Presentation to Fixed Income Investors October 2019 Bruce Moore, - - PowerPoint PPT Presentation

Presentation to Fixed Income Investors

October 2019 Bruce Moore, Chief Executive Officer Paul Weston, Chief Financial Officer Simon Mellor, Head of Treasury & Long Range Planning

Conten ents ts

The information contained in this investor presentation (the “Presentation”) has been prepared to assist interested parties in making their own evaluation of Housing 21. This presentation of Housing 21 is believed to be in all material respects accurate, although it does not purport to be all-inclusive. This Presentation and its contents are strictly confidential, are intended for use by the recipient for information purposes only and may not be reproduced in any form or further distributed to any other person or published, in whole or in part, for any purpose. Failure to comply with this restriction may constitute a violation of applicable securities laws. By reading this Presentation, you agree to be bound by the following limitations. Neither Housing 21 nor any of its representative directors, officers, managers, agents, employees or advisers makes any representations or warranty (express or implied) or accepts any responsibility as to or in relation to the accuracy or completeness of the information in this Presentation (and no one is authorised to do so on behalf of any of them) and (save in the case of fraud) any liability in respect of such information or any inaccuracy therein or omission therefrom is hereby expressly disclaimed, in particular, if for reasons of commercial confidentiality information on certain matters that might be of relevance to a prospective purchaser has not been included in this Presentation. No representation or warranty is given as to the achievement or reasonableness of any projections, estimates, prospects or returns contained in this Presentation or any other

• information. Neither Housing 21 nor any other person connected to it shall be liable (whether in negligence or otherwise) for any direct, indirect or consequential loss or

damage suffered by any person as a result of relying on any statement in or omission from this Presentation or any other information and any such liability is expressly

• disclaimed. This Presentation includes certain statements, estimates and projections prepared and provided by the management of Housing 21 with respect to its anticipated

future performance. Such statements, estimates and projections reflect various assumptions by Housing 21’s management concerning anticipated results and have been included solely for illustrative purposes. No representations are made as to the accuracy of such statements, estimates or projections or with respect to any other materials

• herein. Actual results may vary from the projected results contained herein.

This Presentation is made to and is directed only at persons who are (a) "investment professionals" as defined under Article 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Order") or (b) high net worth entities falling within article 49(2)(a) to (d) of the Order (all such persons together being referred to as "relevant persons"). Any person who is not a relevant person should not act or rely on this Presentation or any of its contents. Any investment or investment activity to which this Presentation relates is available only to and will only be engaged in with such relevant persons. This Presentation does not constitute or form part of, and should not be construed as, an offer to sell, or the solicitation or invitation of any offer to buy or subscribe for, Bonds in any jurisdiction or an inducement to enter into investment activity. No part of this Presentation, nor the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. The distribution of this Presentation in certain jurisdictions may be restricted by law and persons into whose possession this Presentation or any document or other information referred to herein comes should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. This Presentation and any materials distributed in connection with this Presentation are not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would require any registration or licensing within such jurisdiction. Housing 21 does not accept any liability to any person in relation to the distribution or possession of this presentation in or from any jurisdiction.

Conten ents ts

1. Who we are and Our Market Position 2. Our Governance Structure 3. Our Strategic Priorities 4. Key Reported Investor Financials 5. Treasury Management

Stable le & Ex & Expe perie ienced ced Exec ecutiv utive e Manage gemen ent Tea eam

 Prior to joining Housing 21 in 2013, Bruce was Chief Executive for Hanover Housing Group, a post held since 2006. He has also been Chief Executive of Wolverhampton Homes and Deputy Chief Executive of Anchor Trust  Bruce has served as a board member for a number of housing associations and charities including acting as a Housing Corporation appointee and is currently the Deputy Chair of Age UK Birmingham. Bruce has recently completed a PhD in the governance of Registered Providers of Social Housing

Bruce Moore

Chief Executive Officer  Paul, who has 30 years of experience in finance, joined Housing 21 in 2012 after a six month role as the Interim Chief Financial Officer of the Home Group. He previously worked for The Allied Healthcare Group (2004–2012), an AIM/NASDAQ listed concern and was their Chief Financial Officer. Paul is also currently a Non Executive Director of The Wrekin Housing Group and Churches Association of Dudley and District (Chadd). He was previously a Non Executive Director of a NHS Trust  Prior to joining Allied Healthcare in 2004 Paul’s previous experience included SSL International plc, a worldwide manufacturer and distributor of healthcare and consumer brands, Fruit of the Loom and Arthur Andersen.

Paul Weston

Chief Financial Officer  Tony joined Housing 21 in 2014. He is a business and marketing graduate. His career in housing and care services for older people began with Anchor Trust in 1998  He joined Hanover Housing Association in November 2007, where he held three successive roles – Extra Care and Services Director, Strategy and Improvement Director and most recently Retirement Housing and Property Director  Tony is currently a Non Executive Director of The Community Housing Group and Oakleaf Commercial Services Ltd.

Tony Tench

Chief Operations Officer

Who we are and Our Market Position

Wh Who are w e we e – Housin sing g 21 1

• National presence, owning and/or manage over 21,000 Retirement (71%) & Extra Care (29%) housing units
• The largest provider of Extra Care and leading provider of affordable and contemporary retirement housing in England
• Focus on older people of modest means
• Provide Social Care services in Extra Care - no clinical or extensive nurse–led care
• Successful track record of growth in housing stock and operating surplus – 0.6% exposure to outright sales in

development plan

• Strong demand for older people housing from our local authority partners
• Limited exposure to welfare reform as a result of customer demographics
• High resident satisfaction on the back of quality and responsiveness of our services
• RSH’s top Financial Viability and Governance rating of V1 and G1 – IDA March 2019
• A (stable) credit rating from S&P – July 2019
• Not for Profit – over 50 years experience

Tailored, good quality services that meet customers need Achieving the right balance between cost, quality and performance Continuous drive for improvement and innovation 21 Better Experience Value for Money Investing in our assets and service delivery models

• Corporate purpose - is to provide contemporary housing and care services and solutions to meet the needs of older people of

modest means

Identity

Our Key Business iness Stre tream ams s

Extra Care Housing |6,176 properties | c. 42,000 hrs/week of Social Care

 Purpose-built apartments with 24-hour on-site support and care services tailored to meet individual needs  Typically an Extra Care scheme is made up of 60 to 80 units where residents enjoy communal facilities such as restaurants, hairdressers and shops  Schemes link up with schools, businesses and healthcare providers – ensuring residents feel part

• f the wider community

 Housing 21 is the largest provider of Extra Care housing with c. 10% market share

Retirement Housing |14,833 properties

 Promoting independence and choice for older people of modest means through self-contained flats/houses organised in “Courts” with a communal lounge and on-site court manager service  Court Managers offer advice, arrange help If necessary and manage the building  Alarm system provides out-of-hour support to 24/7 call centre

Identity

Where e We Fit t in the Mark rket t Place ce

Mainstream Housing Specialised Housing

Adapted Home General Needs Lifetime Home Wheelchair Home Very Sheltered Cohousing Sheltered Retirement Extra Care Close Care Retirement Village Dementia Care Home Residential Care Home Nursing Home Hospital Hospice

Individual homes to buy or rent – not designated for any specific user group though Lifetime Homes includes age-friendly features and wheelchair housing is specially designed. Personal care, support, other services and amenities available within the community. Groups of homes (usually flats) to buy or rent – designated for older people (typically 55+). Personal care and support usually arranged or provided within the development together with shared facilities and activities.

Care Homes

Residential care rather than independent living.

Identity

Strat rategic egic Plan an 2019 – 2022 2022 – Our key messa ssages ges

• 1. We are experts in

the provision of housing for older people

• 2. We want to do

more and are committed to development

• 3. We are leaders in

providing digital connectivity for

• lder people
• 4. We lead by

providing local choice and control to residents

• 5. We are a leading

dementia-friendly

• rganisation
• 6. We want to be an

'employer of choice'

• 7. We are a

charitable and not for profit

• rganisation
• 8. We believe Court

Managers make our Retirement Housing a positive choice

• 9. We believe Extra

Care provides a more desirable alternative to residential care

• 10. We are

committed to helping older people

• f modest means

Our Strategic Plan 2019 – 2022 reflects our seven key priorities showing a combination of renewed purpose and continuing ambition. It also sets out our ten key messages of who we are and what we stand for.

Key Facts ts and Figure ures s

18446 976 1436 151 Rented Shared Ownership Leasehold Other

Tenure Mix

2015 2016 2017 2018 2019 27.1 26.6 32.3 37.6 35.8 199.1 214.7 197.8 178.8 186.4

Total Revenue & Operating Surplus

Total Revenue Operating Surplus

Our Governance Structure

Simple ple and transparent nsparent corp rporat

• rate

e structu ructure re

 No separate development vehicle, funding vehicle or Joint Ventures  Two ring fenced PFI subsidiaries, no cross guarantees exist  One scheme in Guernsey and our Goldsborough Estates acquisition (will be hived up to H21)  21,009 properties at 31 March 2019

Housing 21 ( Registered Provider ) A Co-operative and Community Benefit Society 18,530 owned & managed properties Goldsborough Estates Ltd Private limited company 577 properties Freehold / Long leases Housing 21 Guernsey LBG Private company limited by guarantee 86 owned properties Kent Community Partnership Limited (PFI) A Co-operative and Communities Benefit Society (Special Purpose Vehicle) 340 owned properties Oldham Retirement Housing Partnership Limited (PFI) A Co-operative and Communities Benefit Society (Special Purpose Vehicle) 1,476 managed properties

Governanc ernance e Structu ructure re

Stephen Hughes, Chair

Extensive local government experience and ex-CEO of Birmingham City Council. He brings considerable knowledge and experience of housing and PFI projects.

Ann Turner, Chair ARMC

Over 25 years of experience in executive positions at three large housing association, Ann has served on numerous CIPFA and NHF committees.

Michael McDonagh, Chair IDC

Held several leadership roles at KPMG and led the Public-Sector Audit practice. Michael has a history of mentoring across the business.

Stephanie Heeley

A resident board member who passionately believes that the focus of the organisation should always be on the resident.

Neil Revely

With over 30 years in social services for local authorities, Neil provides consultancy across health, housing and adult services.

Kathleen Boyle

Kathleen brings knowledge and familiarity of the housing and care sectors through 30 years’ experience working in national and local organisations.

Liz Potter

With over 30 years of housing experience, Liz is currently the Chair of Curo and has been involved in recovery action plans with the HCA.

Michael Knott

Over 30 years of progressive experience from consumer goods through engineering to health and social care. He was previously MD of Shaw Healthcare.

Ian Skipp (Independent - ARMC)

Ian is the Group Director of Finance and Resources at Futures Housing Group.

Christina Law(Independent - ARMC)

Christina is a chartered accountant with experience across multiple industries including investment and trading properties, retail, financial services and not-for-profit organisations.

HC21 Board

Audit & Risk Management Committee Governance Committee Investment & Development Committee Oldham Board Kent, Guernsey & Walsall Group

Chief Executive Officer Chief Financial Officer Chief Operations Officer

David Clark

David is a residential property management specialist and chair and co-

• wner at Mainstay Group.

Elaine Elkington

Elaine has a wealth of housing experience and breadth of expertise regarding housing development gained in a number of executive and leadership roles.

Identity

Key 18/ 18/19 Highlig ghlights hts

• Board New Chair
• 2 independent audit members
• IDA – GI VI March 2019
• Over 600 units acquired
• Investors in people Gold
• ESG Focus
• Strategic Plan
• Housing 21 name
• 94% of all Care Services rated as good or
• utstanding by CQC

Previous Governance Highlights

• Since 2013, the business has reshaped to

focus on older people’s housing provision with limited related care services, allowing us to concentrate on our core purpose, providing a more stable footing for further growth.

• In 2014, we identified a new clear statement
• f purpose and 3 strategic principles. We

delivered 1,131 new Extra Care properties.

• In 2015, we achieved IIP Silver and started to

implement our devolved operating model.

• In 2016 we disposed of our non-core Home

Care business.

• In 2017 we identified our 7 strategic

priorities.

• In 2017 we secured a £250m bond. We also

acquired 563 properties from Your Housing Group

• In 2018 we achieved IIP Gold. We also

acquired 563 properties from BUPA.

• Our Annual Board away-days are used to

reflect on future direction.

Envir ironm

• nmen

enta tal, l, Socia ial, l, Gover ernance ce - ESG

• All properties by 2021 will meet energy efficiency level of EPC level C or above
• G1/VI reconfirmed March 2019
• Social benefits – significant reductions in inpatient stays, lower health & social care

costs, reducing loneliness and isolation

• Social Value of sheltered housing – Demos June 2017
• Key aims for 19/20 is for Housing 21 to update it future Environment & Social

agenda and its reporting

• Sustainability Review –Anthesis

Climate change Water Usage Energy Transport Waste

Identity

Risk sk Managem ement nt

 Continual review of risk appetite by the Board  Adopting a cautious approach to risk taking, with a culture of managed decision making protecting long term viability and reputation of the organisation  Top two current risks:  New build property sales  Achievement of system refresh outcomes  Regular reporting on sector and global risks supplemented by horizon scanning enabling challenge.

• Relatively benign risk environment – rent increases confirmed
• Due to customer base (majority 65years+) minimal impact of welfare reform
• Sheltered Rent and LHA cap, proposals dropped
• Assessment of Brexit identified minimal workforce impact
• Grant regime currently favourable

 Low sales risk

From risk averse to risk hungry Financial: Managed Legal/Regulatory: Cautious Health and Safety: Averse Reputational: Averse Operational Delivery: Open Technological: Open People and Capacity: Open

Risk Appetite

Our Strategic Priorities

Identity

Our 7 K Key Priorities iorities

1.

• 1. Providi

viding ng More Homes mes

• A successful track record of Development
• Key Development highlights included
• 202 properties completed in 2018/19
• Additional 539 properties under construction at year end
• Invested £33.9m in new construction and acquisitions
• Acquired 77 Extra Care Living properties and 577 leasehold

properties, Goldsborough Estates Limited, for £1.7m from BUPA

Identity

New Developments

• pments

Location : Bransdale View Hemsley Housing type : 66 Extra Care flats Accommodation type : 1 and 2-bed flats Tenure: : 21 rented, 40 shared ownership & 3 outright sales Date Completed : March 2019 Location : Casson Court, Thorne Housing type : 72 Extra Care flats Accommodation type : 1 and 2-bed flats Tenure : 35 rented, 37 shared

• wnership

Date Completed : March 2019 Location : Thomas Fields, Buxton Housing type : 53 Extra Care flats Accommodation type : 2-bed flats Tenure : 27 rented, 14 shared ownership & 12 outright sales Date Completed : June 2018

Identity

Development lopment pipeli line e until il 2024

• 2018 Tenure mix vs 2019 Tenure mix – clearly highlighting

the de-risking of the Dev plan 2024

• Total split by Committed vs Uncommitted – showing how much of

the plan remains uncommitted (Committed = Contractual and/or DSG 1st stage approval)

44.9% 53.5% 47.1% 45.9% 8.0% 0.6% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2020 - 2024 (2018 BP) 2020 - 2024 (2019 BP) Rent Shared Ownership Outright Sale

Identity

Providi iding ng more re homes es - Development

• pment pipeline

eline until il 2024

• Since the May 2018 business plan there has been significant movement away from outright sales both to rental

units and shared ownership.

• The 288 units forecast to be developed for outright sale in the 2018 business plan has been reduced to 39 in the

2019 plan. Key actions to manage the sales risk  Focus on rental/mixed-tenure developments  No outright sale-only development  Wide geographical spread of developments  Comprehensive overarching sales strategy adapted to individual schemes  Potential to accept lower sales values, lower shared

• wnership mix

 Potential to convert sales to rental tenure  A significant portion of the current development programme is not contracted and can be removed in the event of market downturn

Providi iding ng More Homes

• mes – effectiv

ctive e oversight sight and assuran surance ce

The Board

The Board set the strategic direction, development targets and review performance at each board meeting.

Investment and Development Committee (from December 2018) - Approve schemes over £10m

A committee made up of board members and the executives provide oversight and assurance on the delivery of agreed property development targets, treasury strategy and make recommendations to the board on issues requiring strategic realignment.

Development Steering Group - Approve schemes valued up to £10m

A group of cross functional head of services and the COO to consider progress towards meeting strategic priority, ensures effective

• versight of development programme and robust financial and operation risk management in a timely manner.
• Key areas of consideration – Strategic fit, demand, deliverability, financial viability and operational risks
• 3-stage assessment of new investments – Informed decision making based upon initial detailed proposal, lockdown

consent and post completion reviews

• Performance monitoring – Progress against targets is monitored on a regular basis and reported to the Development

Steering Group, Investment and Development Committee, and the Board

• Development appraisal assumptions – Reviewed on an annual basis and agreed by the Board

• 2. Quality of Existing Properties

 Completed the third year of the five year investment programme to invest more than £135m (£27m pa) in enhancing the design and specification of existing propertiess  Undertook over 500 capital projects  Considerable progress has been made and we are on track to complete the 100% target programme by 2021.  Undertook a comprehensive review of all aspects of fire safety  No combustible cladding and only 3 high rise blocks  Installed sprinkler system in these 3 blocks at a cost of £750k  Additional fire compartmentation work and reconfiguring alarm zoning investment of £1.4m  Minimal timber framed building – type 4 FRAs assessment currently in progress

93% Kitchens

less than 20 year old

92% Schemes

received design led makeovers in the past 7 year

94% Bathrooms

less than 20 year old

78% Schemes

Energy level C

• r above

Quality of Existing Properties

Meeting the Homes standards  Regular monitoring to ensure that 100% of our Courts meet ‘Decent Homes’ standard as a minimum  Comprehensive Court business plans to determine longer term viability and investment requirement  Rolling five-year investment programmes and agreed budgets are prepared every year for each scheme and shared with our residents  Information related to responsive repairs, service costs and major works is published via the Residents Handbook  Asset management value for money strategy in place, with key metrics reported within the value for money report  Regular compliance review with specific KPI reporting

• n areas of property compliance (e.g. gas, fire,

electricals, water etc.)  Comprehensive servicing regimes managed centrally for all our fire safety equipment  Tracking and reporting of high priority actions following risk assessments and or servicing

Indicator Our commitment and progress Gas Safety Certificate 100% Undertaken annually Fire Risk Assessment 99.2% Undertaken at least on 18 month cycle – 4 currently

• utstanding

For high rise buildings, undertaken on 12 month cycle. Emergency Lighting servicing and testing 100% Undertaken on 12 month cycle. Fire Alarms servicing and testing 97% Undertaken every six months – 5 outstanding Water Hygiene Risk Assessments 100% Undertaken every two years. Asbestos Management re- inspection 98.8% Undertaken on 12 month cycle – 4 outstanding Electrical Hardwire Testing – communal areas 100% Undertaken every five years. Electrical Hardwire Testing – individual properties 96.3% Undertaken every ten years (changes to 5 years from October 2019). Portable / Fixed Appliance Testing (PAT / FAT) 100% Undertaken on 24 month cycle.

Performance against our key safety commitments – August 2019

Identity

Investment estment in Exis xistin ting g Proper pertie ties

Old New

• 3. Qua

uality lity & R & Responsiv ponsivene ness ss of Our ur Servic vices es

 Dedicated Court Managers and devolved operating model  94% care services at the year end assessed as at least good by CQC  In Apr-18, we implemented significant enhancements and changes to care staff employment terms and management structure as part of our commitment to quality

• Circa 70% care staff are on guaranteed hours and

everyone receives a pay rate of at least 10% above NLW

• Strengthened the care management structure

 Continue to seek to recover additional cost impact from the councils through enhanced charge rates over the next two to three years to ensure maintenance of similar level of

• perating surplus

 Maintained Extra Care (care) performance in 2018/19 contributing £0.9m operating surplus (£1.1m in2017/18)  4 schemes now achieved CQC rating of outstanding

• 4. Peop
• ple

le and nd Poten ential tial

• Achieved Investors in People Gold in 2018
• Considerable investment in the training and development of all our staff
• Median pay gap of 26% largely due to the structure of the workforce in

the sector in which we operate

• Care staff, domestic staff and Court Managers account for the vast

majority of our staff and more than 90% of the people in these roles are female

• Big focus on staff engagement

• 5. Syst

stems ems & Technology

• logy

 PEBBLEs (Aareon) in May 2019 marked the start of an exciting process of improvement that will transform the way we work and provide improved service and support to residents  Maintaining focus on information governance i.e. GDPR and security and integrity of the IT infrastructure / systems  Workplace (a social media platform) was introduced in 2018 to engage with HC21 staff who don’t have access to computer or HC21 email account  Over 150 installations of digital alarms now completed. Partnership developed with Virgin Media to give our residents the option to access their digital cable services  Installation of communal WI FI in all Extra Care schemes is in progress

• 6. Value

e for Money

Reinvestment % New Supply Delivered (Social Housing)

Investment in new stock and existing stock as a % of total stock value Units acquired or developed as a % of total units

EBITDA MRI interest cover % Gearing %

Value e for Money y

Headline social housing cost per unit

Operating margin % (social housing lettings only) Operating margin % (overall) Return on Capital Employed (ROCE) %

• 7. Innovation and Influence
• Continue to demonstrate our credentials as a thought leader and share
• ur expertise on housing for older people:
• Sponsor and support the All Party Parliamentary Group on Housing

and Care for older people

• Chair of nationwide Dementia and Housing Working Group
• Hosting the ‘Housing – Rising to the dementia challenge’ events
• Developing an event for planners to increase awareness of social

landlords and the Extra Care brand

• Commissioned the University of Worcester to explore ‘walking with

purpose’ in our Retirement Housing and Extra Care schemes

• Bruce Moore continues to be part of a group working with The Ministry of

Housing, Communities and Local Government to develop the new

• versight regime to ensure quality and value for money in the supported

housing sector

• Continue to contribute to a range of networks including the Housing and

Dementia Research Consortium, Housing LIN, the Dementia-friendly London Housing Working Group, Dementia Action Alliance, Alzheimer’s Society, ADASS

What our residents say

Key Reported Investor Financials

Identity

Key Financi ncials als

FY Ending 31st March (Group) 2016 2017 2018 2019

Turnover (£m) 219.7 202.4 178.8 186.4 Operating surplus (£m) 26.6 32.3 37.6 35.8 Overall Operating Margin 12.1% 16.3% 21.0% 19.2% Net interest costs (£m) (15.9) (16.1) (17.5) (19.1) Sale of other assets and fair value movements 0.9 0.8 1.3 1.4 Surplus before taxation 11.7 17.0 21.5 18.1 Net Margin 5.3% 8.4% 12.0% 9.7%

FY Ending 31st March (Group) 2016 2017 2018 2019

EBITDA MRI margin 17% 20% 20% 18% EBITDA MRI interest cover (EBITDA MRI / Gross Interest cost) 161% 168% 140% 122% Housing properties at historic Cost (£m) 940.5 945.2 970.8 1,000.1 Gross Debt (£m) 468.2 459.1 622.4 602.1 Gearing ( Gross Debt / Housing Properties at Deemed Cost ) 43% 42% 56% 53% Cash from operations (£m) 66.0 73.9 71.7 60.4

Operating surplus excluding discontinued and one-off items 2018 2019

Operating surplus (£m) 37.6 37.3 Surplus before taxation 20.4 19.5

Identity

2019 G Group up Turn rnover er and Operat rating g Surplus plus

* Service charge margin represents a contribution to corporate overheads and sinking funds.

Identity

Operat rating ing Surplus lus and Net et Surplus rplus

Group Operating Surplus Bridge Net Surplus Bridge

Retirement Housing – Decrease as a result of higher repairs expenditure in the year and 1% rent reduction. Extra Care – increase is driven by the full year impact of new properties from 2017/18, affordable rent conversions and acquisitions. Development property sales – despite 19 properties being sold in 2018/19 versus 8 in 2017/18, the increase in surplus is relatively modest as a result of the profile of properties sold in the year being at lower margins. Corporate – increase in spend largely driven by wage and head count inflation. Goodwill – a one-off charge in 2018/19 based on the decision to write-off goodwill arising from the Goldsborough acquisition. Interest receivable – increase as a result of high cash balances being held

• n deposit and in gilts for the full year.

Interest payable – the increase in costs is largely driven by the full year impact of having £250m bond financing versus five months in 2017/18.

Identity

Operat rating ing Performanc

• rmance

e Indicat cator

• rs

2016 2017 2018 2019 Retirement Housing 2.4% 1.5% 1.0% 1.1% Extra Care Housing 2.5% 2.3% 2.0% 1.5% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0%

Re-let Voids

Retirement Housing Extra Care Housing 2016 2017 2018 2019 Retirement Housing 43 31 26 26 Extra Care Housing 50 33 25 24 10 20 30 40 50 60

Average Re-let Days

Retirement Housing Extra Care Housing 2016 2017 2018 2019 Retirement Housing 0.6 0.4 0.4 0.5 Extra Care Housing 0.5 0.3 0.3 0.5 0.0 0.2 0.4 0.6 0.8

Rent Arrears

Retirement Housing Extra Care Housing 2016 2017 2018 2019 Retirement Housing 83% 92% 93% 92% Extra Care Housing 83% 90% 92% 90% 75% 80% 85% 90% 95%

Repairs Satisfaction

Retirement Housing Extra Care Housing

Identity

Balanc ance e Sheet

• Current assets in 2019 includes cash/short term investments of £215m (py £239m). Long term liabilities reduced in 2019

mainly due to gross debt reductions. £'m 2019 2018 2017 Fixed Assets 1,147 1,116 1,091 Current Assets 359 377 207 Current Liabilities (less than 1 year) (118) (103) (97) Total Assets less Current Liabilities 1,388 1,390 1,201 Long-term liabilities (over 1 year) (708) (721) (563) Net Assets 680 669 637 Share Capital

• Hedging reserves

(56) (54) (64) Revaluation reserves 302 302 303 Income & expenditure reserves 434 421 398 Total Capital and Reserves 680 669 637

Identity

2019 G Group up Cash sh Flow Bridge dge

• Free cash-flow capacity of £13.3m created in year for new development investment and debt repayments.

Treasury Management

Identity

Debt t maturit turity y profile ile

• Following the bond issue in 2017 and extension of £25m RBS undrawn revolver, average maturity of the loan book is now

approximately 13 years

• Except for the £25m undrawn revolver, all of the loan portfolios have an amortising repayment profile. Approx. 17% of the loan book

is set to mature in the next five years with a maximum of 8% maturing in the FY 2022/23 – low concentration risk

• The maturity profile will therefore support a number of different repayment profile options for any further financing
• Loan book = £505m Association & £122m PFI debt

Identity

Finan ancial cial Risk k Managemen gement

93% 7% Fixed Rate Debt LIBOR-linked Debt Inflation-linked Debt

93% Fixed Rate Debt

2018-23 Hedging Position of Existing Group Debt  Very strong covenant performance supported by a robust risk management process (risk appetite/shadow limits, stress testing, scenario analysis)  Robust financial stress testing ensures no covenant breaches  93% of the current loan book is on fixed rate basis for the next five years 2019-24 Covenant Performance Interest Cover Gearing

Policy Benchmarks

• The following benchmark performance metrics are applied at the Association level.

Risk Area Code Benchmark Target Limit Actual Comments

Liquidity L1 Daily Liquidity Headroom - (Instant cash & overnight deposits) Minimum £10.0m £24.7m L2 Short term Liquidity Headroom - (Daily Liquidity & charged undrawn facilities should be greater than 6 months SIP & Development budgeted

• utflows)

Minimum £39.1m £124.7m Incl. £55m nominal value

• f Gilts

Interest Rate D1 Floating/Variable rate debt - (LIBOR & Inflation linked debt) Maximum 25% 9% 7% at Group level Covenant Compliance C1 Gearing (covenant ratio < 60%) Maximum 55% 25% Year-end position C2 Interest cover (covenant ratio > 110%) Minimum 150% 228% Year-end position Re-financing R1 No more than 20% of drawn debt should mature in any single financial year in the next 5 years (concentration risk) Maximum 20% 8% c£40m maturing in the FY 2022/23 R2 Facilities should be in place at least 15-21 months In advance 18 months 32 months Per business plan

Identity

Summa mmary y

We are proud of our track record of strong operational performance and financial robustness.

• National presence, owing and/or manage over 21,000 Retirement (71%) & Extra Care (29%) housing units
• The largest provider of Extra Care and leading provider of affordable and contemporary retirement housing in England
• Focus on older people modest means
• Provides Social Care Services in Extra Care with no clinical or extensive nurse –led care
• Successful track record of growth in housing stock and operating surplus – 0.6%exposure to outright sales in

development plan

• Strong demand for older people housing from our local authority partners
• Limited exposure to welfare reform as a result of customer demographics
• High residents satisfaction on the back of quality and responsiveness of our services
• RSH’s top Financial Viability and Governance rating of V1 and G1 – IDA March 2019
• A (stable) credit rating from S&P – July 2019