Strong results lay foundations for investment at Places for People
Places for People’s diversification strategy has enabled the business to report another set of strong results helping it to increase investment in both new housebuilding and improving and maintaining existing stock.
The Group, which includes 6,200-home Scottish social landlord Castle Rock Edinvar Housing Association as well as home and property management provider Places for People Scotland and Places for People Scotland Care & Support, released its annual report last month.
Over the financial year ending 31 March 2017, social landlord and facilities management business Derwent Living joined the Group, helping to increase the number of homes it manages by almost 20% from 152,783 to 182,725, of which 12,182 are in Scotland.
This partnership also saw it enter the student property market for the first time. Derwent Living’s student business, Derwent Students, is the UK’s third largest manager of student accommodation.
Overall, turnover at the Group increased to £795.1 million in the 2016/17 financial year, up 29% from £616m in 2015/16.
Over the same period, profit before tax more than doubled from £43.7m to £119.7m in 2016/17. However, the increase in profit includes a one-off exceptional item of £41.4m after Derwent Living joined the Group in December 2016.
In the past financial year, Places for People has invested £187m in new homes increasing the number of homes built or acquired by 35% from 1,119 in 2015/16 to 1,519 (405 in Scotland) including the construction of 312 new affordable homes.
At 31 March 2017, a further 1,477 homes were under construction. At the same time, the Group increased investment in improving and maintaining its existing homes by 12% from £97m in 2015/16 to £108.7m last year.
Places for People’s development pipeline continues to grow following a number of high-profile contract wins. Overall the Group plans to build 16,000 new homes in the coming years including a partnership with Aberdeen City Council to create up to 3,000 new homes.
The Shaping Aberdeen Housing partnership progressed with the formation of the Shaping Aberdeen Housing Limited Liability Partnership (LLP) and the approval of the LLP’s five-year business plan. The partnership will design, build, own and manage housing for rent targeted at a range of needs, including key workers, and deliver a range of housing for sale, including low cost home ownership.
The first three sites are scheduled to start on site in 2017–18 along with design and planning of further phases. Summerhill, a development of 369 homes for rent, is expected to start in summer 2017 using our in-house construction capability.
In the report, Places for People said: “Our placemaking approach will be adopted ensuring that key services and infrastructure are incorporated into the developments, in what is our largest housebuilding project in Scotland.”
A total of £85m of social value was generated in the communities it operates in. This included supporting 700 people into employment and a further 3,087 into training or learning, as well as employing more than 500 apprentices.
During a period of political and economic uncertainty, Places for People continued to attract significant investment. In August 2016, it issued a £400m corporate bond to fund the Group’s social housing activities. It also successfully issued a £65m retail bond enabling us to raise debt on non-social housing activities, and, in turn, improve the breadth and cost of its funding portfolio.
Places for People Group chief executive, David Cowans, said: “We are buoyed by the continued success of our diversification strategy and remain very confident in the strength of this approach, which helps us to continue to report strong results year-on-year.
“Our robust business model gives us an agility to respond to market conditions in order to protect and increase our assets and revenue, which in turn enables us to invest more in homes, services and the communities in which we operate. It has also been a key factor in enabling Places for People to increase its pipeline of new homes, with plans to build 16,000 new homes in the coming years.”