Financial impacts of COVID-19 on AHBs Webinar: 30th June 2020, 3pm Miriam Kavanagh Head of Financial Regulation, Governance & Registration - The ...
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Financial impacts of COVID-19 on AHBs
Webinar: 30th June 2020, 3pm
Miriam Kavanagh
Head of Financial Regulation, Governance
& RegistrationVoluntary Regulation
Office 01 Introduction & welcome attendees 3:00pm Start
Miriam Kavanagh - Head of Financial Regulation,
02 Governance and Registration. Housing Agency, Regulation
Office
Finance Webinar Medium and Long-Term Financial impacts of COVID-19 on
AHBs
June 30th 2020
3pm 03 Neil Anderson - Director of Finance, Tuath Housing
Financial impacts of Covid-19 on Tuath Housing
Medium and Long- 04 Cliodhna O’Leary - Head of Finance, HAIL
Financial impacts of Covid-19 on HAIL
Term Financial
impacts
of COVID-19 on AHBs 05 Ray Fanning- Head of Finance, Respond
Financial impacts of Covid-19 on Respond
Question & Answer Session 4:30pm FinishPOLL
AHB Sector Scale & Size
Tier 1
3,375 Units
552 AHBs Registered
275 AHBs VRC
197 Tier 1s Tier 2
5,198
Units
56 Tier 2s
22 Tier 3s Tier 3
28,419 Units.POLL
Financial Context - 2018
Tier 3* Tier 2*
Housing Assets
€3.1BN €0.7BN
Gov. Capital Grants
€1.36BN €0.29BN
CALF €295M €15M
HFA €605M €3M
*17 Tier 3 AHBs & 56 Tier 2 AHBs. Figures
are not audited, consolidation for
directional purpose onlyCOVID – 19 Initial Impact
Immediate Impacts
AHBs were fast to act with
short-term solutions created in
‘emergency period’.
Homeless Services Housing Impacts
Successful short-term Suspension of non-essential
solutions implemented with services, rent reductions &
AHBs & DRHE arrears, repairs
Developments Care & Support Services
Initially development sites Patient care, staff & patient
closed due to restrictions, risk of infection.
impact to delivery.
Increase in costs for PPE and
support staff.Context: Unit Growth Tier 3 AHBs
Planned Growth - Forecasts
€BN Projected Debt - Tier 3 AHBs Planned Growth - Units
€5.0
€4.5
2019 2020 2021
€4.0
€3.5
3,024 4,171 3,886
€3.0
€2.5 11,081
€2.0
€1.5
€1.0
€0.5
€0.0
2018 2019 2020 2021
Gov Grants CALF HFA & Other Loans
Forecast total debt €5.22BN in 2023COVID Impact on Unit Growth
Survey Results
Question: Have you assumed unit growth will be impacted due to COVID-19?
No, • 64% of organisations assume unit growth will be
36% impacted in 2020
2020 • 33% of organisations assume unit growth will be
Yes, impacted in 2021
64%
• Feedback on Impact on Growth:
• Delays in delivery due to restrictions
Yes,
33%
• Up to 25% reduction vs. targets
2021
• Delays in closing acquisitions
No,
67% • Delays in allocations due to viewings restrictions
• Revised 2020 budgetsRental & Housing Income
€M Forecasted Income
€300
€250
COVID- 19 Impacts to Housing Income
€200
• Unemployment impacting differential rents
€150 • No Rent Reviews
• Slow down in development/acquisition impacting
€100 P&A
€50
€0
2018 2019 2020 2021
Rental Income Other Housing Income Non Housing IncomeFundraising Income
• Significant fundraising amounts forecasted for 2020
and 2021.
• COVID-19 has negatively impacted fundraising
income.
• Reduction in fundraising highlighted by AHBs as a top
risk to their organisation.
• Some AHBs expect that fundraising could drop by
25%.
From 17 Tier 3 Forecasts
“90.31% indicated that their charities’ fundraising plans for
2020 had been cancelled or postponed “ Charities RegulatorPOLL
Repairs & Maintenance
€M Forecasted Repairs & Maintenance Spending
€40.0
• 60% of organisations reported they have
€1.6
€35.0 €1.5
recorded a material change in
€8.2 expenditure since the start of the
€30.0 €7.1 COVID-19 crisis.
€25.0 • AHBs highlighted that they had deferred
€8.8
€9.9 planned maintenance works due to
€20.0 COVID-19 restrictions.
€15.0
• Reductions in day-to-today repairs.
€10.0 €19.1
€16.8 • Only essential repairs were carried out.
€5.0
• Need to think about backlog in the
€0.0 medium term.
2020 2021
Reactive/Routine Maintenance Planned Maintenance
Cyclical Maintenance Void MaintenanceSTRESS TESTING & FORECASTING
Question: Have you revised the budget/forecast?
No,
• 60% of organisations have revised their organisations stressed
33%
scenarios for 2020 (31% for 2021).
2020
Yes, • Changes to assumptions include:
67%
• Rental reductions
• Reduction in Fundraising Income
• Change to planned maintenance spending
Yes, • Reduced interest payments
40% • Increase services and PPE extra costs
2021
No, • Additional IT costs for remote working
60%
• Only some organisations have conducted stress testing on
revised plansPOLL
Economic Outlook
ESRI Report May 2020
Most Likely Scenario:
• GDP Declines by 12.4% 2020
• Consumer spending drops 13%
• Unemployment at 17% for 2020
Irish Fiscal Advisory Council Report May 2020
• Gov. deficit projected to be €13 billion in 2021 & likely to
remain large for many years
• Unemployment at 9% for 2021
World Bank Report
• The global economy will shrink by 5.2% in 2020
“Ireland is only at the end of the
• Deepest recession since WWII
beginning of the current economic
• Emerging market and developing economies (EMDEs) are expected to
shock caused by Covid-19 and the
shrink by 2.5% this year, their first contraction as a group in at least sixty
future scale of its economic impact is
years.
uncertain.”
Central Bank of Ireland
Second Wave?
? “A second wave of Covid-19 would wipe out any chance of economic
recovery in Ireland either for this year or next.” OECDRegulation Office Expectations Revised Cashflow to the end of 2021 Fully revised financials for the remainder of 2020 and 2021 Stress tested 2020 and 2021 for the perfect storm The Board has fully reviewed and understands the economic, operational and financial impacts in the stressed scenarios Mitigating Actions
THANK YOU
Appendix:
ASSESSMENT FINDINGS
STRESS TESTING
• Part of overall risk framework
• Scenario selection should be linked to risk identification
• Scenarios should not be too conservative
• Vulnerabilities of the Business Plan
• Mitigating actions
KEY RATIOS
• Gearing & Liquidity
• Clearly defined risk appetite
around KPIs
ASSUMPTIONS
• All key underlying assumptions should be clearly identified
• Any changes from the previous year highlighted and explanation
provided
• Business Plan and Financial Forecast linked
TREASURY
• Cash management
• Visibility of cash balances in Financial Statements
• Cash min/max balanceYou can also read
