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 • Group Development Chief Executive Director’s Presentation John Hughes • Group Finance Director’s Group Development Director Presentation • Questions and Answers Paul Phillips 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 • Effective land buying Westgate Centre, Hackney 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
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