Investor Presentation
September 2014
Stephen Howlett – Chief Executive Officer
Susan Hickey – Executive Director Finance
Jeremy Stibbe-Executive Director Development & Sales
Rob Elliott – Director Corporate Finance and Treasury
www.peabody.org.uk
Disclaimer
The information contained in this investor presentation (the “Presentation”) has been prepared to assist interested parties in making their own
evaluation of Peabody Group (“Peabody”) and is believed to be in all material respects accurate, although it has not been independently
verified by Peabody and does not purport to be all-inclusive. Neither Peabody nor any of their representative directors, officers, managers,
agents, employees or advisors makes any representations or warranty (express or implied) or accepts any responsibility as to or in relation to
the accuracy or completeness of the information in this Presentation (and no one is authorised to do so on behalf of any of them) and (save in
the case of fraud) any liability in respect of such information or any inaccuracy therein or omission there from is hereby expressly disclaimed
in particular if for reasons of commercial confidentiality information on certain matters that might be of relevance to a prospective purchaser
has not been included in this Presentation.
No representation or warranty is given as to the achievement or reasonableness of any projections, estimates, prospects or returns contained
in this Presentation or any other information. Neither Peabody nor any other person connected to it shall be liable (whether in negligence or
otherwise) for any direct, indirect or consequential loss or damage suffered by any person as a result of relying on any statement in or
omission from this Presentation or any other information and any such liability is expressly disclaimed. This Presentation may include certain
statements, estimates and projections prepared and provided by the management of Peabody with respect to its anticipated future
performance. Such statements, estimates and projections reflect various assumptions by Peabody’s management concerning anticipated
results and have been included solely for illustrative purposes. No representations are made as to the accuracy of such statements, estimates
or projections or with respect to any other materials herein. Actual results may vary from the projected results contained herein.
2
An Introduction
to Peabody
Our History
•
Peabody Donation Fund, established by George Peabody in 1862
•
Incorporated by an Act of Parliament in 1948 and updated by the Charities
(The Peabody Donation Fund) Order 1997 – objectives:
a) to assist persons in Greater London who are in conditions of need, hardship or distress
by the provision of accommodation or otherwise; and
b) to provide assistance outside Greater London to those elderly persons aged 60 or over
who are in conditions of need, hardship or distress and who have a real and substantial
connection with Greater London, by the provision of accommodation or otherwise
•
A Social Landlord registered with the Homes and Communities Agency and
the Charity Commission
Our mission is to make London a city of opportunity for all
by ensuring as many people as possible have a good home,
a real sense of purpose and a strong feeling of belonging.
4
Overview of Peabody Group
• Currently own and manage c28,000
properties, all in London. Estimated
security value in excess of £3 bn. Vacant
possession value c£10bn
• All properties in compliance with Decent
Homes Standard
• Goal to deliver 1,000 new homes and
support 1,000 people into work each year
• Annual turnover in excess of £200m
million
• Employ c900 members of staff
5
Our Vision
• Great Homes




21st Century homes
Effective, efficient repairs service
Clean, safe and well-maintained estates
Lead regeneration projects
• Raising Aspiration




At heart of 21st Century vision
Promote work, training, enterprise and entrepreneurship
Create opportunities for young people
Enable residents to benefit from digital technologies
• Business Excellence
 Provision of great customer service
 To increase financial strength
 Engaged and motivated workforce
• Growth
 Provide more homes and more services
 To generate financial and operational capacity
 Measured and prudent
6
Group Structure
• Gallions joined the Group on 3 January 2014
• Trust Thamesmead and Tilfen Land also joined the Group on 1 April 2014
• Thamesmead entities reunited – unlocks full regeneration potential
• Integration process within Peabody almost complete
• Top governance and viability rating with Regulator reflecting governance
and financial strength
7
Peabody Governance
Board Members
Christopher
Strickland
Chair
Shirley
Garrood
Executive Committee
Stephen Howlett
Chief Executive
Stephen
Howlett
Karl
King
Stephen Burns
Malcolm
Levi
Paul Loft
Susan Hickey
Elizabeth
Peace
Jan
Tucker
David Lavarack
Baroness Jo
Valentine
June
Welcome
Sandra Skeete
Community
Finance
Corporate
Services
Housing
Jeremy Stibbe
Strong focus on corporate governance
Development and
Sales
8
Peabody Group properties – including commercial properties
9
Financial Summary
Financial Results 2013-14
• Group Turnover of £165 million (Gallions for 3 months)
• Rental Income of £121 million from social housing
• Operating Surplus of £49 million; Operating margin of 30%
• Strong interest cover: 285%
• Total assets less current liabilities increased by £717 million
• Property assets of £2 billion in the Balance Sheet at
depreciated cost
• Group had £1.2 billion of committed debt funding
11
Regeneration and Development
Thamesmead Futures
13
Development & Sales Programme
Approved Programme (Homes)
Pre- Acquisition
Pre- Planning
Pre-Site
On Site
Completed
Total
Start of
year
318
1,196
1,412
2,081
Current
396
786
1,555
2,342
182
190
5,189
5,269
Commercial Performance this year
Current tenant arrears
Voids
Rent reviews started
Financial Performance this year
Target
Current
5%
0.40%
4.6%
0.30%
0 remaining 17 remaining
Loan variance
Cashflow
Department budget
ROI
Target
Forecast
0%
£356.3m
£6.0m
(13%)
-4.4%
£353.4m
£5.6m
(13%)
Customer Care
Defects per home
Open complaints - New Build
Open complaints - Other
Sales this year
Target
Year to date Forecast
Reserves (homes)
No Target
Exchanges (homes)
607
Completions (homes)
249
Revenue (£)
£39.8m
88
15
3
£0.4m
604
607
172
£41.5m
S/O Equity (%)
32.5%
33%
35.0%
GLA Programme
Target
Current
1.00
0
0.43
0
0
1
Total
Homes
Target PCs Forecast
in year PCs in year
11-15
Build the Pipeline
1,507
577
1,150
0
1,069
0
15-18(9)
1477**
0
0
Total
3,561
1,150
1,069
14
Operating Environment
15
Operating Environment
Welfare Reform Act
• We continue to focus on identifying tenants most at risk and
taking proactive action to minimise consequences to them and
us
• To date number of tenants impacted by Bedroom Tax and
Benefits Cap relatively small compared to total number
• Revenue impact has been low-also we looked to improve voids
rates to reduce the financial impact
• Rolling out of Universal Credit now over much longer period
16
Summary of Recent Sector Pronouncements
•
Protecting Social Assets in a more Diverse Sector -responses to consultation
•
Rents for Social Housing from 2015-16
•
Impact of move from RPI to CPI base
•
Impact of end of rent convergence
•
Rents for Social Housing from 2015-16
•
Grant funding
•
Homes for London: the Draft London Housing Strategy – revised draft published in
April
•
Political environment – Scottish referendum, general election, mayoral election
17
Conclusion
18
Conclusion
• A 151 year history of providing affordable housing to residents of London
• Operates within a highly regulated sector with a history of no credit losses for secured
creditors
• Strong board and management team with an excellent track record and ability to deal
with the challenges of Welfare Reform
• Rated A2 (Stable) from Moody’s
• Manages finances and risk efficiently
• Committed to taking advantage of attractive growth opportunities, whilst maintaining
a conservative financial profile
• Focussed approach to development
19
Appendix
20
Peabody Financial Performance 2008 - 2014
2008
£m
2009
£m
2010
£m
2011
£m
2012
£m
2013
£m
2014
£m
Turnover
93.4
94.1
98.3
104.9
121.5
128.5
165.1
Operating costs
-73.4
-75.7
-76.1
-82.4
-85.5
-85.1
-115.7
20
18.4
22.2
22.5
36
43.4
49.4
Operating margin
21.40%
19.60%
22.60%
21.45%
29.63%
33.77%
30.0%
Net interest payable
-17.7
-15.7
-13
-14.8
-19.5
-18.9
-22.3
Net operating surplus / (deficit)
2.3
2.7
9.2
7.7
16.5
24.5
27.1
Cost of early redemption of loans
-37
0
-0.7
-1.8
-3.1
0
0
Surplus - disposals programme /
LCHO
37.2
17.6
13
2.2
4.5
1.5
7.6
Surplus – one off transactions
29.1
15.3
0
0
0
0
256.5
TOTAL SURPLUS
31.6
35.6
21.5
8.1
17.9
25.9
291.1
Net debt
358
362
343
475
490
546
819
Net debt : Turnover
3.8
3.8
3.5
4.2
4.9
Effective WACC
5.0%
4.3%
Interest cover
1.66
1.79
Operating surplus
4.5
4.0
4.3%
3.8%
4.2%
3.8%
4.4%
2.27
2.34
2.47
2.80
3.03 21
Peabody Financial Position 2008 – 2014
2008
£m
2009
£m
2010
£m
2011
£m
2012
£m
2013
£m
2014
£m
Fixed assets
543.9
555.7
578.1
725.4
747.7
863.4
1,368.8
Current assets
67.5
78.7
79.3
45.7
108.8
50.0
252.0
Current liabilities
-29.9
-29.6
-38.9
-39.4
-41.9
-35.0
-72.8
Total assets less current liabilities
581.9
604.8
618.5
731.7
814.6
878.6
1,595.8
7.7
14.3
32
15.4
28
31
44
Loans (due > 1 year)
396.9
385.8
377.1
480.6
545.9
557.6
967.1
Revenue reserve
168.7
197.5
200.8
235.6
240.6
290.0
578.1
8.6
7.2
8.6
0
0
0
6.6
581.9
604.8
618.5
731.7
814.6
878.6
1595.8
£25,015
£25,030
£24,458
£31,537
£32,623
£32,890
£39,360
Pension deficit
Designated reserves and Provisions
Debt per unit
22
Peabody Performance of Core Stock
2008
2009
2010
2011
2012
2013
2014
Rents and services charges (£m)
80.7
82.5
86.2
88.1
92.4
106.3
121.1
Growth
4.5%
2.2%
4.5%
2.2%
4.8%
15.0%
13.9%
1.5
1.5
1.4
1.5
1.2
1.4
1.4
1.8%
1.8%
1.6%
1.7%
1.3%
1.3%
1.2%
0.8
0.2
0.4
0.8
0.5
0.8
0.6
1.0%
0.2%
0.5%
1.0%
0.6%
0.8%
0.5%
Void losses (£m)
As % of rents and service charges
Bad debts (£m)
As % of rents and service charges
23