2. Progress
Housing Group
Presentation by
Debbie Atherton & Helen Lecky
Finance Team
March 2014

3. Today’s Discussion
• Who are the finance team?
• What services do the team provide?
• Cash is King!
• What are our challenges and how can they
become our opportunities?
• Value for Money
• Your feedback

4. BINGO TIME!!!!

5. Overview of the Progress Finance
Team
Operations
Director
Finance
Project
Accountancy
Group
Accountancy
Treasury
Procurement
& Purchase to
pay
Database

6. What do we do in Finance?
Project Accountancy
Planning our finances in the long term
Setting our rents and service charges
Financial assessing our new developments
Treasury Management
Managing cash in our bank accounts
Borrowing loans from banks using our properties as
security
Accountancy
Producing and managing our budgets
Reporting our financial position
Procurement & Purchase to Pay
Paying our suppliers and customers for their
services
Procuring services at the best price and for good
quality
Database Team
Processing our rent and other payments
Set up direct debits to collect rent & arrears
payments

7. Database Team
Management of posting rent and other
income
Responsible for setting up and calculating
direct debits for payments
Update housing benefit entitlements
Coordinate annual rent and service charge
increase process

8. Our Database Team Challenges
 Need to ensure we have robust systems for the collection
and posting of income ensuring there are as many options
to pay as possible and that payments are receipted to
accounts on a timely basis
 Welfare Reform - Increase in number of transactions and
changes to how payments are made
 Having systems in place to offer more flexible direct debit
payments to collect any day when introduction of Universal
Credit

9. Our Database Team
Opportunities
 Look at methods of payment and tailor these to our
customers, for example: introduction of automated
telephone payments, able to pay rent over the telephone 24
hours a day
 Review and streamline processes for income collection
 Ensure value for money when looking at different methods
of payment

10. Transaction Payments
 Between 2012 and 2013 we had an increase of 6% in the
number of transactions to 32,000 with internet payments
and direct debits increasing
 Our payment methods:
Swipe Cards – Post Office 0.49p
- Paypoint 0.52p
- Payzone 0.32p
Direct Debits 0.07p
Card & Internet Payments 0.49p
Cheques 0.25p

11. Project Accountancy
Challenges:
– Ensure 30 year business plans remain strong
and are suitably “stress tested” to consider
future uncertainty
Opportunities:
– Upcoming HCA bid round to develop more
Affordable Homes
– Tax planning opportunities – minimising cash
leaving the Group

12. Group Accounts
Challenges:
• Major change to accounting standards from April 2015
• Implementation of new accounting system with streamkined
processes
Opportunities:
• Assessment of our properties to see which are loss making
• Annual budget process to ensure financially strong to
deliver our priorities

13. Our Treasury Challenges
 Decreasing security (we can borrow average £44k for each property but have to
spend average £100k) existing houses have to “top up”
 No long term funding of 30 years from banks
 Universal Credit – Direct Payments will create increased bank transactions
 Maintain covenant compliance.
 Ensure we borrow money at best time – what‟s going to happen to interest
rates?
 Ensure there is sufficient funding for all the development we want to do.
 Not giving the banks any opportunity to make our existing loans more
expensive.

14. Our Treasury Opportunities
 New funding at the right time could make long term savings for the
Group.
 Process improvements for transaction posting will improve customer
service and customer information.
 Fixing loans at low interest rates frees up more money to spend on
existing homes and new developments.
 Maintaining and improving financial strength attracts better funding
deals.
 VFM - includes assessments on properties that cost a lot of money
and whether they are good for the company. Decreasing costs and
losses will achieve higher valuations.

15. How much we’ve borrowed (and what
it costs)
Total Group Borrowings 31 Dec 2013 £millions
263
117
92
50
4
0
50
100
150
200
250
300
TOTAL NPHA PCHA NFHL GRP
•Total Interest Payments per year £12million
• If interest rates rise 1% = Extra £2.6million cost every year

16. What do we have to offer?
Each house is worth a loan of
• New Progress £ 44,000
• New Fylde £ 31,000
• Supported properties £182,000
Security (houses) For Loans Dec 13 £m
£325.46
£46.61
£35.89
£21.65 Already Used
Available for agreed loans
Free but need bank's
permission
Free for more borrowing

17. Where have all the banks gone? (and
what does that mean?)
• Interest per year paid now £12million
• Interest per year with new funder £17.2million
 This would mean £5million less to be spent on your homes
Banks borrowing rates 2008 vs 2013
1.64%
0.61%
0.30% 2.50%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
2008 2013
Margins (lenders
"profit")
Interest
Banks available
2008 2013
10 6
• Credit crunch has meant lots of
mergers….and banks still struggling….

18. Procurement and Purchase to
Pay
• Management of Procurement and
purchasing processes
• Compile and publicise tender opportunities
• Manage Group Supplier list
• Invoice processing for all the Group
• Make payment to all suppliers

19. Our Procurement Challenges
 Current economic environment means that suppliers are very keen to obtain
business but also more at risk of failure.
 Increasing levels of legislation
Social Value Act
Late Payment Legislation
Changes to Public Procurement Regulations
 Advances in technology and changes to the payment environment
 Supporting smaller businesses to embrace new technologies and processes
 Resistance to change both from staff and suppliers to new technologies and
processes (essential if we are to achieve VFM processes)

20. Our Procurement Opportunities
 Opportunity to increase further develop our social value measurement.
 Increase use of technology for publicising and tendering contract
opportunities.
 Improved processes utilising new technologies.
 Opportunity to increase local suppliers and their engagement with
Progress Futures
 Continue to review the Group‟s procurement arrangements to achieve
value for money across all types of purchase.

21. Other Challenges and
Opportunities
Our challenges:
 Welfare Reform – arrears and voids
 Keeping up with technology to improve our services
 Changing needs of our customers
Our opportunities:
 Going digital – investment to improve services
 Remodelling our sheltered schemes
 Downsizing options
 Importance of cash management…………

22. Cash is King!
Cash In flows 2012/13
Grants
Received
£4.8m
Loans
Drawndown
£12.5m
Disposal
Proceeds
£1.0m
Operating
income -
e.g. rent,
service
charges,
other
operating
income
£64.1m
Cash Out Flows 2012/13
Operating
costs - e.g.
management,
maintenance,
service costs
£36.2m
Purchase of
other fixed
assets £0.7m
Loans Repaid
£0.5m
MR
(Component
additions)
£3.5m
Net Interest
£11.4m
Corporation
Tax £0.1m
Acquisition &
construction
£28.3m

23. Total Cash Flows
• Rents
• Services Charges
• External Income
• Grant Receipts (C)
• Loans Advanced (C)
• Maintenance
• Management
• Property Acquisition (C)
• MR (Components) (C)
• Loan Repayments (C)
• Interest Charges
• Pension Contributions
• IT equipment & software (C)
• Office Costs
Ins Outs

24. Value for Money (VFM)
Where, why and how do we spend our
money?
What are our achievements last year?
What are our targets this year?
How do we compare with others?
What are your thoughts….?

25. What does VFM mean for Progress?
• Our strategy enables us to:
Maintain and improve our existing properties
Manage our liabilities i.e. how much we owe
Deal with external challenges such as
welfare reform
Continue our developments providing new
homes to new customers

26. QUIZ: Where are we spending
money next year?
£18m, 22%
£19m, 23%
£12m, 15%£2m, 3%
£15m, 19%
£15m, 18%
0, 0%

27. Where are we spending money
next year?
MAINTENANCE
£18m
22%
DEVELOPMENT ADMIN
£1m
2%
DEVELOPMENT PROPERTY
£18m
21%
INTEREST PAYABLE
£12m
15%
INFORMATION TECHNOLOGY
PROJECTS
£2m
3%
CORPORATE RUNNING
COSTS
£10m
12%
SUBSIDIARY RUNNING
COSTS
£5m
6%
SERVICE COSTS
£9m
11%
SUPPORT
COSTS
£6m
8%
2014/15 EXPENDITURE
MAINTENANCE
DEVELOPMENT ADMIN
DEVELOPMENT PROPERTY
INTEREST PAYABLE
INFORMATION TECHNOLOGY PROJECTS
CORPORATE RUNNING COSTS
SUBSIDIARY RUNNING COSTS
SERVICE COSTS
SUPPORT COSTS

28. What do we look at?
• Maximise our income
• Look at our properties – are they cost
effective to maintain? Do we need to
remodel or sell?
• All areas of expenditure
• How we buy goods and services
• How we minimise loss to the Group i.e.
insurance, fraud

29. Our recent achievements –
Assets and Income
• Remodelled sheltered bedsit
accommodation in Fylde
• Disposed of pre-cast concrete properties
• Bring service charges in-house for Progress
Care
• Resident warden service reviewed

30. Our recent achievements – Cost
• Senior management and governance
changes – reduction in numbers
• Joint working between NPHA and NFH
• Digital communication
• External assessment of our Tenancy
Enforcement service
• Active treasury management

31. Our recent achievements –
Procurement
• Reviewed 19 contracts c£4.2m
• Fixed price procurement incl materials and
heating spares
• Grounds maintenance contract
• White goods contract
• E-tendering system to reduce admin and
costs

32. How do we compare?
• We benchmark with Housemark, the HCA
Global Accounts and internal reviews
• Ask our customers via customer involvement
with 99.1% stating „good‟ or „ok‟ VFM
• Scrutiny Panel service reviews for ASB and
responsive repairs action plan
• Tenant satisfaction top quartile
• Higher than average management cost per
unit

33. Our targets for continued
improvement…
• c£1.7m procurement contract reviews
including grounds maintenance for PCHA
• Demonstration of efficiencies arising from IT
investment
• Review PCHA subcontractors
• Continued joint working NPHA and NFH
• Growth of social alarm services

34. Your feedback is important to
us…
What are your priorities?
Are we spending in the right areas?
Any ideas of improving value for money?