YORKSHIRE HOUSING INVESTOR PRESENTATION AUGUST 2019 Nick Atkin - - PowerPoint PPT Presentation

YORKSHIRE HOUSING

INVESTOR PRESENTATION AUGUST 2019

Nick Atkin Chief Executive Guy Millichamp Director of Finance

For the purposes of the following disclaimer, references to “this presentation” shall mean these presentation slides (and any printed copies of them) and shall be deemed to include references to any related speeches made by or to be made by the management of the Yorkshire Housing (the “Group”), any questions and answers in relation thereto and any other related verbal or written communications. This presentation may only be communicated or caused to be communicated in the United Kingdom to persons who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the “Order”) or high net worth entitles who fall within Articles 49(2)(a) to (d) of the Order (all such persons being referred to as “relevant persons”). Any investment or investment activity to which this presentation relates is available only to relevant persons and will be engaged only with relevant persons. Persons who are not relevant persons should not remain present for, or rely on, this presentation. This presentation is being directed at you solely in your capacity as a relevant person (as defined above) for your information and may not be reproduced, redistributed or passed on to any other person or published, in whole or in part, for any purpose, without the prior written consent of the Group. The information in this document is confidential and subject to change without notice, its accuracy is not guaranteed, and it may be incomplete and is condensed. The information contained in this presentation is subject to updating, completion, revision or change, verification and amendment without notice. No representation or warranty, express or implied, is made by or on behalf of the Group or any of its board members directors, officers or employees or any other person as to the accuracy, completeness or fairness of the information or opinions contained in this presentation and no responsibility or liability is accepted for any such information or opinions save that nothing in this paragraph shall exclude liability for any representation or warranty made fraudulently. This presentation does not constitute a prospectus or offering documents in whole or in part and it is superseded by the final version of a prospectus or offering documents relating to any proposed transactions. Recipients of this presentation who intend to apply for securities issued by a member of the Group are reminded that any application must be made solely on the basis of any information contained in the final version of the prospectus or offering documents, which may be materially different from the information contained in this presentation. No reliance may be placed for any purpose whatsoever on the information or opinions contained in this presentation or on its completeness. This presentation may contain certain statements, statistics and projections that are or may be forward–looking. The accuracy and completeness of all such statements, is not warranted or guaranteed. By their nature, forward looking statements involved risk and uncertainty because they relate to events and depend on circumstances that may occur in the future. Although the Group believes that the expectations reflected in such statements are reasonable, no assurance representation or warranty can be given that such expectations will provide to be correct. These are a number of factors which could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements. Nothing in this presentation should be construed as a recommendation or advice to invest in any securities. You should make your own independent evaluation of the proposed

• transaction. This presentation does not constitute or form part of any offer or solicitation or invitation to any person to acquire any securities from any member of the Group in

any jurisdiction.

DISCLAIMER

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PRESENTING TEAM

Nick Atkin - Chief Executive

Nick has a track record of leading organisations through transformational change, driving performance improvement, with a focus on maximising the untapped potential from businesses and people. Nick has previously introduced a fully flexible/ remote working approach. He also led the move to 90% of customer led transactions to be delivered through online self-service routes. He is regularly included in the top 25 most influential people in housing and is a keen advocate of

• innovation. He uses digital as an enabler to drive fundamental change in

how businesses operate. He is also a disruptor in the ‘future of work’ debate and has been paperless for 17 years.

Guy Millichamp – Finance Director

Guy joined the group in 2001 and has held a number of finance roles before becoming director of finance in February 2015. As well as being Yorkshire Housing’s chief financial officer, Guy also leads on business planning, governance, risk and assurance. A chartered accountant with a background in the not for profit sector including charities, education and housing, Guy is currently a board member at Rochdale Boroughwide Housing. He lives in Leeds with his wife and three children.

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CREDIT HIGHLIGHTS

A successful, well-run regionally focussed housing association With broad-reaching portfolio across 20 local authorities throughout Yorkshire Focus on financial health as development programme accelerates Moody’s A3 credit rating and G1/V1 ratings from the RSH Trusted partner of MHCLG and HE – one of only 23 strategic partners nationally On track to deliver current programme of 3000+ homes by 2021, and another 3,000 by 2026 Providing over 16,500 homes across a range of tenures Supporting over a thousand elderly or vulnerable tenants Well funded, simple business model with £130m liquidity (£50m cash, £80m secured facilities) Experienced board and management with appropriate skills to oversee current strategy

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WHO WE ARE

STRONG REGIONAL PRESENCE

• Yorkshire’s largest developing Housing

association.

• Founded in 1968, now headquartered in Leeds,
• through merger with other Yorkshire HAs, and
• more recent growth through development of

new homes

• Founder member of Homes for the North
• Multi tenure portfolio with 85% on social or

affordable rents

• 2/3rds less than 50 years old
• 2/3rds houses and bungalows
• No high rise tower blocks
• Mix of family accommodation & supported

housing (older persons & independent living)

• Strong focus on sustainable communities

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• Serving a widely spread urban and rural community

across Yorkshire including * older people * tenants with support needs

• Long term strategy to deliver more homes
• While maintaining associated social added value
• And cutting costs to improve resilience

DELIVERING MORE

Current Strategic Objectives (under review):

• Growth
• Independence
• Profit
• Transformation

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FUTURE DIRECTION (WORK IN PROGRESS)

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• Growing the business and delivering high

social impact has required YH to maintain a sound financial base

• Prudent management have enabled us to

secure substantial government grant

• Trusted partner of MHCLG and Homes

England, as well as other HAs – one of only 23 strategic partners with HE

• Regional agent for Help to Buy
• Limit of 15% market sale and 25% shared
• wnership

SOUND AND STABLE FINANCIAL BASE

Key data

2015 2018 20191

Units

16.1k 16.7k 17.0k

Regulatory Judgment

G2/V1 G1 / V1 G1 / V1

Turnover (£m)

92 101 113

Social Housing Lettings T/O £m

80 87 85

Overall Operating Margin

27% 32% 31%

SH Core Margin

27% 32% 29%

Gearing

40% 47% 45%

EBITDA MRI Interest cover

1.74 1.56 1.78

1) As published in, or based on, unaudited trading update 29th July 2019

Funding Programme Grant AHP (2015-18) £17m SOAHP (2016-21) £25m LTSP wave 2 (2021-25) £62m

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Supporting sustainable communities is at the core of YHG’s strategy. This involves

• Meeting demographic needs - more homes for the elderly and those with special needs
• Two extra care schemes (more planned)
• Providing support for tenants to improve their lives
• Support people into a position of financial independence
• Help customers into employment and training
• Offer more support to those who need it
• Focus on our neighbourhoods.

We embed our social purpose in our KPIs

DELIVERING SOCIAL IMPACT

Measure by 2020 2019 performance Status People into employment, better jobs, training, volunteering 1,000 1,020 (Jun 19) Exceeding target Vulnerable people helped to live independently pa 15,000 17,231 Exceeding target

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MEETING THE CHALLENGE

• 1. Growth

STRATEGIC OBJECTIVES

• 4. Transformation
• 3. Profit – financial performance

strong and on track

• 2. Independence – more important

than ever to support our customers 12

BUSINESS OPERATIONS

Litton Road, Keighley

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STRONG REGIONAL PRESENCE

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BALANCED PROPERTY PORTFOLIO

Bedrooms

7% 4% 14% 5% 15% 18% 13% 16% 8% Pre 1919 1919-1944 1945-1964 1965-1974 1975-1984 1985-1994 1995-2004 2005-2014 2015+

Build Type Purpose

2% 1% 28% 39% 27% 3% Bedspaces Bedsits 1bed 2bed 3bed 4bed 5bed+ 80% 3% 2% 2% 3% 9%1% General needs Housing for older people Supported housing Market rent Shared ownership Intermediate Rent Other 34% 55% 11% Flat House Bungalow

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HIGH QUALITY ASSETS

New Build

3,120 new homes by 2021 High quality and easy to heat

Appraisal

Value of each property assessed c.100 uneconomic homes pa sold

H&S

£3m pa spent on building safety No high rise tower blocks Positive independent H&S review

Investment

99.6% Decent Homes £15m pa major repairs spend sustained

Strategic Asset Management

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GOOD DEMAND AND LOW ARREARS

• No. of current empty homes as a % of total stock

Current tenant arrears as % of rent roll

2,527 customers on universal credit, but up to 7,500 anticipated when fully rolled out, and more complex cases Investment in rent collection has minimised the impact of universal credit throughout whole region Strong track record in rent collection and arrears control – sector leading We actively pursue former tenant debt through the courts, when necessary, and we collect around one third of outstanding arrears from former tenants Available to let voids 0.75%, with remaining flats awaiting sale

1.4% 1.5% 1.2% 1.3% 1.4% 1.0% 1.3% 1.2% 1.2% 1.5% 1.5% 1.4% 1.5%

0.0% 0.2% 0.4% 0.6% 0.8% 1.0% 1.2% 1.4% 1.6% Actual Sector Average

1.8% 2.0% 2.0% 2.0% 2.1% 2.1% 1.8% 1.7% 1.7% 1.5% 1.5% 1.4% 1.6%

1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% Actual Sector Average

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STABLE CUSTOMER BASE

Age banding Length of tenancy Tenure type Payment method

13% 32% 25% 30%

0-1 year 1-5 years 5-10 years 10 years+

83% 10% 2% 3% 2%

social / affordable rent sub-market rent market rent home ownership supported housing

2% 11% 37% 37% 7% 6%

Cash/Cheque Debit/credit cards Direct debit Housing benefit Rent cards Standing orders

25% 44% 27% 4%

Retired 41-retirement age 26-40 0-25

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DEVELOPMENT

Aynham Close, Grassington

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BUILDING ASSETS FOR THE FUTURE

We plan to develop 6,120 new homes, predominantly for social / affordable rent by 2026, with over 1,000 already completed. Mostly family homes, all in areas where there is strong demand Completions at 450 pa, slowed and are now accelerating again.

• 200

400 600 800 1,000 1,200 1,400 2019 2020 2021 2022 2023 2024 2025 2026

Aspirational new homes completions

Social / affordable rent Rent to Buy Shared Ownership Market sale Market rent

18% 19% 22% 41%

10 yr programme progress

Completed In contract Named sites Unidentified

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DEVELOPMENT CASHFLOW (£M)

All schemes are appraised on both financial and lettable criteria, with minimum financial criteria required, including rent surplus to cover interest costs from year 1

2019 2020 2021 2022 2023 2024 2025 Total spend 79 127 169 165 103 68 59 Less grant (6) (14) (35) (31) (3) (1) Less sales proceeds (15) (36) (74) (41) (38) (32) (45) Net expenditure 58 76 60 93 63 35 15

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NEW HOMES STRATEGY BY LOCATION

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YORKSHIRE HOUSE PRICES REMAIN BUOYANT

• 20.0
• 15.0
• 10.0
• 5.0

0.0 5.0 10.0 15.0 20.0 25.0

Annual average house price change

England & Wales Yorks & Humber South East

Source – LSL property services plc analysis of Land Registry transactions

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HELP TO BUY COMPLETIONS

200 400 600 800 1000 1200 1400

Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec

2016 2017 2018 2019

Source: monthly completions in NE and Y&H regions managed by Yorkshire Housing

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CORPORATE GOVERNANCE

Lairds Way, Penistone

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SIMPLE CORPORATE STRUCTURE

Yorkshire Housing Ltd. Registered Society Charitable status Registered Provider Y H Residential Ltd. (known as Space Property) 100% owned Company limited by shares Non-Charitable Yorkshire Community Property Services Ltd. 100% owned Company limited by shares Non-Charitable Currently dormant Yorkshire Housing Finance plc. 100% owned Company limited by shares Non-Charitable

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EFFECTIVE GOVERNANCE AND CONTROL

Philip Severs

Risk and Assurance Committee

Sue Hall

Governance Committee

Keith Holloway

Development Committee

Linda Christon

Customer Services Committee

Will Lifford Chair of Yorkshire Housing Board

Sets the values, aims and strategic objectives Approves the corporate strategy, including the financial business plan and budgets Sets the appetite for risk and decides on strategies and plans for the future Monitors the performance of all parts of Yorkshire Housing through agreed key performance information and appraisal Ensures compliance with all regulatory, legal, and financial requirements Exercises control of subsidiaries through an Intra-Group agreement, setting of strategy and appointment of subsidiary Board members

The Yorkshire Housing Board’s Role

Committee Chairs 27

EXPERIENCED EXECUTIVE TEAM

Nick Atkin Chief Executive Over 28 years sector experience David Bolton Director of Property Services Over 30 years sector experience Andy Gamble Director of Development Over 33 years sector experience Cath Owston Interim Director of Customer Services Over 32 years sector experience Michelle Gregg Director of Business Transformation Over 30 years sector experience Guy Millichamp Director of Finance Chartered accountant Over 21 years sector experience

Overview Corporate Governance Business Operations Development Financial Performance Policy Changes Treasury & Funding

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EFFECTIVE RISK MANAGEMENT

Risk Impact (1 – 5) Likelihood (1 – 5) Total (1 – 25)

Statutory compliance breach 4 3 12 Significant reduction in the customer’s ability or willingness to pay rents 4 3 12 Shock in the housing market 4 3 12 Significant changes to the economy that adversely impacts the financial viability of Yorkshire Housing 4 3 12 Failure to retain or recruit the right people and skills 3 4 12 Serious health and safety incident 3 4 12 Cyber attack 3 4 12 Failure to deliver the key benefits from the Today’s Yorkshire programme 3 4 12 Failure to deliver the growth plan 3 3 9 Financial loss from the failure of a significant counterparty 2 4 8 Large scale political change 2 4 8

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FINANCIAL PERFORMANCE

York College

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SUSTAINABLE GROWTH

2015 2016 2017 2018

Published Published Published Published

Income and expenditure account (£m) Total turnover 92 96 101 101 Operating surplus 25 28 41 33 Net surplus for the year 13 14 19 16 Statement of financial position (£m) Fixed assets 778 805 827 849 Net current (liabilities)/assets 17

• 8
• 4

91 Total assets less current liabilities 795 797 823 940 Long term loans 337 341 352 451 Social housing grant 289 284 282 282 Other creditors 5 3 1 1 Revaluation reserve 29 29 29 29 Revenue reserve 134 140 159 177 Group funds 795 797 823 940

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FINANCIAL RATIOS

0% 5% 10% 15% 20% 25% 30% 35% 40%

2015 2016 2017 2018 2019

Operating margin

0% 20% 40% 60% 80% 100%

2015 2016 2017 2018 2019

SHL income % total turnover

• 0.50

1.00 1.50 2.00 2.50

2015 2016 2017 2018 2019

SHL interest cover

30% 35% 40% 45% 50%

2015 2016 2017 2018 2019

Gearing

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TREASURY AND FUNDING

Aldham View, Barnsley

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CURRENT DEBT PROFILE

Debt Profile (£m) Available Facilities Hedging all embedded Fixed Rate Maturity Profile

20 40 60 80 100 120 140 160

Jan-19 Jan-20 Jan-21 Jan-22 Jan-23 Jan-24 Jan-25 Jan-26 Jan-27 Jan-28 Jan-29 Jan-30 Jan-31 Jan-32 Jan-33 Jan-34 Jan-35 Jan-36 Jan-37 Jan-38 Jan-39 Jan-40 Jan-41 Jan-42 Jan-43 Jan-44

£ Millions 77% 14% 9%

Drawn Undrawn Liquid Resources

93% 7%

Fixed Var

• 100

200 300 400 500 600 700 2019 2020 2021 2022 2023 2024 2025 2026 Bond Fixed rate Variable rate

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PROPERTY SECURITY AS AT JULY 2019

Unit Numbers and Values

Type Units MV-STT Ratio MV-STT (net) Units EUV-SH Ratio EUV-SH (net) Total Houses 1,244 £83m 115% £72m 618 £35m 105% £33m £105m Flats 858 £45m 115% £40m 341 £15m 105% £14m £54m Total 2,102 £128m £112m 959 £50m £47m £159m

Funding Facility Valuation Asset Cover Requirement Surplus Security Bank loans £392m £549m £470m £78m Public bond £140m £177m £159m £18m Unencumbered properties (est)

• £176m

£176m Total £532m £883m £272m

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INVESTOR RELATIONS

We value open relationships with all our stakeholders News and annual reports & updates posted on our website AGM open to stakeholders Commit to speaking with investors at least annually Standing invite to corporate events

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Alison Hadden

• Alison began her housing career 30 years ago and has spent the past eight years as a chief executive.
• She is currently the chair of Stafford and Rural Homes and continues to work as an experienced interim manager

within housing.

• Alison is a member of the Risk & Assurance Committee.

Current board members are as follows

BOARD BIOGRAPHIES

Will Lifford (Chair)

• Will is a chartered accountant and a former UK head of audit with accountants Grant Thornton.
• He has held a number of non-executive roles in the public, charity and not-for-profit sectors. He is currently a Board member
• f the Independent Parliamentary Standards Authority.
• Will is a member of the Governance Committee.

Sue Hall (Vice Chair)

• Sue has more than 30 years’ leadership experience in IT transformation, risk management and consultancy.
• She was formally director of information systems and strategy with leading global law firm, Linklaters LLP and is a

non-executive director and Board Chair of the Valuation Office Agency.

• Sue is chair of the Governance Committee.

Linda Christon

• Linda has 30 years experience working in housing, health and social care.
• Formerly a Regional Director of the Commission for Social Care Inspection.
• Linda is Chair of the Customer Services Committee.

Richard Flanagan

• Richard is a Chartered Surveyor with over 25 years experience in commercial development, valuations and development

consultancy

• He currently runs his own property consultancy and is a non-executive director of York Science Park
• Richard is a member of the Development Committee

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Current board members are as follows (cont’d)

BOARD BIOGRAPHIES (CONT’D)

Keith Holloway

• Keith is a founding director of Adept People and Performance Ltd, a company that provides consultancy services to housing
• associations. Formerly a housing association Chief Executive, he has a wide range of skills and experience relevant to the

housing sector.

• Keith is Chair of the Development Committee and a member of the Governance Committee.

Naz Parkar

• Naz has worked in social housing for over 30 years, and joined the Home and Communities Agency as head of investment

before becoming an executive director in 2013.

• He re-joined local government in 2017 as the director for economy and infrastructure and in 2018 moved to the role of

director of growth and housing at Kirklees Council.

• Naz is a member of the Development Committee

David Perry

• David is a retired managing director of several Shell UK subsidiary companies. He also spent time leading the European
• peration of a foreign exchange brokerage, giving him significant experience in the world of commercial finance.
• David is a member of the Customer Service Committee

Philip Severs

• Philip is a chartered accountant. He has substantial public and private sector experience and has held a number of non-executive

roles throughout his career. He was formerly finance director of Sheffield Hallam University and is currently Chairman of Harrogate Healthcare Facilities Management LTD.

• Philip is chair of the Risk and Assurance Committee.

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MANAGEMENT BIOGRAPHIES

Current management members are as follows

Nick Atkin

• Nick joined Yorkshire Housing as Chief Executive in April 2019. He as a track record of leading organisations

through transformational change, driving performance improvement, with a focus on maximising the untapped potential from businesses and people.

• Nick has previously introduced a fully flexible / remote working approach. He also led the move to 90% of customer

led transactions to be delivered through online self-service routes

• He is regularly included in the top 25 most influential people in housing and is a keen advocate of innovation. He

uses digital as an enabler to drive fundamental change in how businesses operate.

• He is also a disruptor in the ‘future of work’ debate and has been paperless for 17 years

David Bolton

• David has been director of property services since 2008 and is responsible for the delivery of Yorkshire Housing’s property

related services to over 18,000 homes across Yorkshire including Leeds City Council homes.

• He also takes responsibility for health and safety, landlord compliance services and is lead director for Yorkshire Housing’s

home improvement agencies.

• David is a board member of Yorkshire Transformations Ltd and a trustee of East Lancashire Hospitals NHS Trust.
• An alumnus of the University of Central Lancashire, David also support the University Business School in a voluntary

capacity Andy Gamble

• Andy joined Yorkshire Housing as director of Development in June 2017.
• He has over 30 years’ experience in the affordable housing sector, working with public and private companies. He

previously worked at Accent Group where he led on development and growth since 2005.

• Andy began his career with British Waterways Board, as an assistant mining surveyor.
• He is a chartered surveyor and member of the Chartered Institute of Housing.

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MANAGEMENT BIOGRAPHIES (CONT’D)

Michelle Gregg

• Michelle leads Yorkshire Housing’s business transformation programme which will ensure the organisation is geared

up to meet the challenges of a changing sector.

• She also has responsibility for HR, learning and development and communications.
• Michelle joined in 2015 from Merseyside and Cheshire-based Plus Dane group where she was interim executive

director of neighbourhoods.

• Her previous roles include deputy chief executive for North West-based Your Housing Group.

Current management members are as follows (cont’d)

Guy Millichamp

• Guy joined the group in 2001 and has held a number of finance roles before becoming director of finance in February

2015.

• As well as being Yorkshire Housing’s chief financial officer, Guy also leads on business planning, governance, risk

and assurance.

• A chartered accountant with a background in the not for profit sector including charities, education and housing.
• Guy is currently a board member at Rochdale Boroughwide Housing.

Cath Owston

• Cath Owston is interim director of customer services at Yorkshire Housing. Her remit includes responsibility for our

neighbourhoods, independent living service and customer contact centre teams.

• Cath joins Yorkshire Housing from Rochdale Boroughwide Housing where she was executive director of customer

and community. Her thirty years in housing include four years at New Charter Housing Trust Group as director of customer experience and five years at Trafford Trust where she was transformation manager.

• She is also a board member with Bolton at Home and Chair of Starts with you, a social enterprise in Bolton

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CONCLUSION

A strong, ambitious and well-run association with 16,000 properties, tracing its roots back to 1968 Moody’s A3 credit rating (Baseline credit assessment baa1) and G1/V1 ratings from the RSH Financially robust with strong and improving performance (not reliant on property sales) Clear focus on core business, with social housing activities representing 87% of turnover Well prepared for the impact of Universal Credit & welfare reform Simple corporate structure Experienced executive and non-executive teams Excellent track record of development, adding over 3,000 new homes since 2010 Properties throughout Yorkshire, the largest county in England with a growing & diverse economy

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