GreenSquare Group
Value for Money Statement
Extract from REPORT AND FINANCIAL STATEMENTS
For the year ended 31 March 2015
1.
Introduction and principles
This statement is for our residents, stakeholders, Board members and staff. It sets out where we are
on providing an efficient service for all our customers, and creating value for money within
GreenSquare. This is the third year we have provided such a statement.
The staff and Board members at GreenSquare define value for money as the relationship
between effectiveness, efficiency and economy, often described as the value chain. Value for
money is high where there is a good balance between all three – low costs, high productivity and
successful outcomes.
We aim to be accountable to our residents, partners and regulator by setting out here our past
performance and future aspirations.
Overview
Value for money is at the heart of our strategic objective ‘Every penny counts’. Creating value for
money is essential within GreenSquare as it creates “choices” of what we can do to further our social
and charitable objectives. Any value added can be applied to:
improving our existing homes and raising resident satisfaction; and/or
building new homes to help address the lack of housing supply in the areas where we
operate; and/or
helping to improve the life chances of our residents and/or the communities where they live.
Therefore, there is a compelling drive to deliver value for money at GreenSquare. There are some
areas where we are improving. However, there are some areas where we need to do better and
there are plans to in place to do that. Consequently, this value for money statement seeks to achieve
two overriding objectives:
To outline our value for money performance; and
To outline the Board’s way forward for value for money, and what decisions it has already
taken to raise performance in this area.
2.
The contents of this statement are broken down into 5 areas:
Our long term aspirations (see Section 3)
Managing and monitoring value for money (see Section 4)
Our performance to date including benchmarking and the social and financial return we
achieve from our assets, and value for money achievements (see Sections 5 and 6)
The Board’s way forward – driving more value for money (see Section 7)
How the Board gains assurance that we are doing what we say we are (see Section 8)
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3.
Our longer term aspirations
Overall we want to be as efficient as we can whilst providing excellent services to our residents. We
define this aim as achieving top quartile performance (i.e. within the top 25% when compared to
similar housing organisations) on services in a number of areas, particularly in customer satisfaction,
and being better than our peers on cost. We are making progress but there is a way to go on this, as
set out in the rest of this statement.
4.
How we manage and monitor value for money
The key aspects of how GreenSquare manages and monitors value for money are set out in our
business plan 2015-2020 and are :
the business planning cycle which includes comprehensive cost reviews and challenge,
seeking a three year 10% absolute reduction in management costs per unit by 2017/18;
performance reporting focused on value for money;
a strategic management team meet regularly to drive changes through the business;
co-regulation of value for money with the resident scrutiny panel;
use of professional advisers;
good contract management;
rigorous project management; and
periodic service reviews looking at cost and service quality.
We also highlighted our Greenstates, a one-page statement of costs, performance, and areas for
improvement for each of our service areas.
5.
Our Performance to Date
a)
Understanding our performance: performance over time
We have reviewed the key indicators, which demonstrate our value for money. They are:
Social Housing Margin
Management and Maintenance Costs per Unit
Void Losses
Efficiency/Procurement Savings
Cost of funds.
With the exception of efficiency/procurement savings, which are covered later on, we have set out
below our performance in each of these over the recent period.
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Social Housing Margin (Earnings before interest, tax and depreciation and amortisation EBITDA)
A good earnings margin is fundamental to ensuring the organisation is generating sufficient funds to
enable it to invest in its operations going forward. The charts below show trends on our core social
housing turnover and operating earnings (these exclude non-cash adjustments due to depreciation,
revaluation of properties and capitalised repairs). They exclude non social housing activities.
Social Housing Turnover and EBITDA
80
£m
60
Turnover - Social
40
EBITDA Social
20
0
2010
2011
2012
2013
2014
2015
Social Housing EBITDA %
40.00%
35.00%
EBITDA % Social
30.00%
25.00%
2010
2011
2012
2013
2014
2015
Management and Maintenance Costs per Unit
We monitor our overall management and maintenance costs per unit as part of our value for money.
Management Cost per Unit
1500
1400
£
1300
Management
Cost per Unit
1200
1100
1000
2010 2011 2012 2013 2014 2015
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2014/15
management
costs have been reduced
significantly with a 6%
absolute
saving
over
original budget despite
inflation and increased
pension costs.
We have successfully met
the £1,393 target level set.
The Board have set a three
year target to reduce
absolute costs by 10% by
2017/18.
Maintenance Cost per Unit
1,500
1,400
1,300
Maintenance Cost
per Unit
1,200
1,100
We have had a low relative
level
of
spend
on
maintenance compared to
benchmarks
and
are
reviewing our investment
strategy for our assets.
1,000
2010 2011 2012 2013 2014 2015
Void Losses
Voids are loss of rent where there is no tenant. Voids losses are an area of focus for the Group and a
pilot for the lean process reviews (see below, section 7 value for money systems) is being undertaken
during 2015/16.
Void losses are showing
an improving performance
over time and are top
quartile compared to our
peers.
Void Losses
1.70%
1.50%
1.30%
1.10%
Void Losses
0.90%
0.70%
0.50%
2010 2011 2012 2013 2014 2015
Cost of Funds
Cost of Funds
4.80%
4.70%
4.60%
4.50%
Cost of Funds
4.40%
4.30%
4.20%
4.10%
2010 2011 2012 2013 2014 2015
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Our cost of funds (e.g.
interest
costs)
are
relatively low but may go
up as interest rates rise.
At year end March 2015
the element of variable
debt was approximately
18% of total drawn
facilities.
b)
Understanding our current performance: benchmarking costs and income
To understand better our existing performance on costs we have looked at our absolute (i.e.
published figures) and relative (i.e. how our costs compare with others) costs, through benchmarking.
Background on benchmarking: We gain a fuller assessment of GreenSquare's value for money
performance by comparison to other similar sized registered providers. Consequently, a key focus for
this year’s value for money statement is how GreenSquare benchmarks against others.
Our primary source of benchmarking data is HouseMark and we use the information they provide
throughout the year to monitor our performance. In addition, at the year end, we use “Shape-Up”
analysis (by FSMB). The financial benchmarking reports, provided by Shape-Up, are only available
after the financial statements of our comparators have been published, therefore this analysis
compares the results for year ended 31st March 2014 and then is rolled forward for the year ended
31st March 2015. The benchmarking in Shape-Up compares GreenSquare to a peer group of 37
similar housing association/groups between 10,000 and 20,000 units. Where there is similar analysis
from HouseMark the benchmarking has shown a consistent story with the Shape-Up results.
Results: For performance to date the following areas have been summarised:
growth;
revenue and cost structure;
surplus and interest;
bad debts and arrears; and
financial indebtedness.
GreenSquare
2015
7.1
6,836
34,266
1,408
25.7*
0.7
5.3
29,049
Growth in assets %
Total revenue per unit £
Staff cost per FTE £
Maintenance per unit £
Operating margin %*
Bad debt per unit %
Arrears %
Debt per unit £
Interest cover ratio
(including capitalised repairs)
1.90
* Adjusted for excess revaluation depreciation
GreenSquare
2014
12.0
5,440
34,291
1,199
28.1*
0.6
4.6
27,442
Peer Group
Average
2014
5.4
6,109
28,762
1,697
27.1
0.8
5.8
24,600
1.68
1.55
Growth: In 2013/14, our total assets grew by 12.0% and this put us in the top quartile of the peer
group. In 2014/15 that growth was 7.1%. This shows that GreenSquare is using its financial
resources to deliver new homes for those in housing need.
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Revenue and cost structures: In the last year the group has increased its total revenue per unit to
£6,836, which is above benchmark in comparison to its peers. This includes capital sales and
highlights the importance of increasing revenue streams and the saving that GreenSquare creates for
government when comparing rents paid by residents in receipt of housing benefit to the level of
benefits that would be required to pay market rents in the private rented sector.
As from April 2014, a new reward strategy has been put in place to reduce any salary differential over
a reasonable period. As a result, these financial statements show a cost per the number of staff
employed of £34,266, an improvement from the previous year.
On average, spend on maintenance at GreenSquare has been in the top quartile within our peer
group, i.e. one of the lowest spenders in this area. In 2014/15, this increased to £1,408 but still below
our peer group average. Whilst financially this still demonstrates good value for money, it needs to be
set in the context of the aim to improve benchmarks on resident satisfaction. This “cost versus
satisfaction” relationship is addressed in more detail below in the section on “The Board’s way forward
- driving more value for money” as the group has made a conscious decision to invest more in
improving its assets.
Surplus and Interest: The balance sheet records GreenSquare's assets at valuation whereas many
housing associations have continued to use historical cost. The impact of that is the GreenSquare
Operating Surplus is reduced because of a higher depreciation charges. In order to benchmark
consistently, if that difference of £2.9m is removed then the Operating Margin (before interest and
tax) is around the peer group average.
Together with the 2015/16 Business Plan, the Board approved a new ten year Corporate Plan setting
out the strategic direction for the organisation out to 2025. Our seven Strategic Objectives support
the National Housing Federation “Ambition to Deliver” and generate “profit for purpose”.
Bad debts: We continue to show good performance in this area, with the losses from bad debts as a
percentage of gross rents and service charges in the top quartile and better than our peer group
average of 0.8%.
Arrears: In 2013/14, our arrears were top quartile compared to our peer group. Despite pressure
from welfare reform our 2014/15 results continued to show good performance compared with a peer
average of 5.8%.
Rent Arrears %
8.00%
6.00%
4.00%
Rent Arrears %
2.00%
0.00%
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Financial Debt Position: As noted above in Growth, GreenSquare has a recent history of maximising
the investment use of its property assets to help deliver its charitable objectives Consequently the
debt per unit is high compared to the peer average. During 2014/15 GreenSquare further increased
its borrowings in order to deliver its development programme. This has resulted in an increased debt
per unit of £29,049.
A sector wide interest cover ratio, which is regularly used by rating agencies and the HCA is EBITDA
MRI (Earnings before interest, tax and depreciation and other non-cash adjustments divided by
interest adjusted for capitalised repairs. GreenSquare has improved this ratio over the past few years
and is better than the peer group benchmark average and in the second quartile.
Summary: Our revenue is higher when compared to its peer group and our growth is greater. Both of
those results are a positive outcome from a focus on value for money. In financial terms, the higher
maintenance spend is positive in that it has created value invested in new homes and communities.
During the course of the past year we have published a new ten year Corporate Plan setting out the
strategic direction including carrying out a strategic asset review to look at all our assets and level of
investment. Historically we have consistently benchmarked lower maintenance spend but this year
sees a change to increase the level of investment in our stock. The Board has developed seven key
strategic objectives, including “valuing our customer”, which sets the context for an additional £4.0m
investment in our homes each year over the next ten years. This will enable us to effectively deal with
harder to let properties (through improvement or disposal), regeneration of our major estates, tackle
affordable warmth, increase our improvement works and enhance the public spaces surrounding our
homes.
c)
Understanding our performance: satisfaction
Resident satisfaction is fundamental to us proving value for money. We have recently moved to the
STAR system to collate this resident feedback data and the results for the last three years on our
landlord service are shown below:
Our investment in a single housing management system this year and our planned investment in a
single telephone system will facilitate further operational efficiencies. We now have a plan to
consolidate our work to deliver a single unified service for all our customers, which will drive up
satisfaction while driving down operational cost.
There has been a steady
improvement in our overall
performance and the Board
will
remain
focused
on
achieving
the
Housemark
benchmarking
median
performance of 88% and
ultimately our longer term aim
of over 90% to be in the top
quartile.
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d)
Understanding our performance: financial return on assets
Are we holding and investing in the right assets?
A full strategic asset review was carried out in 2013/14, which identified 16 areas of focus to ensure
we are maximising the return on our assets. During 2014/15, we have conducted detailed analysis of
each of the areas involving looking at long-term net present values and customer satisfaction levels.
As a result of this review the Board approved an additional £4m of investment in our homes each year
over the next ten years as part of the Corporate Plan. The areas of focus are :
Sheltered housing schemes
Precast reinforced concrete (PRC) properties
Small land sites with development potential
Land holdings with no development potential
Regeneration areas
Estates with sustainability issues
High value properties
Three storey flats
Two bedroom flats
Properties with scope to extend
Open spaces with potential to enhance the neighbourhood
Energy efficiency
Under occupation supply and demand.
Garage sites
Supported housing
Potential acquisitions to support regeneration.
e)
Understanding our performance: Social return on investments - improved outcomes
for residents:
We invest in dedicated teams to help support residents who might be either in arrears, or
likely to get into arrears, and help them maintain their tenancies. Not only does this help
people to keep debt to a minimum, it can also reduce mental health problems and be a
positive outcome for the wider communities in which they live.
We used nine advice agencies across the group to provide advice, some working as part of a
consortium arrangement. The total contract cost was reduced by £7,530 compared to the
previous year. 520 households received advice on 720 issues. Residents received £628,000
of additional benefit and were helped to reduce household debt by £426,000. The total
financial gain for residents was £1,054,000, which is approximately £6 for every pound
invested.
Dealing with anti-social behaviour (ASB), which affects the wider community, ensures
successful tenancies and prevents others from moving away. Working with the local Crime
and Safety Partnerships produces better outcomes for customers and avoid costly
duplication. This partnership assisted us in resolving 46 cases during 2014/15 (2013/14: 23).
We continue to develop and support our customers who can further their skills and training
through the GreenSquare Academy. This year over 90 residents took part and recorded
satisfaction levels of over 96%. 10 residents completed courses with a formal accreditation.
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Understanding our performance: Social return on investment - improved outcomes for the
communities where GreenSquare works
We invest in community initiatives. The Board agreed an investment of £1 per property per
week back into the community. The decisions about investment in community initiatives is
based on priorities set by our resident led Communities Boards Action Plans. These projects:
o
improve the areas around our homes; and/or
o
foster community; and/or
o
improve individual wellbeing; and/or
o
empower our customers to be effectively involved in GreenSquare
The Board has set a target of attracting an additional £1 from the Community for every £2 we
invest. In 2014-15, we considerably exceeded that target with £557,000 of external funding
being brought in by partner agencies into the communities that we work in.
The review of our community involvement projects through our annual Impact Assessments
shows that for the majority there has been a real benefit for communities. Where an Impact
Assessment does not support this work then the project is reviewed. Some examples of
successful projects are detailed below.
Youth Action Wiltshire through their Inspire Credits programme worked with 61 young people
through support and learning. Of these, 29 were young carers, 14 were NEET and 18 had
special educational needs. 56 young people engaged in volunteering and personal
development sessions, 42 gained accreditation. This project was match funded with £25,000
and cost GreenSquare £492 per participant.
Without any additional cost, we have been working with Aspire Oxford, a charity providing
grounds maintenance services that train and employ ex offenders, to cover our Oxfordshire
estates grounds maintenance. Aspire save the public purse over £1,000,000 each year and
98% of trainees do not re-offend.
Our successful estate ‘clean up days’ continue. These cost just over £7 for each of the 1,242
residents who took part. Over 80% of the materials collected were recycled or recovered;
they also attracted £7,727 of investment from partners.
Our Communities Boards have been working to complete their Communities Plans with 38
local consultation events. These projects have successfully worked with organisations such
as other Housing Associations, voluntary organisations such as the Rise Trust and Wiltshire
Wildlife Trust, local Councils, Children’s Centres and the Police.
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Understanding our performance: Social return on investment - new homes, and the ‘rent
dividend’
In 2014/15, we completed 202 new homes (2013/14: 167) and invested capital additions net of grant
of £35.3m (2013/14: £43.5m) into the local community.
Homes Under Management
12000
11500
11000
10500
Homes Under
Management
10000
9500
9000
8500
2010 2011 2012 2013 2014 2015
In total, we now own and manage over 11,730 homes. The vast majority of these properties are at
rent levels significantly below market levels, which creates a ‘social dividend’ as we are effectively
investing in our local community.
The average group rent we charge p.a. is £98 per week that is £56 below the average market rent.
Given that about half of our rents are covered by housing benefit we are saving those residents that
pay the rent themselves collectively £16.8m a year and we also are saving the government the same
sum in reduced housing benefit compared with housing our residents in the private sector.
f)
Environmental return
We invest in our assets and services to improve the energy efficiency of homes and reduce our
environmental impact. Our residents have highlighted the high costs of energy as a key concern.
Each year we plan to invest £650,000 in improving the energy efficiency of our homes with a
SAP rating (Standard Assessment Procedure – a measure of the energy efficiency of a home)
of under 65.
Energy performance certificate indicate our investment saves residents £385,000 per year in
energy costs alone.
The average SAP rating of our homes is 73.19 compared with an average private rented
sector home SAP rating of 56.
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6.
Value for money achievements: actual cost and efficiency savings
The target for the year ended 31 March 2015 was £1,690,000 (2014 - £2,267,000). This was
exceeded, with actual value for money savings of £2,443,000. Those savings were made up of:
£1,633,000 in-house construction: These are savings from using GreenSquare Construction
rather than external contractors.
£185,000 development fees. These accrued from renegotiating existing employers agent fees
and Section 106 agreements.
£176,000 neighbourhood services: Savings were made through a reduction in staff and relet
costs.
£87,000 of service charge gains: There were a number of tenancies that came over from
North Wiltshire District Council that did not include the ability to levy a service charge. This is
unfair when compared to those residents that do have to pay such charges.
£42,000 ICT savings: These accrued from re-tendering existing contracts, and through the
changing of the way printers are used. The new printer services provided an improved
‘service’ to staff and saved money.
£98,000 supported housing: Following resident consultation, a change to the service of
redecorating of residents’ rooms was made together with a reduction in community costs by
providing support through existing staff rather than using an external supplier.
£71,000 was achieved through a simplification of the Executive structure.
£151,000: savings from a variety of other sources.
Total savings though specific initiatives generated £2,443,000 of value for money savings in 2014/15
the split between areas is shown below:
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7.
The Board’s way forward - driving more value for money
The Board have published a Corporate Plan that sets out the strategic direction for the organisation
out to 2025. The Plan explains our seven Strategic Objectives, one of which is ‘Every penny counts’.
To achieve this objective GreenSquare will be ‘at least as efficient as the top 25% of similar housing
providers within 5 years, while still improving our customer service’.
The details of how we will achieve that objective are set out in the Business Plan 2015-2020. A
summary is provided in the table below:
Our Goals
5 year performance target
Target for 2015/16
Focus on the removal of waste
Management costs reduced
Management cost for the
st
and inefficiency from the
by 10% by the year ending
year ending 31 March 2016
st
business to enable us to
31 March 2018
to be 5% less than the
improve our customer service
previous year (with no
Operating margin increased
and deliver our other corporate
adjustment for inflation)
to
32%
objectives
Simplify the Group structure to
reduce complexity, inefficiency
and risk
Improve our approach to
procurement to enable us to
‘buy better’
Make a marked step towards
becoming a ‘paperless’
organisation and increasing our
own digital inclusion
Improve our performance on
lettings, voids, rent arrears, year
on year;
Registered Providers (RPs)
have been merged into the
GreenSquare group at the
point it makes business
sense to do so
All RPs have a common set
of Rules and standard
operating procedures
10% saving per annum from
our procurement spend
Cost of office space used to
store documentation
reduced by 50%, when
st
compared to year ended 31
March 2015 costs
We will achieve top quartile
performance in the following
areas:
Re-let times: 12 days
Projects complete as per the
Project Initiation Document
st
(PID) by 31 March 2016
Procurement Consultants
engaged
Project plan approved and
implementation commenced
before 31 March 2016
Projects, including paperless
board meetings, complete
as per PID
We will improve performance in
the following areas:
Re-let times: 21 days
Void rent loss: 0.66%
Void rent loss: 0.4%
rent arrears as a percentage
of rent we are owed: 1.98%
Ensure the survivability of the
business
Manage cash flow in order to
ensure there is sufficient short
term cash available in all
subsidiaries to meet
requirements
Legal and regulatory
compliance
Undertake annual stress test
of GreenSquare Group
Meeting Golden Rules
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rent arrears as a
percentage of rent we are
owed: 2.5%
Legal and regulatory
compliance
Undertake annual stress test
of GreenSquare Group
Meeting Golden Rules:
- Facilities to cover 2.5 years
of future commitments
and debt repayment
- Loan drawdowns to be
secured a minimum of 1
year in advance
Complimentary Goals have also been agreed under the Strategic Objectives ‘Making a difference’
and ‘Able to stand on our own’.
Key Performance Indicators (KPIs): The KPI’s are set out in the Business Plan 2015-2020 and
against which we will report success in subsequent years.
By 2020, GreenSquare aspires to be a “Top Quartile” performer. That means that when comparing
key performance measures with similar housing providers, it will be in the top 25% for all comparative
measures of satisfaction and service delivery performance. The 2020 targets used within this 2015 to
2020 business plan are the current levels at which a housing provider has to achieve to be classed as
a top quartile performer.
2015
Performance
Customer satisfaction with
GreenSquare as their landlord
Customer satisfaction with the
quality of their home
Time taken to re-let an empty
(Void) property
2014/15 Target
Target to meet
by 2020
85%
86%
over 90%
75%
78%
88%
25 days
25 days
12 days
Operating Margin*
23%
Group Management cost per
unit
£1,384
*adjusted for non cash accounting adjustments
23%
32%
£1,393
£1,200
8.
How the Board gains assurance that we are doing what we say we are
The Board receives information on our performance on value for money in the following ways:
This statement has been reviewed by the Board
Greenstates, a position statement on the costs and quality of all major areas of service level
activity, are available to the Board
Our balanced scorecard reported quarterly to the Board includes KPI’s, such as management
costs per property, covering the efficiency of our services
We report progress on key saving initiatives to the Board in a ‘savings log’ quarterly
The budget is approved by the Board and sets targets for savings and the management
accounts show how these are being achieved
The Board has appointed one of its members as a value for money champion and they attend
the GreenSquare Management Team responsible for value for money and provide regular
reports to the Board on value for money progress. They also coordinate the value for money
portfolio holders within the Communities Boards and the Resident Scrutiny Panel.
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9.
Conclusion
As outlined at the start of this value for money statement, there is a compelling driver for improving
GreenSquare’s value for money. “Every penny counts” enables value to be created that can be
applied to the three key strategic choices of improving existing homes and raising resident
satisfaction, building new homes to help address the lack of housing supply and seeking to improve
the life chances and communities for our customers.
This value for money statement shows that GreenSquare has achieved good performance in some
areas but acknowledges that there are other areas where improvements can be made. The Board
acknowledges this and have already embarked on a series of measures to address it.
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