The Orbit Group is committed to our communities and we have nearly 50 years’ experience in the housing sector. As one of the largest housing providers in the country, we manage over 39,000 homes across the Midlands, East and South East. Our annual turnover is in excess of £200m and we are one of the largest developers in our sector with a programme of homes for social rent, shared ownership and market sale costing over £200m per annum.
We employ more than 1,200 people to deliver our mission of Building Communities and we achieve this by working together to improve the social, economic and environmental prospects of people and communities. This mission forms the basis of our 2020 Vision guided by our passions, principles and resources.
- Moody's Report
Moody's Investors Service EMEA Limited ("Moody's") assigned an A1 issuer rating to Orbit Group Ltd (ORB). In addition, the rating agency has assigned an A1 debt rating to the proposed GBP250 million bond issuance of Orbit Capital Plc, ORB's borrowing vehicle.
Orbit Homes' (ORB) A1 rating assignment reflects 1) strong social housing margins, which has historically provided healthy interest cover; 2) moderate debt levels relative to its peers; 3) solid liquidity position with sizable unencumbered assets; and 4) strong geographic diversification. The rating also takes into account an increasing proportion of sales- related revenue and high levels of standalone swaps.
In addition our assessment that there is a strong likelihood that the UK government (Aa1, stable) would intervene in the event that ORB faces acute liquidity stress ORB is rated at the upper end of Moody's-rated English housing associations, whose ratings span from Aa3 to A3. ORB's relative position reflects its modest debt burden, which support good coverage levels.
- A diversified geographical footprint
- Historically strong social housing lettings margins and healthy interest
- Solid liquidity position backed by a sizable pool of unencumbered assets
- Moderate debt levels, rising to match Moody's rated peers
- Strong regulatory framework
- Government policy changes make operating environment more challenging
- Increasing exposure to for-sale receipts, which will become an increasingly important source of revenue
- Ambitious development plan
- Exposure to collateral posting as a result of large standalone-swap portfolio
On 8 July 2015, the UK government announced a number of measures that we view as credit negative for the sector. Notably a 1% annual reduction in social housing rents over the next four years. The rent reduction coupled with additional benefit reforms creates a more difficult operating environment for housing associations.
Projected financial metrics referenced in this report are from the post-budget revised business plan incorporating the impact of policy changes, specifically reductions to rents. ORB did not change its strategy materially following the rent decrease because the board felt the stress testing to the business plan indicated a robustness to revenue changes. However, the revised plan includes £14.7 million of saving per year by 2020 and a small decrease in the development programme from 2018-19. ORB has not included any Right-to-Buy (RtB) proceeds or Pay-to-Stay rent increases in their business plan. Economic assumptions were not altered in the revised plan as compared to the previous business plan approved by the board earlier in 2015.
The outlook on A1 rating is stable.
What Could Change the Rating - Up
A combination of the following could have positive rating implications: 1) a reduced risk profile as evidenced in lower exposure to sales; 2) sustained profitability in its social housing lettings business which would allow ORB to maintain social housing interest cover at a levels approximating 2x, despite growth interest cost given the additional borrowing; 3) reduced debt levels and 4) simplified treasury portfolio.
What Could Change the Rating - Down
Negative pressure could be exerted on the rating by one or a combination of following: 1) lower than expected sales revenue in relation to near term development plans and/or a continued growth in the development for the sales program; 2) social housing interest cover falling to levels below 1.5x on a sustained basis; and 3) an increase in borrowing that results in higher gearing than levels projected in the 2014 business plan (peaking at 45%).
Additionally, a weaker regulatory framework with a dilution of the overall level of support from the UK government or a downgrade of the UK sovereign rating would also exert downward pressure on the rating.
Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating. For further information, please refer to the rating action page here
- Financial Results
Please see our latest financial statements below for information on our financial performance across the Group. You can also explore archived statements for previous financial years here.
- Orbit Group Limited Financial Statements 2015 – 16
- Financial Statements Orbit Heart Of England 2015 - 16
- Financial Statements Orbit South 2015 - 16
- Financial Statements Orbit Treasury 2015 - 16
- Financial Statements Orbit Capital 2015 - 16
- Orbit Group Annual Report
At Orbit we take Value for Money very seriously. You can find our Value for Money Self Assessments and our Value for Money framework here, explaining how we drive efficiency across Orbit: View Value For Money area
- Orbit Information
Treasury Day November 2016, for more information click on the PDF documents below:
- Orbits Performance 2015/16
- Funding Update and Plans
- Innovation at Orbit
- Orbit's Development Plans and Slide Show
Explore the people that make up our the Group Board and Executive Team at Orbit:
Take a look at the view provided by our regulators in their viability review:
This report is an assessment of the financial viability of the Orbit Group, and of our compliance with the viability element of the Governance and Viability Standard.
This report is based on an assessment of our latest Business Plan and supporting Financial Forecast Return approved by the board in September 2013, responses to quarterly surveys (latest one December 2013), annual accounts and audit management letter for the period 31/03/2013 and other enquiries made by the regulator in coming to their assessment.
Further information surrounding our governance and regulation:
Governance rating – G1. The provider meets the requirements on governance set out in the Governance and Financial Viability standard.
Viability Rating – V1. The provider meets the requirements on viability set out in the Governance and Financial Viability standard and has the capacity to mitigate its exposures effectively (issued March 2014)
Watch a short video on Orbit’s 2020 journey so far (2013-15):
If you would like to know more about the regulatory regime that applies to housing associations you can look at the information provided on the HCA website
- Future Plans
In 2013 we launched our 2020 Vision and set nine ambitious targets to deliver over a seven-year planning cycle. We have now completed the first phase of this plan focused on ‘Creating the Platform’ 2013-15. Our focus in 2015-17 will be on ‘Delivery & Growth’ by providing quality services to our 100,000 customers and delivering 3,000 affordable new homes.
In a challenging and dynamic operating environment our Board and Executive Team (ET) has identified four strategic priorities for the year, find out what these are in the Group Business Plan - View the Orbit Group 2014-15 Business Plan. Read our 2020 Vision and Outcomes document.
- Investor Contacts
- Operating Environment
Environmental Analysis – August 2015
- The first all Conservative Budget for almost 20 years delivered in July contained some significant changes for the sector, notably the 1% reduction in rents over the next 4 years; implementation of ‘Pay to Stay’; and confirmation that Right-to-Buy would be rolled out in some form; along with more detail of where the benefit cuts would fall.
- A recent article published in 'The Times', penned by David Cameron and George Osborne, reaffirmed the Government's vision for housing and reiterated its Right-to-Buy agenda. The article was robust in tone, effectively telling the sector that it is either for or against the Government's agenda, without leaving much room for manoeuvre. The Conservative Party sees social housing not as an end in itself, but as a stepping stone towards homeownership – all tenures effectively being a route to ownership.
- The Conservative Party Conference takes place from the 4th-7th October in Manchester
- Voting is underway to elect the new Labour leader. Ballots close on 10th September with an announcement due on the 12th. Latest polls place Jeremy Corbyn ahead of the other contenders - Yvette Cooper, Andy Burnham, and Liz Kendall. Corbyn’s left-wing populism has hit a nerve with the young and those disenfranchised with politics. He has been accused by his critics of ‘Alice in Wonderland Politics’, taking the Labour party back to the early-1980s and into electoral oblivion.
- If successful the left-wing MP for Islington North is expected to be forthright in setting out how Labour would tackle the housing crisis, which is a key part of his vision for 2020. Corbyn’s housing policies align with the ‘wish-list’ of almost anyone hit by the housing crisis: lift the housing revenue account cap to allow councils to build social housing; longer tenancies; private landlord registration; rent regulation, with private rents linked to average local earnings.
- Tim Farron, MP for Westmoreland & Lonsdale, and former President of the Liberal Democrats was elected as Leader of the party on 16th July 2015.
- The Communities and Local Government Committee is holding an inquiry into the viability and sustainability of housing associations. This inquiry looks at the proposed extension of Right-to-Buy and how this and a number of other Government measures may impact on the ability of housing associations to build and develop. We have submitted evidence as part of this inquiry.
- The Government has launched a‘10 point plan for boosting productivity in rural areas’ which includes steps to making it easier to allocate land for new homes. This links with the earlier pledge to provide 200,000 ‘Starter Homes’ to be offered at 20% discount to first-time buyers by 2020.
- The HCA’s latest quarterly survey shows the sector as a whole remains financially strong with access to sufficient finance. New finance continues to be raised through both capital markets and bank loans and the sector remains attractive to lenders.
- Its latest housing market bulletin confirms national average house prices are increasing at a slower rate than this time last year, but nevertheless price rises remain strong. House building starts in England show a 14% decrease compared to the previous quarter, with a 6% decrease compared to the same quarter last year.
- Terrie Alafat, Chief Executive of the Chartered Institute of Housing, said in response to the Summer Budget: “We support the government’s ambition of building more homes and helping people realise their aspirations of home ownership and work – but not at any price.”
- The NHF is in talks with the Government to secure greater flexibility under the Right to Buy extension to housing associations. It is understood this could involve a plan under which associations pledge to build more low-cost homeownership properties in return for Right-to-Buy being adopted voluntarily.
- In conjunction with the Centre for Economic and Social Inclusion, it has published a report called 'Worklessness, welfare and social housing' (read the executive summary or the full report), which discussed the characteristics of residents, the barriers they face to accessing the labour market and the kinds of initiatives which work in supporting them. The report suggests a new partnership between Government and housing associations to support tenants in finding jobs.
Think Tanks and Research
- The G15 have published the second years findings from a three-year longitudinal study ‘Real London Lives’ being conducted with the Centre for Housing Policy at the University of York. One of the stark findings is that 16% of housing association residents in London were so financially stretched in 2014, they had used a foodbank, pawnbroker, payday loan company or rent-to-own shop during the last year.
- The Institute for Fiscal Studieshas published a report entitled ‘Living Standards, Poverty and Inequality in the UK: 2015’, which highlights that two- thirds of children in poverty live in working families.
- ResPublica, in partnership with GallifordTry, Peabody, Places for People and Trowers & Hamlins, has set out a radical vision of double devolution to tackle the housing crisis. It argues that the only way to plug the shortage of affordable housing is through the creation of Local Place Partnerships – that devolve housing to people and places. It advocates that the HCA should transfer surplus public sector land directly to these Partnerships to ensure swift release and efficient use.
- The International Longevity Centre UK has published research showing the benefits of Extra Care schemes. It demonstrates that this type of provision promotes greater independence and provides greater choice in planning for later life than, helps reduce social isolation, and improves quality of life.
- Data from the government’s English Housing Survey shows the private rented sector (PRS) continue to surge ahead of social housing. At the end of 2013/14 there were 4.4m households in PRS, compared to 3.9m in social housing.
- PWC call on Housing Associations, to reflect on their vision and purpose, and review how successfully they are delivering for their customers. In their talking Points publication they say the sector needs to harness the potential of digital, data, leadership, culture and innovation. Structural change - consolidation, acquisition, divestment and shared services will also be key for delivering a strong vision.
- Age UK has published a report looking at the impact of the Budget on the older population. This report indicates the Budget has done little to close the gap between the most affluent and poorest pensioners. It suggests that pensioners are missing out on around £3.9bn worth of benefits, with over a million in the 65+ age band still in employment.
Economy and Housing Market
- The UK's inflation rate turned positive in July, with the Consumer Prices Index measure rising to 0.1% from June's 0%.The OBR now expects GDP growth in 2015 to be down to 2.4 %, reflecting the weaker than-expected start to the year.
- The latest OBR Fiscal outlook published in July states that the Summer Budget loosened the squeeze on public services spending, this being financed by welfare cuts, net tax increases and three years of higher government borrowing. The Government has delayed the expected return to a budget surplus by a year to 2019-20, but is aiming for a slightly bigger surplus in the medium term.
- Unemployment totals have risen for the first time in two years according to the Office for National Statistics (ONS), which has reported 5.6% unemployment in the March to May period, compared to 5.5% reported in the last quarter. The ONS data shows that pay is picking up, with average weekly earnings (including bonuses) having risen at an annual pace of 3.2% in the latest three-month period, the fastest rate in five years.
- The author of Moodys, recent report "2015 Outlook Update - English Housing Associations: Sector Outlook Turns Negative Due to Adverse Policy Decisions said ".The cumulative impact of recent changes in Government policy have created a more difficult operating environment for housing associations. The sector's overall credit profile could deteriorate if housing associations are unable to maintain their current financial projections."
- It is likely that the UK interest rates rise could be delayed until autumn 2016, according to City expectations, as market turmoil in China raises the prospect of historically low borrowing costs staying in place for longer than expected. The British Bankers Association (BBA) have said the number of people moving to fix their loans at low rates was at its highest level for four years. It followed Bank of England governor Mark Carney’s indication in mid-July that the Bank could raise interest rates early next year.
- UK house prices rose by 3.2% year-on-year in August, according to the latest survey from mortgage provider Nationwide. This is the weakest annual pace since June 2013, and marks a slight slowdown from July.
- The Welfare Reform and Work Bill was introduced in the House of Commons on 9 July 2015. It has received its second reading and is currently being scrutinised by the Public Bill Committee. The NHF is preparing to submit evidence on behalf of the sector which will call for exemptions to the proposed reduction in social housing rents and will look to mitigate the severest impacts of a reduced benefit cap.
- A separate update has been provided for the Board which assesses the impact of proposals set out in this Bill.
- Iain Duncan Smith has announced that the government is planning to make changes to the sickness benefit rules to encourage more people into work. Instead of classifying claimants as either fit or unfit for work, they should be supported to take up any work they can, even if it is just a few hours.
- The number of people being evicted from rented homes has increased by around 50% since housing benefit cuts were introduced four years ago. Data from the Ministry of Justice show 10,361 households in England and Wales were repossessed between April and June this year – equivalent to more than 23,000 people.