Funders Day 2017 Notting Hill Housing Group - Notting Hill Genesis

Notting Hill Housing Group
        Funders Day 2017
 Paul Hodgkinson – NHHT Chair

Agenda

                      • Chair’s Introduction
 Paul Hodgkinson
       Board Chair
                      • Chief Executive’s
                        Presentation
      Kate Davies
    Chief Executive   • Group Development
                        Director’s Presentation
     John Hughes
Group Development     • Group Finance Director’s
          Director
                        Presentation

     Paul Phillips
                      • Questions and Answers
    Group Finance
          Director                                 2

Funders Day 2017
Our Strategy - Kate Davies
              Chief Executive

Summary
• It’s been a very good year:
  – Financially
  – Operationally

• Economic and political changes create uncertainty
  but provide challenges and opportunities for us

                            The Bloom in Hammersmith and Fulham
                                                              4

Our Strategy

               5

Our Residents

                Altogether Better
                • PRH Customer Satisfaction
                  Index - 75%
                • Void Turnaround - 24 days
                  (23 days 16/17)
                • Group Income Collection -
                  100.81% (100.86% 16/17)
                  Figures as at October 2017

                                               6

Our Homes

Active Asset Management
• 74 homes sold (£26.3m)
• 562 family homes acquired
  Of which:
− 56 went to disposal
  boroughs
− 254 to host
  boroughs
− 73 to moves
− 178 to NHCH
− 1 as a reciprocal
  offer

                                                           7
                        Old Castle Street, Tower Hamlets

Providing More New Homes

                           • 1,571 plots acquired so
                             far this financial year
                           • Planning submitted for
                             541 homes
                           • And 589 homes
                             completed
Westgate Centre, Hackney
                           • Effective land buying
                             team
                           • More complex estate
                             and town regeneration
                             opportunities
                                                  8

Our Financial Strength

• Assets valued at £11.9bn
• 2016/17 surplus of £142.2m (2016:
  £125.4m), leading to closing reserves of
  £2,253.6m (2016: £2106.8m)
• Operating
  margin of
  35%

  Royal Albert Wharf, Newham
                                             9

Digital Transformation

• £7m investment
   – Re-invented processes

   – Working with technology partners
      (integrating Legacy to Cloud and
      web/mobile)

• Incremental cost reductions
   – 3-year payback

   – Automation & efficiency

   – Operational integration through Digital
      with partners (eg Wates and Plentific)

• Resident self-service

• Real-time data

                                               10

Our people and our work

                          • Staff Satisfaction
                            improved to 87% – up in
                            17 of 30 questions

                          • Improved management
                            development

                          • 70%+ recruited from
                            within

                          • IIP Gold
                                                  11

Closer partnerships
• Local authorities e.g.        • TfL
  Haringey, Southwark,          • Private sector partners
  Greenwich, Barnet and
  Hounslow

       Lampton Road, Hounslow
       Topping out ceremony                             12

The merger

• Genesis HA
• Similar history and
  values
• Adding assets,
   relationships and
   other resources

                        13

Challenges remain

• Housing in London is not
  affordable

• Difficulty of creating
  affordable supply

• Grenfell

• Issues for residents e.g.
  welfare reform

• Market Sale Risk

• Digital services
                              14

Funders Day 2017
Our Development Programme
              John Hughes

Locations of Schemes

                       16

Acquisitions

               2016/17    3,102
               2017/18   485 (ytd)   17

Starts on Site

             2016/17    2,425
             2017/18   635 (ytd)   18

Completions

              2016/17    1,152
              2017/18   326 (ytd)   19

GLA Programme

   Grant £172m, nearly 5,262 homes funded
   to 2021
                                            20

Planning Permissions

          4 schemes, 1,433 new homes
                                       21

New Opportunities

• Transport for
  London
  development panel
  framework –
  Landmark Court
• GLA – Gallions 3B
• LB Havering –
  Rainham
• LB Brent – South
  Kilburn Estate
                      22

Funders Day
                  Funders Day 2017
Finance Presentation

        Our Finances – Paul Phillips

Introduction

  I will cover:
  • 2016/2017 Results
  • 2017/2018 Results to date
  • NHH Exposures
  • Future prospects
  • Comment on merger

                                24

2015/2016 Results

                    2016/2017
                      Results   25

2016/2017 Results

  Will comment on the entities with
  external debt:
  • Notting Hill Housing Trust
  • Notting Hill Home Ownership

                                      26

Group Revenue Account

 Key facts
 • Surplus up by 14% from £125m to
   £142m
 • Turnover down by 1% from £415m to
   £412m
 • Turnover from Social Housing lettings up
   by 4% from £215m to £223m
 • Surplus excluding sales up from £37m to
   £56m
 • Surplus on sale of existing properties up
   from £27m to £32m                           27

Group Balance Sheet

 Key facts
 • We invested £373m (2016: £314m) in
   new housing
 • £26m of Grant receivable (2016: £6m)
 • Housing at cost now £3,065m (2016:
   £2,927m) - VP value over £11.9bn
 • Borrowings up from £1,298m to £1,336m
 • Gearing 42% - from 43% in 2016

                                           28

NHHO Revenue Account

 Key facts
 • Turnover (excluding intercompany) down
   by £22m (16%) to £120m
 • Surplus before gift aid decreased from
   £72.2m to £66.6m.
 • Gift aid to NHHT and Notting Hill
   Community Housing of £58m (2016:
   £75m)

                                            29

NHHO Balance Sheet

  Key facts
  • Invested £204m (2016: £199m) in new
    housing
  • Properties held for sale stood at
    £196.4m, of which £79.2m was for sale
    to other Group members
  • £16.7m of properties held for sale
    represented finished homes
  • Housing assets at cost stood at £619m
  • Borrowings up from £306m to £389m
                                            30

Folio London Limited

• Folio London’s purpose is to operate Notting
  Hill Housing’s market rent portfolio
• The number of homes owned and managed
  by Folio increased from 517 to 736 during
  the year due to the sale of one scheme of
  106 units from Presentation Market Rent
  with the remaining coming from new build
  units.
• At 31 March 2017 the value of investment
  properties was £142m (2016: £139m)
                                            31

2017-2018
Results to date
              32

Key events so far
 In the last year:
 • Results have held up well so far - with the
     half year surplus £14m above budget.
 • Moody’s has downgraded us from A2
     (negative) to A3 (stable) as a result of the
     changes to the sovereign.
 • Moody’s commented adversely on
     treasury policy breach (maintaining 11
     months’ cover for future uncommitted
     expenditure rather than 18 during merger
     discussions).
 • S&P rating unchanged at A+ (-ve outlook)     33

Sales to date

 As at 31 October, the position was as follows.
 • We had sold 73 shared ownership homes
    at a surplus of £5.4m.
 • We had sold 58 outright sales homes at a
    surplus of £9.9m.
 In general, sales continue well, and we have
 a further 146 shared ownership and 80
 outright sales expected for the remainder of
 this financial year.

                                             34

Other Points

 Unaudited position to 30 September 2017
 • Board budgeted surplus of £88m for the
   full year
 • Budget surplus lower than last year due to
   fewer sales.
 • Surplus to 30 September - £60.8m
 • Full year surplus should exceed budget -
   before mark to market effects
 • 186 staircasing sales - surplus of £13m

                                            35

Statement of Comprehensive Income (£m)

 Group                          Half year to 30 Sept.   2016/17
                                  Actual     Budget      Actual
 Turnover                          175.5      189.1      411.7
 Cost of sales                     (29.7)      (39.1)    (87.7)
 Operating costs                   (81.6)      (83.5)   (178.4)
 Operating surplus                  64.2       66.5      145.6
 Surplus - asset disposals          15.3        3.8       32.1
 Net interest payable              (21.4)      (23.6)    (44.4)
 Gains/(losses) - derivatives        2.9         -         8.8
 Surplus before tax                 60.8       46.7      142.2
                                                            36

Statement of Financial Position (£m)

 Group - Actual                           As at      As at
                                       30 Sept. 31 Mar. ’17
                                        Actual      Actual
 Housing properties                    3207.6      3,149.7
 Other fixed assets                     587.3        509.6
 Net current assets (excl. debt)        362.8        314.5
 Debt                              (1,467.5)      (1,336.3)
 Other long term liabilities           (373.8)      (383.7)
 Net assets                        2,316.4         2,253.8

 Reserves                          2,316.4         2,253.8
                                                        37

Consolidated cash flow (£m)

 Group - Actual                       Half year   2016/17
                                          to 30
                                          Sept.
 Cash from operations                    16.8     161.6
 Net interest paid                      (38.4)     (62.8)
 Purchase & construction of housing    (141.9)    (261.6)
 Sale of housing properties              35.2       71.9
 Investment in joint ventures             (0.9)      8.2
 Net debt drawn/(repaid)               (131.2)      36.4
 Other                                    (4.0)     21.8
 Increase/(Decrease) in cash              (2.0)     24.5
                                                      38

30 September 2016 ratios

                                 Interest
                   Gearing
                                  Cover
       NHHO                67%    1,517%

       NHHT                51%      328%

                                            39

Notting Hill Housing Trust

     NHH Exposures

               Exposures
                             Page 40

NHH exposures - build for sale

                                   2017          2016
                               No          £m    £m
 Vacant plots                 2,351         73    117
 On site - spent                 856       166    120
 On site - committed                   -   231    115
 Completed homes                   41       16     18
 unsold
 Total                        3,207        468    352
                    As at 29/11/2017
                                                      41

House price risk

  Points to note:
  • We have contracted for sale of £8m of
    the homes on site
  • We started 625 homes for sale in the
    last year and expect to start 305 in
    the next year

                                            42

NHH exposures - shared ownership

                                     2017         2016
                             No             £m    £m
Vacant plots                1,886            65     76
On site - spent             1,291           181    117
On site - committed                   -     262    140
Completed homes                  94          27     19
unsold
Total                       3,177           508    333
                  As at 29/11/2017
                                                       43

NHH exposures - land bank

                              2017    2016
                            No    £m £m
Plots for rent               768    6   13
Plots for shared ownership 1,886   65   76
Plots for outright sale    2,351   73 117
Plots for market rent        392   10   12
Total                      5,397 154 218

                  As at 29/11/2017      44

NHH - current loan book 31 October 2017

                                          £m
Drawn at variable rates                    163
Drawn at variable rates - hedged           240
Drawn at fixed rates                      1,271
Drawn on an index linked basis                 30
Total drawn                               1,704
Undrawn and committed                      574
Total                                     2,278

Also holding £217m in cash
                                               45

Future
Prospects
        Page 46

Prospects

• Initial view of 2017/2018 budget suggests a
  group surplus similar to 2016/2017budget
  (excludes MtM of derivatives)
• We continue to build and hope to start
  c2,100 homes this financial year
• We hope to secure a £200m loan from the
  European Investment Bank in early 2018.
• We hope to complete the merger with
  Genesis early in 2018.
• Long term plans show the Group, the Trust
  and NHHO in a healthy position
                                            47

Merger with Genesis - Progress

Announced a merger with Genesis Housing in
July 2017.

 Expect to amalgamate the two organisations,
  subject to banking negotiations and
  shareholder approval.

 Genesis’ credit rating is two notches below
  NHHT.

 S&P have said they do not currently expect
  the merger to be credit negative for NHHT.

 Moody’s have said they will not comment
  until early 2018 - shortly before completion.
                                            48

And finally…

               If you have been…..

                                     49

And finally…

               If you have been…..

               Thanks for listening

                                      50