MOD007667 010 Element Individual Assignment Sample
Introduction
Although Covid-19 had a negative effect on Grainger, the company’s performance over the previous six months has been solid, according to Helen Gordon, the company’s Chief Executive Officer. Grainger is the country’s biggest residential landlord. Grainger has 9,109 rental units in operation and a £2.1 billion pipeline of further 8,851 rental properties in the pipeline.
Grainger is the most prominent residential real estate company that is listed openly in the United Kingdom. During this time period, company have been offering our clients support in the privacy and convenience of their own homes, which has resulted in a considerable rise in the quantity of operational activity. During this time period, adjusted profits increased by 11 percent, and our great sales performance more than compensated for a drop in occupancy in our PRS portfolio (89 percent), which was the direct result of the Covid-19 lockout limits that were enforced.
Our rental revenue has continued to demonstrate its consistency by maintaining unusually high levels of rent collection at 98 percent and by maintaining a econstant rise in rental rates of 1.7 percent.
Evaluate financial performance
Company have met or exceeded all four of our long-term environmental, social, and governance commitments, and company are pleased with how far company have progressed in this regard. The specifics of this are detailed in the Environmental, Social, and Governance portion of this study, which begins on page 38 and continues until the conclusion of the report. Company are pleased with the progress that has been made so far in our Diversity and Inclusion Program, despite the fact that it is still in its early stages.
Company also engage with students in educational settings to promote more diversity within our industry, and company continue to seek out, encourage, and support diverse and inclusive populations to be housed in and around our facilities. It is anticipated that the introduction of a new committee, the Responsible Business Committee, which will be responsible for all elements of environmental, social, and governance (ESG), would allow board members to devote an increased amount of time and attention to these important issues.
Our year has been fruitful since company have effectively integrated important components of our technological platform, despite the fact that company have had to operate from distant locations on a few occasions. Company hope to see even more advantages in the coming years, including increased efficiency and scalability, as well as enhanced customer service, among other things.
Following Vanessa Simms’ resignation from the company, Rob Hudson was appointed to the post of Group Chief Financial Officer, as previously indicated in this article. Our newest member, Rob, joined our Board of Directors on September 1st, and he brings with him a lot of knowledge and experience in the real estate industry.
Her replacement, Carol Hui, has been appointed to the Board of Directors as a Non-Executive Director, and she has been nominated to lead a new responsible business committee that began meeting on October 1st. Carol has experience working in a variety of industries and has been involved in the implementation of environmental, social, and governance programmes.
Andre Carr-Locke, who has served as a Senior Independent Director and as the Chair of the Audit Committee, will step down from his post in February 2022, and company are appreciative for everything that he has done for the firm over the course of his tenure with the company.
It is with great gratitude that company acknowledge Andrew’s seven years of service, and company wish him every success in his future endeavours.
Because of this, company recommend a final dividend of 3.32 pence per share for the year, which would bring the total payout for the year to 5.15 pence per share. This is in accordance with our objective of distributing 50% of net rental revenue to our shareholders. Because of this, company do not plan to make any changes to the amount of our interim dividend, which is currently fixed at 1.83 pence. This decision was made because company believe that the present level is appropriate.
In addition to new purchases that total 490 new rental houses, key planning approvals that total 618 new rental houses, and over 1,000 new rental houses that are scheduled to be delivered this year, company are continuing to implement a growth strategy that has been well established. Because of the use of our in-house operating platform, company were able to improve customer retention in addition to lettings and rental rise at a faster rate than the market during this time period. This allowed us to outpace the competition in terms of revenue growth. During this time period, there was a downward trend in the market as a whole.
As company move into the busiest part of the summer season and all remaining lockdown restrictions are lifted, positive market evidence, such as the increase of 86 percent in lettings enquiries that company have generated since the beginning of the year, indicates that a robust lettings market is likely in the near future. This is according to the National Association of Realtors.
This gives us with extra confidence in a greater performance in the second half of the year, assuming that the economy of the United Kingdom reopens as presently expected in the first half of the year. To be more specific, the premise that underpins this assertion is that the economy of the UK will restart.
Budgeting and performance management
Discuss the advantages and disadvantages of making a budget for the next year. Do the results of the ratio analysis indicate any aspects worthy of special consideration?
In the beginning of the year, occupancy levels were lower than typical, which might be linked to Covid-19 limits, which had an impact on the rental market. Company have witnessed an increase in net rental income from new schemes, which has been somewhat offset by an increase in our asset recycling efforts. This has resulted in an increase in net rental revenue for us.
When company look to the future, company can see that Grainger’s course is unambiguous. The company will maintain its emphasis on driving expansion in the private rental sector in the United Kingdom, expanding on its solid roots while also offering amazing homes, beautiful settings, and exceptional service to customers.
Company were allowed to return to our offices as of the beginning of the fiscal year, but by the conclusion of the first quarter, company had been thrown back into lockdown mode. Company were able to do this because, rather than wallow in self-pity or despair, company rose to the occasion and provided outstanding service to our consumers.
Critically evaluate how performance management can use the budget to make better financial decisions.
Company were able to assist a substantial number of our clients, many of whom worked from home, during this time of change and transformation because of the presence of front-line Resident Services workers in our BTR homes. It was possible for the teams to expand the spectrum of services they could give as a result of the strengthening of legislation controlling occupational health and safety (OHS).
They demonstrated high levels of involvement and a readiness to help us in our efforts to make progress toward our goal when our office-based team members returned to the office at the end of September.
The core of our customer service concept is based on complete client happiness, and company take our obligation to provide complete client pleasure very seriously. It is only via data and intelligence, as well as direct and independent consumer feedback and input, that company have gained such a comprehensive understanding of our consumers’ interests, demands, and preferences. Our choices on capital allocation, design, operations, and marketing are all guided by the information gathered from this source.
ensuring the health and well-being of all persons is essential
Company believe that the company is a positive force for the better in an environment where there is a scarcity of affordable housing as well as an insufficient rental market in general because it provides mid-market renters with high-quality houses and excellent service standards at a reasonable price, which company consider to be an excellent value. In our opinion, these commitments and goals, which go well beyond the scope of our current projects in the areas of the environment, social responsibility, and governance, are just the beginning of a long and fruitful cooperation.
Explain two different approaches to drawing up a budget for the business.
With the goal of achieving better results, the organisation is forcing itself to go farther by incorporating environmental and social goals and responsible business objectives into every team, process, and decision, as well as into every choice made by a group of people. This comprises everyone from the Board of Directors to the operational teams and suppliers, amongst other groups of individuals.
It is our belief that operating as a socially and ecologically responsible organisation will help to the development of a more prosperous future for all of our stakeholders. Customers, suppliers, and staff are some of the stakeholders of a business. Throughout the conference, it was a joy to collaborate with him on a variety of projects, and it was also a pleasure for me as a business partner to participate in the COP26 Built Environment Virtual Pavilion.
A number of accolades and standards have been bestowed upon us this year for our sustainability and environmental, social, and governance (ESG) efforts, including the EPRA’s Sustainability Best Practice Reporting, which has granted us its sixth consecutive Gold Award for the sixth consecutive year. To add to this, our Prime Rating for the International Space Station ESG review has been consistent over time as well.
Following our performance in the GRESB’s Public Disclosure Assessment, company were awarded an A, making us the top-scoring residential organisation from a nation other than England and Wales. A more consistent approach to environmental, social, and governance performance and reporting in private rental property has been made possible by Grainger, who previously worked on the Residential ESG Guidance from the British Property Federation and the UK Apartment Association’s Best Practice Guide.
the expansion of our system’s capacity in order to handle a greater number of users.
A 97 to 99 percent collection percentage of total rental square footage was achieved by the company, in spite of the impact that the pandemic had on revenue collection. Because of the restrictions imposed as a result of the coronavirus pandemic that has spread throughout much of the United States in recent months, there were fewer people at the hotel at the beginning of the current fiscal year than usual. In the event that company had vacancies, our internal leasing employees assisted us in filling them. In addition, company remodelled and modernised the interiors of our older rental properties, among other things, in order to make them more desirable to prospective tenants going forward.
The Customer Service Desk, which was created in February and has been active since then, is now open to residents who have limited access to on-site Resident Services and can assist them with their needs.
Having lease professionals on staff enabled us to react swiftly to the spike in inquiries that happened when the market came up during the Summer. Company are grateful for their efforts.
Rental agreements were signed all around the nation, breaking all previous records in the process (Ellinger2021).
| Market Cap (intraday) | 2.13B |
| Enterprise Value | 3.16B |
| Trailing P/E | 17.88 |
| Forward P/E | 29.59 |
| PEG Ratio (5 yr expected) | N/A |
| Price/Sales (ttm) | 7.95 |
| Price/Book (mrq) | 1.23 |
| Enterprise Value/Revenue | 12.84 |
| Enterprise Value/EBITDA | 17.12 |
Our PRS portfolio was only a few percentage points shy of 94 percent occupancy at the end of September, and company were back up to 95 percent occupancy within a few weeks. To far, company have leased more than 1,300 more rental flats, accounting for 91.5 percent of our overall portfolio, which is a new corporate record.
Our CONNECT platform has received a tremendous amount of attention and resources this year, and company expect this to continue in the future. New, market-leading technology has been introduced to assist with our customer relationship management (CRM), maintenance process and supply chain, asset management, and data reporting for our whole PRS portfolio via digital leasing. As a consequence of this change, company will be better able to service our clients, which will help us to expand our company in the future.
A combination of lower occupancy (-£5.3 million) and disposals (-£4.4 million) resulted in a 4 percent fall in net rental revenue during fiscal 2018, which was somewhat offset by a £1.5 million rental increase and a £5.2 million rise in PRS investment. According to data collected at the end of October, 91.5 percent of the 1,304 units that were constructed this year were already leased, suggesting that net rental revenue is expected to expand considerably in the next year as a consequence of this trend.
After accounting for inflation, net rental income increased by 15% to £80.9 million in the year ended December 31, 2016, driven by a significant increase in occupancy in the fourth quarter and new projects that have been successfully rented, resulting in strong growth momentum into the following financial year. The company has collected £6.2 million in void recovery, £5.5 million in lettings, and a net of £1.4 million in disposal impact from the fiscal year 21 /21. In addition to the remaining lease up of FY21 launches and FY22 pipeline deliveries, which will be heavily weighted in H2 and lease up primarily in FY23, and which will generate an additional £3 million in net rent, the remaining lease up of FY21 launches and FY22 pipeline deliveries will also generate an additional £3 million in net rent. As company continue to recycle our assets, company anticipate that disposals will be commensurate with recent years.
Dividends & Splits
| Forward Annual Dividend Rate 4 | 0.05 |
| Forward Annual Dividend Yield 4 | 1.85% |
| Trailing Annual Dividend Rate 3 | 0.05 |
| Trailing Annual Dividend Yield 3 | 0.02% |
| 5 Year Average Dividend Yield 4 | 1.85 |
| Payout Ratio 4 | 33.98% |
| Dividend Date 3 | N/A |
| Ex-Dividend Date 4 | Dec 29, 2021 |
| Last Split Factor 2 | 5:1 |
| Last Split Date 3 | Feb 24, 2005 |
In the midst of a tough market environment, company maintained our resilience, delivering like-for-like growth of 1.0 percent in our PRS portfolio (compared to 2.5 percent in FY20) and 3.6 percent in our regulated tenancy portfolio (FY20: 3.0 percent ). (The number is 4.6 percent for fiscal year 2020.) The PRS saw just 1.6 percent like-for-like growth without these incentives, and company feel that company are now in an excellent position to restore rental growth levels of c.3 percent or greater to levels seen prior to the Pandemic of 2008.
Balance Sheet
| Total Cash (mrq) | 317.6M |
| Total Cash Per Share (mrq) | 0.43 |
| Total Debt (mrq) | 1.35B |
| Total Debt/Equity (mrq) | 77.82 |
| Current Ratio (mrq) | 8.45 |
| Book Value Per Share (mrq) | 2.35 |
Our London and regional portfolios have had somewhat different results in terms of occupancy rates and demand, but the difference has been rather small overall in comparison to our London portfolio.
Investment appraisal
Following the completion and stability of the project, company predict that net rental revenue will grow by about 90 percent, to approximately £137 million, over the following several years, bringing the total to around £137 million.
As a result of our tight asset recycling programme, company have been able to take advantage of favourable sales conditions, allowing us to sell to a large market and achieve a high sales volume while maintaining competitive pricing. Compared to previous evaluations, price realisations increased by 2.6 percent, and sales transaction velocity increased to 108 days, which was much higher than the national average (FY20: 120 days).
In order to dedicate our resources to growing our PRS pipeline, company have essentially ceased development for sale initiatives. Nonetheless, company have taken advantage of a number of critical site purchases in order to maximise potential. There was a profit of £1.8 million realised in the fiscal year under review, compared to a profit of £4.2 million in the preceding fiscal year.
It is estimated to be 2.4 percent for the fiscal year 2020. While our entire portfolio value climbed by 4.5 percent in FY20 (as opposed to a 2.4 percent increase in FY20), our operational PRS portfolio increased by 3.4 percent (as opposed to a 3.1 percent increase in FY20), and our highly regulated portfolio saw a 3.7 percent valuation increase (FY20: 4.0 percent ). Because of the institutional structure of the investing market, company have evaluated our PRS portfolio on a net rent/yield basis in order to properly reflect it. The completion and stability of projects, as well as a rise in ERV rental growth of 1.9 percent (referred to as the ‘ERV’), have all contributed to the increase in the PRS value in recent months. The increase is largely in line with increases in the market price of our regulated tenancy portfolio, which is mostly focused in the Greater London area (81 percent of our total real estate portfolio).
The funding and capital structure of a company are significant factors to consider.
Now that company have a secure financial structure in place, company can lay the groundwork for implementing our ambitious development goal, according to the company’s CEO.
Our LTV is covered by £641 million (compared to $650 million in FY20), ensuring that company can pay our commitments to the pipeline regardless of future capital needs or operating cashflows. If company included in this committed expenditure into our LTV calculation, our LTV would increase to 40.1 percent from the current value. This puts us well inside the 40-45 percent LTV zone.
In spite of $128 million in operating cashflows from operations, $64 million in asset recycling profits from asset recycling, and $204 million in equity offering, the company’s net debt remained at $1,042 million (compared to $1,032 million in FY20).
All of the profits from our equity offering were invested in three different projects, resulting in a total of £236 million in new investment capital.
Having finished a nine-month programme intended to prepare them for leadership positions within our organisation, our first class of future leaders has received their diplomas from the university.
The course had a female majority of 45 percent of the students, and it covered a wide range of subjects, from growing confidence to preparing for a board of directors interview.
It was necessary for participants to research and analyse the possible consequences of new law and how it would affect their organisation while working on a group project for the Executive Committee as part of their work on the project. This offered them with a chance to exhibit their leadership abilities while working together on an important corporate initiative, which they took advantage of.
the process of identifying and nurturing fresh talent
As a result of this collaboration, company worked with our joint venture partner Transport for London to develop a new educational engagement programme to encourage young Londoners to consider a career in real estate. Company also sponsored a bursary to enable a deserving student to pursue a real estate degree at the Worshipful Company of Chartered Surveyors.
In the course of this year’s operations, two new Resident Services positions were established as a result of our partnership with The Apprentice Academy and the introduction of our new apprenticeship programme. After completing their training, our Resident Services Apprentices will be placed with the Institute of Residential Property Management, a professional organisation where they will get hands-on experience in all aspects of building-to-rent operations after completing their training.
NPV and IRR techniques
Giving back to the community via the use of our abilities and skills.
The LandAid pro bono effort allowed Grainger to put our employees’ expertise and experience to good use in order to help those who were in need. Throughout the year, I volunteered my time on pro bono tasks for charitable organisations, which included lease negotiations and building inspections.
It is with great pleasure that company announce our participation in LandAid’s First Step Campaign, which seeks to increase the availability of short-term shelter for young people who are experiencing homelessness by increasing the availability of short-term shelter. The initiative, which includes financial assistance and pro bono legal aid from Grainger, is benefitting an affordable housing project in North Tyneside, which is near to our home in Newcastle.
It is necessary to conduct a systematic identification and evaluation of developing hazards. Our internal committees must first identify current risks in order to identify prospective dangers in the future or existing hazards that are difficult to quantify. This is the first step in identifying future dangers or existing hazards that are difficult to quantify. In order to detect and monitor these potential hazards, company use a tool called a “risk radar,” which is examined on a regular basis by our team of specialists.
The interconnections between our core risks, as well as the ways in which one risk might raise the chance and/or effect of another risk, have been monitored in order to get a more complete and in-depth knowledge of the dangers company will face in the future. Our team used this information to establish whether or not the essential controls already in place were appropriate, as well as whether or not they were in contradiction with one another.
framework for risk management, as well as a willingness to accept risks are essential.
The Board of Directors is ultimately responsible for overseeing Grainger’s risk management and internal control systems, as well as determining the level of risk tolerance that the firm is willing to tolerate.
Following a comprehensive evaluation of our risk appetite, the Board of Directors has determined that its risk tolerance for regulatory and reputational difficulties will remain low in 2021. In return for taking on a moderate level of development risk, the Board will be able to take advantage of the enormous potential in the PRS sector, notably in the area of build-to-rent projects, which is currently underutilised.
Financial Highlights
Currency in GBP.
Profitability
| Profit Margin | 43.99% |
| Operating Margin (ttm) | 45.56% |
Management Effectiveness
| Return on Assets (ttm) | 2.27% |
| Return on Equity (ttm) | 6.88% |
The Risk Management Framework prepared by the company’s Executive Committee has been granted the green light by the company’s Board of Directors. Each of our three lines of defence is supported by a unique internal governance system, which company have developed specifically for them. This building may be located at this location. A considerable number of important investment, operational, and business transactions are overseen by these committees, each of which has its own risk register.
Recommendations
Organizational risk assessments are carried out by the Executive Committee and its subcommittees, as well as by the management committees of the organisation. It provides assistance to the board of directors by keeping track of and analysing the effectiveness of internal controls and risk mitigation mechanisms in place.
Additionally, it guarantees that the most severe dangers are taken into account, as well. The Internal Audit department employs its monitoring approach as well as audit results in order to keep an eye on these risks in the organization’s internal control system.
It will be difficult to achieve our operational and strategic goals unless company are able to properly manage risk. In a highly competitive market, the ability to make informed decisions is vital to success.
Company need to be able to detect risks, put controls in place, and calculate returns with accuracy in order to be successful. Rather of responding to external demands, company have shown our ability to withstand risks by concentrating on internal controls and mitigants. Disaster recovery and business continuity practises help to achieve this by acting as a safety net for the organisation.
As part of our risk management approach, company strive to be responsive, forward-thinking, consistent, and responsible while maintaining the appropriate balance between company and personal requirements and responsibilities.
The risk management culture at Grainger, as well as the “three lines of defence” approach , are two of the methods company use to achieve this goal. Our risk management systems and controls must be able to keep up with the expansion of our PRS strategy in order to be successful.
As a consequence of the Covid-19 epidemic, Grainger has shown its ability to persevere in the face of difficult economic conditions. It has been shown on several occasions throughout the course of this time period that our mature risk management system is capable of adapting to a rapidly changing environment on its own.
Summary
All risks, including those related to strategy, markets, finance, legal/regulatory compliance, and operations, are taken into account. An strategy that incorporates both “bottom-up” and “top-down” techniques is used to identify specific risks.
Each risk has two scores: a gross score (which is the score before mitigation) and a net score (which is the score after mitigation) (after mitigation). When it comes to threats, which ones are most dependent on internal mitigation mechanisms, and which ones need further intervention and treatment?
A risk-scoring matrix may be used to ensure that company are following a consistent process when assessing their overall effect. Keeping a rolling 12-month timeframe in mind, company calculate the chance of operational hazards arising over the course of the year. Departmental risk registers are used to keep track of the significance of hazards and the possibility of them happening.
These risk registers, which are evaluated on a regular basis, are a representation of the ability to adapt to changing circumstances. In the corporation, a committee is in responsibility of reviewing these registers on a quarterly basis, and this committee meets once a month. Following that, a summary of the most significant risks affecting the organisation is submitted to the Executive Committee and the Audit Committee for consideration.
Following the implementation of this strategy, eleven big threats have been identified, and company are actively watching their progress. Throughout the year, the chance of many big threats happening and the possible effects of such occurrences have increased, with the possibility of these threats occurring increasing as well. In light of the general economic uncertainties as well as other external circumstances, this cautious evaluation was warranted owing to the durability of Grainger’s company as well as a significant demand for high-quality homes in the United Kingdom.
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