annual review 2014-2015

everyone has a home

Contents

Foreword 3

Aster Group 4

Aster Communities & Synergy Housing 6

Aster Homes 8

Aster Property 10

Aster Living 12

Finance summary 14

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annual review 2014-2015

everyone has a home

Contents Foreword

annual review 2014–2015

Bjorn Howard Group CEO

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Our vision: everyone has a home I’m proud we’ve agreed a new Group Strategy which gives us a new clarity of purpose with our vision that everyone has a home.

Why? Because our work won’t be done until we can be sure everyone has a home. It’s a sobering thought that we are one of the richest nations in the world, and yet around one in seven children live in poor housing or are homeless. And the effects of poor housing and homelessness are well documented, having implications for health, education, employment and mental wellbeing.

So, we should not forget the transformational effect our work has on individuals and society, no matter how challenging it becomes.

To ensure that we deliver our vision we need the right people

We’ve reviewed our governance and have an excellent team of non-executive directors working with us. Our Way We Work project continues to deliver lots of benefits for our employees to make Aster a better place to work.

aster Group

Sustainability

annual review 2014–2015 4

Our approach

Getting around

Waste management

Adapting to a changing climate

We forged a pioneering partnership with Forum for the Future to help develop our current strategy.

Forum for the Future is an independent organisation, working globally with businesses and the government to solve complex sustainability challenges.

We’ve also maintained an externally-certified ISO14001 environmental management system that helps to ensure legal compliance, prevent pollution and ensure the continual improvement of our environmental performance.

We became a research partner in the externally-funded Innovate UK research project, which aimed to solve business problems using environmental data. The consortium, made up of global climate change adaptation experts, helped us understand our current and future exposure to climate-related risks, such as flooding and overheating. The project has provided recommendations we can now adopt to ensure these risks are managed in future.

We’re committed to limiting the impact our business travel has on the environment. A Group-wide travel plan, informed by a colleague survey, was approved. During the year we’ve also carried out trials of fuel-efficient pool cars across four offices, as well as supporting flexible working to reduce the need to travel.

In 2014-15, we carried out a waste and resource efficiency review, looking for opportunities to develop more efficient waste management within our repairs and maintenance teams. The review, undertaken by independent consultants, made 10 recommendations around how we can reduce the cost of handling waste, improve efficiency and reduce the environmental impact of waste management. We’ve now begun implementing the recommendations.

Way We Work New governance framework

Aster Scholarship New Group Strategy

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The Way We Work at Aster is changing. Over the next five years we’re committed to making improvements for our employees and customers.

In Autumn 2014 we implemented the changes to the governance structure proposed by our governance review.

We’ve been laying the foundations for our new five-year Group Strategy.

Our Group and Executive Boards have been working together to focus the business on what Aster does best – provide homes for people in our local communities. Our social heart will never leave us, but we also have to think increasingly commercially to ensure we can continue developing new homes and providing good services to both our existing and new customers for the long term.

Our second ‘Aster Scholar’ began university life in September. Aleksander Sokol, of Marlborough, Wiltshire, started his four-year MEng degree in Electrical and Electronic Engineering at the University of Southampton.

Aleksander joins Hannah Parkes, our first scholar who started a law degree at the University of the West of England last year.

The programme is only open to Aster customers and family members who live in our properties. They receive £3,000 per year towards university living costs, work placements with our partners and a one-year internship once they’ve graduated.

We’re moving towards more digital ways of working and offering colleagues more flexibility.

We are focusing on four key areas:

Planet – to leave a positive impact on the environment People – to improve the Aster working experience Places – to have the right working spaces in the right places Performance – to improve our efficiency.

We conducted considerable research with our employees across the business, to aid our design of the future. We’ve listened to their views and introduced a flexible working project, MS Lync, and a business-wide efficiency programme. Alongside this, we launched wellbeing initiatives, a healthcare cash plan and a pool car trial.

We worked with Altair to design the new structure which provides us with a streamlined, modern approach. We now operate with one overlap Board to serve the Group, supported by committees. This has provided us with a more efficient structure and greater clarity for timely decision making.

The committees are: Remuneration and Nominations, Audit, Risk, Treasury, Regulation and the Customer and Communities Network. We’ve adopted the UK Corporate Code and also introduced the role of the senior independent director to reflect the nature of the business and our Strategy moving forward.

aster Communities & Synergy Housing

Welfare Reform

Digital and Financial Inclusion Strategy

Having already done considerable work to limit the impact of Welfare Reform on our customers, 2014-15 has seen us build further on this and successfully put in place a number of measures aimed at helping them respond to the challenges they may face.As well as setting up a dedicated Welfare Reform Strategy Group, we’ve also formed a Practitioners’ Group, which has been instrumental in creating a number of innovative initiatives to help our customers and ensure they are prepared for the introduction of Universal Credit. This includes a pilot scheme featuring ‘jam jar’ accounts, which we’ve introduced working in partnership with credit union United Savings and Loans, for new customers. Through the scheme, a customer’s rent money which is included in their Universal Credit payment, goes directly into a ‘jam jar’ to ensure it is protected, and we then take the rent payment from there.

Offering customers flexibility as to how and when they could pay us was also considered. As a result, we’ve increased the number of days direct debit payments can be made from two to four. Additional work was carried out around the introduction of an auto-payment telephone line, helping customers to self-serve by accessing their own rent statements, and liaising closely with other organisations to share best practice.

Protecting our own business from the effects of Welfare Reform has also remained a top priority for us. Our customer accounts teams have continued to ensure our rent arrears performance is robust. For the third year running, arrears have remained at around the two per cent mark.

We’ve continued to support customers through a variety of initiatives we’ve introduced as part of our Digital and Financial Inclusion Strategy.

These include setting up a number of job clubs in the areas we work in to support customers looking to get back into employment by giving them help and advice. We’ve also provided assistance to customers looking for work experience by helping them find suitable placements.

In addition, we’ve also welcomed a member of staff from the Department of Work and Pensions to join us on secondment, helping us with our Universal Credit preparations.

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Under scrutiny Goodbye Customer Boards;

hello Customer Overview GroupAfter completing its first scrutiny exercise last year, 2014-15 has proved to be a busy year for our Customer Scrutiny Panel (CSP).

The panel, which provides an independent and objective assessment of our services and business processes from a customer perspective, carried out a further three scrutiny projects this year, completing around 960 hours of work in the process.

The three projects carried out by the CSP included thorough examinations of our work around mutual exchanges, our contact centres, and responsive repairs. The panel looked closely at each area before making its recommendations to the Aster Boards and Customer Community Network.

The CSP also presented two workshops at the fourth National Tenants’ Panels Conference and achieved a 100 per cent performance satisfaction rating.

This was an opportunity to personally thank our Customer Board members for their time, commitment and contributions over the years.

The five regional Customer Boards were introduced across Aster Communities and Synergy Housing following our merger in November 2012. Over the past two years, they’ve achieved a number of successful outcomes:

Recommended approval of key operational strategies to Synergy Housing and Aster Communities Boards

Approved key operational policies

Approve Customer Annual Reports

CBIG investment decisions through recycled efficiency spend

Scrutiny of key performance on a regional basis

Professional standard of meetings and constructive challenge.

At the end of 2014-15, we held a joint customer event to celebrate the achievements of our five Customer Boards.

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The boards have also played a significant role in deciding how £1.5 million of efficiency savings made by Aster Property should be reinvested to improve our estates and local communities.

In addition, a further £130,000 was allocated to the Dorset-based Customer Board for 2014-15, which has been spent on a variety of community initiatives.

In September 2014 a review of the Customer Board structure commenced, taking into account the new organisational governance arrangements; the introduction of one operations directorate bringing together Aster Property, Aster Communities/ Synergy Housing and Aster Living, and a core focus on added value. Following the review, Customer Boards have been replaced with a Customer Overview Group, representing current and future customers.

aster Homes

Targets exceeded

Share and share alike

After an extremely productive year in 2013-14, Aster Homes has enjoyed even greater success in 2014-15, increasing the number of homes it built by 35 per cent on the previous financial year.

In 2014-15, we delivered 725 new homes across central southern and south west England.Building these new homes in a highly efficient way also helped us to stretch the Group’s capacity for new homes by a further 280.

Over-delivering was a recurring theme throughout the year. The end of the financial year saw the conclusion of the Homes and Communities Agency’s four-year programme, which has helped to fund some of the new homes we’ve created during that time.

With the funding we were given by the HCA, we promised we’d build 863 new homes over the four years; we actually delivered 1,177 across the Aster, New Futures and Synergy Programmes, exceeding our original target by more than 35 per cent – a terrific result.

During the year, we secured sales on nearly 200 shared ownership new-build homes, providing customers with new homes and offering many an opportunity to get on to the property ladder which, without the option of shared ownership, may not have been possible.

This also helped bring in over £15 million of income to the Group which could be reinvested to deliver new homes in the future.

We also supported almost 80 customers to sell their shared ownership homes on to new shared ownership customers, ensuring that these homes remained as affordable properties for longer.

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aster Homes

Targets exceeded New territory

Open market sale

Joint ventureDuring the year, we secured sales on nearly 200 shared ownership new-build homes, providing customers with new homes and offering many an opportunity to get on to the property ladder which, without the option of shared ownership, may not have been possible.

This also helped bring in over £15 million of income to the Group which could be reinvested to deliver new homes in the future.

We also supported almost 80 customers to sell their shared ownership homes on to new shared ownership customers, ensuring that these homes remained as affordable properties for longer.

In 2013-14, we had offers accepted for affordable rent, social rent and shared ownership schemes in locations we’d not previously worked in.

This year, work has begun on many of those schemes, enabling us to deliver much-needed new homes for the first time in local authority areas including Hart, Eastleigh and East Hampshire.

We completed sales at Waverley Point, Swanage, where we breathed new life into an ageing property, transforming it to create nine new apartments for open market sale.

Again, all profits were reinvested back into the Group to help deliver more new homes elsewhere.

Working alongside Community Land Trusts to help them deliver their own homes in rural areas has historically been important for us and this has continued in 2014-15.

At Maiden Newton, Dorset, we’ve worked in partnership with the Upper Frome Valley Community Land Trust to create 14 new homes featuring four one-bedroom flats, four two-bedroom bungalows and six two and three-bedroom houses.

In nearby Toller Porcorum, work has continued to build six new affordable homes and a new community post office, while in Bradworthy, North Devon, we’re working alongside Bradworthy Community Land Trust to deliver 10 new homes in the village at Tucker’s Park, including four one-bedroom flats and six two and three-bedroom houses.

This year has also seen us take our total investment in joint venture projects to a level that will create over 900 homes.

One joint venture project which saw exciting progress in 2014-15 was White Rock, a 350-home development we’re delivering in partnership with Linden Homes in Paignton – one of three joint venture schemes we’ll be working on together. The development’s sales and marketing suite, show home and specialised training and education hub were successfully launched in January 2015.

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Rural housing

aster Property

During 2014-15, Aster Property has been working closely with development colleagues, to ensure the transition of new homes takes place as smoothly as possible.

This has included:

Design and technical appraisals

Reviewing specifications

Agreeing scheme structures and design layouts

Increasing on-site supervision

Improvement scheme handover information

Managing latent defects.

Throughout 2014-15, the Property Investment Team, has provided Aster Homes with a wide range of comprehensive support. This has included handling latent defects, which are defects not normally apparent at the time of a development’s completion, but can become noticeable months, or even years, afterwards.

Aster Property has been working closely with the National House Building Council (NHBC) to ensure contractors responsible for our new buildings deal with defects that arise after completion. Theses defects are often covered by the NHBC guarantee.

However, there are occasions when defects are not covered by the NHBC guarantee. To ensure we deal with these, the Property Investment Team created a separate management account. The account is managed by the senior clerk of works and prevents unrecoverable costs being charged to other operational budgets such as response repairs.

The business links made with the NHBC meant that 19 latent defect cases were pursued last year, with each one delivering a satisfactory outcome, at no cost to Aster. The savings made in 2014-15 are estimated at £118,000.

We’ve been able to provide:

New kitchens for 822 customers

New bathrooms for 530 customers

New heating systems for 1,198 customers

New roofs for 256 customers

New front and back doors for 957 customers.

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This year has been a successful one for our planned programmes.

Dorset Close, Frome

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Dorset Close is a 1950’s precast reinforced concrete construction, built to meet post-war housing needs, but originally not intended as a long-term housing solution.

We’ve been able to provide:

New kitchens for 822 customers

New bathrooms for 530 customers

New heating systems for 1,198 customers

New roofs for 256 customers

New front and back doors for 957 customers.

And thanks to our cyclical programme:

3,880 customers had their homes decorated and cleaned externally

20,390 customers had a gas safety check

5,930 customers had their electrics checked to make sure their homes are safe.

We were also able to make over £548,000 of efficiency savings with better procurement and streamlining processes. Some of this money was used to carry out even more improvements for our customers, including:

43 additional kitchens

97 additional heating systems

Extra improvement works to external areas of some estates.The rest of the savings were reinvested in our local communities by Aster Communities and Synergy Housing.

As time progressed, it was agreed there was a need for redevelopment of the site, but due to the fact the all 27 flats were occupied, it was decided to internally refurbish each one by replacing kitchens, bathrooms and heating over a five-year period.

In 2013, the homes underwent external refurbishment to extend their life cycle further. This included the addition of two layers of high-performance polystyrene and a render finish, making it easier to redecorate in future.

The work was completed during 2014-15 and has ensured condensation problems have been reduced. Heating bills were also reduced by 25 per cent creating an expected annual saving of around £90 per household.

aster Living

Safe and warmIn March, Aster Living was awarded £45,000 to help older and vulnerable people remain safe and warm in their own homes.

The company was one of a number of registered Home Improvement Agency (HIA) providers across the UK to receive the funding from Foundations Independent Living Trust (FILT) through its Warm at Home programme. FILT was handed £850,000 by Scottish and Southern Electric which will help over 4,500 vulnerable householders improve their homes in 133 local authority areas across the UK.

The funding has helped Aster Living provide a wide range of energy-efficient measures in the homes of older and vulnerable people including draught proofing, heating repairs and replacements, boiler servicing, providing temporary heating solutions and insulation.

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People eligible to apply for funding included the over-60s, those in receipt of income-related benefits, or individuals with a disability or long-term illness.

At the same time, Aster Living became one of three HIA providers to be chosen by FILT to take part in a funded research project being run in partnership with Sheffield Hallam University. The pilot scheme looked at the impacts of the Warm At Home programme, highlighting its positive effects, not only by keeping vulnerable people warm but also by preventing hazards and worsening health.

Helping customers live independent lives at homeAster Living works closely with Adult Social Services to help older customers live independent lives at home.

Aster’s extra care housing solution provides a range of support for customers who don’t need the additional support sheltered housing offers.

Over the last year we have helped a number of people stay at home in this way, including one customer who spent a short time in sheltered accommodation but quickly realised she didn’t need as much support. Instead, our work with Adult Social Services meant we were able to provide what she needed in her own home.

In addition to our older customers, the Aster Living team also works with customers with disabilities.

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Kirsty had recently moved into one of Aster Living’s one-bedroom properties. We took over providing her support, working closely with Kirsty and her family to ensure what was offered matched Kirsty’s needs. A small core team of staff, who support Kirsty on agreed days have helped her to build relationships with the team. Six months on, Kirsty is now flourishing in every way. Her confidence has improved along with her general wellbeing, and her independent living skills are continuing to improve.

Finance summary

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SummaryThe Group has had a successful financial year. Headline revenue decreased by £20.2 million to £174.9 million as revenue levels returned to normal following the one-off recognition last year of £36.1 million of revenue from the Group’s Silbury Housing PFI contract. Adjusting for this, underlying revenue increased £15.9 million in 2014-15. The Group’s operating surplus was £49.9 million (2014: £46.0 million), an increase of £3.9 million. Taking into account the one-off recognition noted above the Group’s operating margin was largely unchanged at 28.5% (2014: 28.8%) reflecting the new baseline following the cost reductions in 2014 in line with the merger with Synergy. The potential impact of Welfare Reform was not as severe as expected and both Aster Communities and Synergy Housing revenues held up well.

Aster Group operates an Overlap Board structure where the same people sit on the boards of Aster Group, Aster Homes, Aster Living, Aster Property and Synergy Housing.

The Aster Communities Board consists of the same people who sit on the Overlap Board with the addition of three council nominees.

Mel Cook Chairman

Steve Trusler Non-executive director

Sally Higham Non-executive director

Dr Mike Biles Co-opted member

Phillip Owens Non-executive director

Andrew Jackson Non-executive director

Mary Watkins Non-executive director

Bjorn Howard Group chief executive

Arthur Merchant Non-executive director

John Brace Group resource director

aster Group board

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Income and expenditure account for the year ended 31 March 2015 2015 £’000 2014 £’000

Turnover 174,891 195,130Operating costs (124,808) (148,859)Administrative expenses (153) (243)Operating surplus 49,930 46,028Surplus on sale of properties not developed for outright sale 90 1,009Profit/(Loss) on sale of fixed assets 6 (241)Interest receivable and other income 3,644 2,437Interest payable and similar charges (25,672) (18,927)Other finance cost (272) (841)Share of joint venture’s interest expense (600) (219)Surplus on ordinary activities before taxation 27,126 29,246Gift Aid receivable - -Tax on surplus on ordinary activities (15) (78)Surplus for the year 27,111 29,168

aster Group board

M A R C H2015

- - - - - - 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31

Balance sheet as at 31 March 2015 2015 £’000 2014 £’000

Fixed assetsHousing properties at valuation/cost 1,289,260 1,178,572Less: social housing grant (6,324) (4,322)Net book value of housing properties 1,282,936 1,174,250HomeBuy loan 5,084 6,156HomeBuy grant (5,084) (6,067)Other fixed assets 23,389 22,826Investment in subsidiary - -Investment in joint ventureShare of gross assets 27,463 19,728Share of gross liabilities (28,282) (19,947)Total fixed assets 1,305,506 1,196,946Current assetsStock 1,799 1,591Debtors: amounts falling due after one year 63,801 53,172Debtors: amounts falling due within one year 22,645 18,390Properties held for resale - 1,554Shared ownership properties developed for sale 7,400 5,801Cash at bank and in hand 82,788 82,740

178,433 163,248

Creditors: amounts falling due within one year (30,679) (28,566)Provisions for liabilities and charges (291) (510)Net current assets 147,463 134,172Total assets less current liabilities 1,452,969 1,331,118

Creditors: amounts falling due after more than one year

740,777 690,159

Pension liability 37,652 30,272Capital and reservesCalled up share capital - -Revaluation reserves 595,027 552,146Designated reserves 493 664Restricted reserves 208 208Revenue reserve 113,846 85,187Pension reserve (35,034) (27,518)

1,452,969 1,331,118

Company number: 29573R

Group Cash Flow Statement 2015 £’000 2015 £’000 2014 £’000 2014 £’000

Net cash inflow from operating activities 50,399 55,919Returns on investments and servicing of financeInterest received 3,644 514Interest paid (26,272) (15,542)

Net cash outflow from returns on investment and servicing of finance

(22,628) (15,028)

27,771 40,891

Taxation 49 (25)Capital expenditure and financial investmentAcquisition and construction of housing properties (90,769) (77,181)Replacement of major components (10,137) (15,485)Social Housing Grant received 6,011 9,754Proceeds from sale of housing properties 19,745 19,647Cost of sale of housing properties (928)Purchase of other fixed assets (3,429) (3,341)Proceeds from sale of other fixed assets 33 37Loan arrangement fee (182) (1,781)

Net cash outflow from capital expenditure and financial investment

(78,728) (69,278)

Net cash outflow before management of liquid resources and financing (50,908) (28,412)

FinancingBond drawdown 50,956 196,892Loan repayments - (108,271)Increase in net cash 48 60,209

contact usSarsen Court Horton AvenueCannings HillDevizesWiltshireSN10 2AZ

0333 400 8222

www.aster.co.uk AsterGroupUK @AsterGroupUK

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