

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