Investor Presentation - 28th October 2021 Nick Atkin, Chief Executive Andy Oldale, Executive Director Finance & Governance - Yorkshire Housing
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Investor Presentation 28th October 2021 Nick Atkin, Chief Executive Andy Oldale, Executive Director Finance & Governance
Disclaimer The information contained in this investor presentation including the slides and any related speeches made by the management of Yorkshire Housing Limited (“Yorkshire”), and questions and any answers thereto or any related verbal or written communication in respect thereof (“The Presentation”) has been prepared to assist interested parties in making their own evaluation of Yorkshire. This presentation is believed to be in all material respects accurate and 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 law. By reading this Presentation, you agree to be bound by the following limitations. Neither Yorkshire nor any of its representatives, directors, officers, managers, agents, employees or adviser or their respective affiliates, advisors or representatives, makes any representations or warranties) or accepts any responsibility as to or in relation to the accuracy or completeness of the information in this Presentation (and no-one is authorized 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 any reason of commercial confidentiality information on certain matters that might be of relevance to a prospective investor has not been included in this presentation No representations 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 Yorkshire 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, estimate and projections prepared and provided by the management of Yorkshire with respect to its anticipated future performance. Such statements, estimates and projections reflect various assumptions by Yorkshire’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 in 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. The information presented herein is an advertisement and does not comprise a prospectus for the purposes of Regulation (EU) 2017/1129 as it forms part of domestic law by virtue of the EUWA (the UK Prospectus Regulation) and/or Part VI of the Financial Services and Markets Act 2000. 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, any securities of Yorkshire 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 and other information 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. The Issuer does not accept any liability to any person in relation to the distribution or possession of this presentation in or from any jurisdiction.
Agenda 1 Introduction to Yorkshire Housing 6 Financial & Operating Performance 2 Operating Area and Stock Profile 7 Financial Plan, Treasury & Funding 3 Development 8 Refinancing Strategy 4 ESG 9 Summary 5 Governance 10 Appendices
Highlights • Rapid return to G1 after a 13 months at G2 • Strengthened Board with relevant skills • Bolstered leadership capacity • Robust operating performance in face of COVID • Strong shared ownership and open market sales reflecting buoyancy of local markets • Good financial ratios and enhanced liquidity • Well developed refinancing strategy
1 Introduction to Yorkshire Housing
Our history 2021
Hub, Home, Roam agile working
sees Yorkshire Housing sell
office and acquire carbon 2019
neutral flexible working space Yorkshire Housing becomes one
Yorkshire Housing History of five founding members of
2012 Forge New Homes
Move to single headquarters
• Yorkshire Housing was formed in 2008 through the formal and creation of dedicated
merging of stock transfers Ryedale Housing Association and customer service centre 2008
Yorkshire Housing Group
Craven Housing both with homes across North Yorkshire amalgamates to become
2006 Yorkshire Housing Limited
along with Yorkshire Metropolitan Housing Association and Safe Haven and Brunel Housing
Brunel and Family Housing Association (whose homes were join Yorkshire Housing Group
2003
mainly in West and South Yorkshire). Craven Housing Association
formed after a voluntary stock
2000 transfer from Craven DC
• The four organisations together had a combined stock of Safe Haven is formed under a
Home Office contract
about 13,500 homes. 1999
Rydale Housing Association and
Yorkshire Metropolitan Housing
• Yorkshire Housing has grown and diversified significantly 1991 Association merge to create
Ryedale Housing Association Yorkshire Housing Group
over the last 12 years. We now have more than 18,000 formed after a voluntary stock
homes in management across Yorkshire and aim to be one transfer from Ryedale DC 1976
Yorkshire Metropolitan Housing
of the best providers of homes and support. formed
1968
Bradford Council and Shelter
form Brunel Housing to tackle a
shortage of quality housing
Our strategic vision • The Yorkshire Housing vision is to make it possible for people to have a place they're proud to call home. • A safe and secure home provides a solid foundation for everyone. Yorkshire Housing is more than a landlord and it’s aim is to improve the quality of people’s lives by providing targeted services to meet their needs and support their ambitions. • As Yorkshire Housing grows and expands its development programme it wants to become Yorkshire’s first choice for anyone looking to rent or buy their home. • One area of priority is growth; where Yorkshire Housing will deliver 8,000 new smarter homes that are more energy efficient, sustainable and affordable by 2030.
Our five corporate priorities
1 Great customer experience: 4 People and culture:
We will listen to customers, design services to meet their We will develop a reputation as a dynamic and market-leading
expectations and provide targeted support where needed. innovative employer. We’ll create an inspirational workplace
We will use data and insight to help us take a proactive and culture based on being able to work anywhere. We’ll also
approach to delivering services. offer a range of personalised benefits.
2 Homes and places to be proud of: 5 Strong, resilient and innovative business:
We will provide high quality, safe, affordable homes that We will invest in the three business foundation pillars of
meet customer expectations and needs. We will reduce our Finance, ICT and People. We will influence policy and be
reliance on fossil fuels and be one of the first UK housing a leading-edge organisation that others want to work with.
associations to stop using gas heating and hot water systems. We will be Yorkshire in name and nature, with a sustained
focus on value for money.
3 Growth:
We will deliver 8,000 new homes by 2030. We will provide
smarter homes that are more energy efficient, sustainable
and affordable to live in. We will renew our focus on social
and affordable rented options and Help to Buy.
Our corporate structure
2 Operating Area & Stock Profile
The property portfolio:
18,363 units at 30 September 2021 28
Hambleton 60
Scarborough
2,812
Ryedale
Geographic concentration
providing economies of scale 1,613
Craven 348
• 18,363 properties across Harrogate
• 21 local authorities [1,535]
York
Over 1,000 properties in each 24
(103) 335
East Riding
2,224
of 8 local authority areas Pendle
Bradford 2,436
53
Leeds 531
Hull
Selby
588
Calderdale 1,522
Wakefield
1,559
Kirklees
1,349 315
Barnsley Doncaster
No live development activity
York, North Yorkshire & East Riding 194
747 Rotherham
Sheffield City Region Sheffield
0 18,363 homes in management to 30 September
Leeds City Region 2021; includes Swarcliffe PFI
1
NE Derbyshire
[ ]
( )Balanced property portfolio
Homes by Type Homes by Usage Homes by Age
3% 2% Market rent 6%
18% 4% Pre 1919
34% 56% General Needs 1919-1944
Flat 25% 1945-1964
Housing for Older people 14%
Bungalow 1965-1974
Intermediate Rent
1975-1981
52% House Supported Living
11%
5% 1982-2000
2% Affordable rent 2001-2010
7% Leasehold 2011-2020
10%
13% 2021 onwards
5%
30%
• Well diversified portfolio by type and age
• No major tower blocks (see next slide)
• Stock condition surveys have been conducted on about 87% of stock.
• 40% of properties have had a full stock condition survey in the last 5 years.
• Yorkshire Housing aims to move to a rolling five year cycle of stock condition surveys to cover 100% of stock without
cloning data.
• Average SAP rating at Yorkshire Housing is 72%.
• Type 4 fire risk assessment programme covers all high risk residential buildings.
• 100% compliant with programme of inspections and follow up on resultant actionsHealth & safety
Health & Safety Investment 2021/22 Fire Safety
(£m) • Programme of level 4 FRAs undertaken.
Fire Safety 1.9 • Yorkshire Housing does not own any ‘high rise’ blocks.
Gas Compliance 2.7 • Yorkshire Housing manages 5 blocks of flats that are
• Landmark House – Cladding Removed
Electrical Testing & Remedials 2.0
• Skyline – Cladding Removed
Asbestos 0.8 • Cypress Point – Removal in progress
Legionella 0.2 • St Georges – Removal in progress
Other 0.2 • Timblebeck – Removal not started
Total 7.8
• The full cost of Landmark and Skyline has been met by the
Building Safety Fund (BSF)
• In addition there are 5 properties owned by Yorkshire Housing
Similar levels of spend expected in future which don’t fall under the ‘high rise’ definition but where we
years and funded within the business plan. have identified work required on cladding systems.Demand for affordable housing
• Over 160k households in Yorkshire waiting for homes in the Local Authority Registers across Yorkshire (Source
ONS) this is up 10k on the previous year, examples below in some of our key areas:
• Leeds requirements up 11,000 to 29,000
• Bradford up 2,000 to 17,000
• Sheffield stable at 24,000
• Yorkshire Housing is receiving high demand when it advertises its home. Between August and September we
have had over 9,000 enquiries following advertisements on RightMove for properties in our region.
Area Type Market Social
These are examples of Leeds 2 Bed Apartment £138 pw £87pw
social rents charged, Leeds 3 Bed House £148pw £102pw
typically between 55% Sheffield 2 Bed Apartment £151pw £101pw
and 70% of market rents. Sheffield 3 Bed House £138pw £100pw
York 1 Bed Apartment £153pw £99pw
York 3 Bed House £190pw £103pw3 Development
Growth strategy • We plan to build 8,000 high quality new homes over the next 10 years to 2030 - with and without the use of grant and subsidy • We will offer a wider range of homes which meet local needs and demands of our customers including social and affordable rent, shared ownership and market sale • We aim to produce low carbon homes which are more efficient to build and reduce the running cost for our customers.
Growth Strategy Pipeline:
30 September 2021
Hambleton Scarborough
0 56
Ryedale
66
Craven
68 Harrogate
217
York
103
East Riding
Pendle 109
(0) Bradford
344 Leeds
214 Hull
Selby
(0)
85
Calderdale Wakefield
191 165
Kirklees
195
Barnsley Doncaster
2 0
No live development activity
York, North Yorkshire & East Riding Rotherham
Sheffield 0
Sheffield City Region 0
A concentrated growth strategy
Leeds City Region 1,815 homes in development, in contract or
approved pipeline at 30 September 2021
NE Derbyshire
[ ] 0Derry Hill, Menston
Sales name: Farmington
Contractor: Tolent Living Limited
Acquisition: March 2021
Start on date: Sept 2021
Completion Expected : March 2024
One of the first schemes to use modern methods of Construction
- Trialling MMC - Structurally Insulated Panels (SIPS)
- Enhanced Insulation to walls & roofs
- Aico Gateway System to Monitor Fire Detection triggers online
Accommodation Mix
113 new homes :
70 Shared Ownership, 20 Affordable Rent, 23 Rent to Buy
Finance
Total scheme cost: £17,698,115.60
Subsidy (Grant/RCGF) £4,898.976
Sales Income: £7,533,050
Rental income: £747-£947 P.C.M
ON SITEHodgsons Gate,
Sherburn in Elmet
Sales name: Hodgson Gate
Former use: Greenfield
Contractor: Countryside Properties
Acquisition: Dec 2018
Start on site: Dec 2018
Show home: Jan 2020
Completion: Apr 2022
Accommodation Mix for 270 Homes:
1 bed flats / 2 bed bungalows / 2,3,4,5 Bed
Homes with mixed tenures of Open Market Sale,
Market Rent, Rent to Buy, Shared Ownership
and Affordable Rent
Finance
Total scheme cost: £53.1million
Subsidy (Grant/RCGF): £1.7 million
Anticipated Sales Income:
Shared Ownership – £4.8 million
OMS - £28.9 million
Rental Income: £650 – 1400 PCM
ON SITE4 ESG
Green homes & the environment
• No of YH homes at Band C and above: 11,010.
Properties with Renewable Technology
• Key Business Strategy priority to remove reliance on
fossil fuels and reduce carbon emissions. Technology No. of Properties
Environmental funding obtained / ongoing: ASHP 21
• European Regional Development Fund - £90k for
decarbonising 28 properties in Craven. GSHP 42
• LAD2 funding - £25k for Solar PV to 10 properties also
in Craven. Solar PV 259
• Renewable Heat Incentive - £34k for some of our air
and ground source heat pump properties. Solar Thermal 395
• Feed in Tariff - £92k p.a. for some of our early Solar PV
properties (until 2030). Grand Total 717Homes for the Future – The move to Net Zero Carbon
• Begun phasing out gas in our new build homes and will end the
use of gas in all new affordable homes we build by 2023 (2 years
ahead of government mandate)
• We will end the use of gas in all new build homes we build by
2024 (a year ahead of government mandate).
• Produced a roadmap to net zero carbon for developments
• Implementing a zero gas, low carbon specification. We will then
gradually move to a net zero carbon standard.
• We have redesigned our standard house types to allow for using
Modern Methods of Construction as well as traditional methods.
• Installing smart technology to maximise heating efficiencies
and minimise maintenance.
Business plan currently includes £143m
Hub, Home, Roam will see us sell our Head Office and use investment in net zero carbon over 30 yrs.
more flexible work spaces, including a new net zero Hub.• To roll out from 2022
• Enhanced thermal insulation levels
• Low maintenance / no-servicing to ventilation system
• Provision of Solar PV – to mitigate higher energy running costs of
Air Source Heat Pump versus Gas for customersNet Zero Carbon Standard
Enhanced tenancy services
• 7 Money Coaches- coaching customers with
benefits, debt, money management, appeals,
tribunals and immigration
• 6 Tenancy Coaches - coaching customers with
employment, managing a tenancy, hoarding,
domestic abuse, mental and physical health.
• In 2020/21 we:
• Coached 1,264 customers
• Secured £900k income for Yorkshire Housing
• Secured £360k for Customers
• Customer Feedback- customer fed back that her
money coach was her “Guardian Angel” and was
now able to sleep at night not worrying about
personal debt, also a tenancy coach customer
feeding back “thank you so much for your help
and support it is really appreciated”.Enhanced Tenancy Services Community Independence • Team- 2 Community Independence Officers, 3 Activity Coordinators, a Volunteer Development Officer and a Project Community Officer • Community Spaces- managing 16 community centres across Yorkshire • Volunteer Framework- that includes employee, student, customer and community volunteering plus charity of the year • Community Projects- leading on digital, youth, health & wellbeing and inclusion projects • Activity Coordinators- working in YH older people’s schemes with customers on inclusion activities • Social Value- using SV to show impact on customer wellbeing and in procurement • Place Plans- taking a multi service approach to regenerating Yorkshire Housing communities
5 Governance
Governance
• Regained G1 status earlier in year following completion of action plan and review by the regulator.
• Strengthened board with four new board members joining Yorkshire Housing:
Ingrid has extensive experience in Ian has substantial experience of asset
housing and healthcare. Ingrid has management and leading IT transformation
previous chaired Halton Housing, been programme. Ian is currently the Group
vice Chair at Regenda and currently sits Asset Manager at Manchester Airports
on the board of Riverside. Ingrid joins Group and previously worked for 16 years at
as new group Chair. United Utilities.
Ingrid Ian
Fife Costigan
(chair)
Ellie has over 30 years of experience in Russel has extensive leadership experience
financial services including roles at in improving customer experience, digital
TSYS International, Yorkshire Bank and innovation and complex regulatory matters.
GE Capital. Ellie also has non-executive Russell is currently Managing Director at the
roles at Leeds University Business Halifax Bank . Russell joins as new Chair of
Eleanor School and Yorkshire Air Museum. Russell the General Business Assurance Committee.
Stead GalleyExperienced leadership team
Nick Atkin
Chief Executive
Cath Owston Andy Gamble Andy Oldale
Executive Director Executive Director Executive Director
Customer Experience Growth & Assets Finance & GovernanceManagement Team
Page 4Effective risk management
Risk management is a core part of our approach to delivering our organisations goals
Strategic Objectives
Risk and Assurance
Risk appetite statement
Oversight of risk management and assurance framework
Board and Committees
Risk escalations from GBAC
Quarterly review of strategic risks and assurance
Assurance to Board on the adequacy and effectiveness of the
Group Business systems of governance, risk management and internal control
Assurance Committee (GBAC) Internal audit oversight
Implement effective risk management,
processes, controls and culture
Executive Leadership Team
Risk Quarterly review of strategic risk register
Review progress made in implementing
internal audit recommendations
Culture Risk and mitigation
Follow policies, processes and controls
Directors and
Performance Management
Operational Teams Risk ownership & operational management
The Board agrees risk appetite annually with regard to
financial, legal, operational and reputational risks
31Principal risks & mitigations
Governance & Data
Adverse Economic Climate Health & Safety Development & Sales Cyber Security
Compliance
• Shortages of raw • Legal non-compliance • Pressure on cost prices • Non compliance with • Financial loss
materials and labour • Fatality / serious injury / (materials and labour) regulatory standards • Loss of data
• Increasing inflation disability • Ineffective and • Reputational damage • Unavailability of systems
• Higher interest rates • Business disruption unprofitable delivery of • Ineffective decisions • Reputational damage
• Customers less able to • Litigation growth plan • Poor performance • Fines and regulatory
Risks pay • Financial loss / fines • Reduction in market • Poor customer service action
• Higher voids demand and prices for
• Reputational damage new homes • Weak processes / controls
• Housing market slow
down / contraction • Missed opportunities
• Regulatory issues
• Financial, performance • Policies and procedures • Board review of growth • Governance & financial • Range of physical
and market monitoring • Performance reporting options & development viability validation restrictions (password, 2
• Framework contracts • Qualified / skilled performance • Regulatory compliance factor, no USB etc)
• Treasury Policy to fix operatives • Dedicated team manages annual review • Use of encryption and anti
interest rates • External assurance development programme • Customer Standards virus software
Mitigants • Liquidity policy and including internal audit • Development scheme • Assets Liabilities Register • Regular penetration
refinancing exercise • A comprehensive risk option appraisals and • Comprehensive review of testing
• Sensitivity analysis and register to mitigate approval process data • Data sharing agreements
stress testing exposures (including • Savills strategic reviews of • Monthly Performance with all contractors
those arising from the opportunities Clinics • Cyber security
Covid-19 pandemic) improvement programme6 Financial & Operational Performance
Financial ratios
Interest cover has remained strong.
Development programme has increased gearing.
Operating margin has reduced to:
• The impact of a higher level of voids.
• Investment to address historic system and
process issues.
• Increased mix of sales activity.Operational ratios – property sales Demand for new properties, both market sale and shared ownership, have remained strong Yorkshire is a popular place to live!
Operational ratios – rent arrears
During the last year we have not seen a significant increase in arrears
The total level of arrears is only a little
higher than at the start of the pandemic.
During the year there has been a
significant increase in the proportion of
our customers in receipt of Universal
Credit, with 2,000 customers moving onto
UC since the start of the pandemic.
We monitor the level of arrears carefully
and work pro-actively with customers who
are struggling to pay.Operational ratios – empty lettable homes
There was a significant increase in empty lettable homes (voids) at the start of the pandemic.
Source: Regulator of Social Housing
Reducing this has been a challenge for
ourselves and other providers.7 Treasury, Funding & Financial Plan
Debt profile Debt Profile (£m) Available Facilities Maturity Profile Hedging all embedded
Property security
Asset Cover Surplus
Funding Units Facility Valuation
Requirement Security
Bank loans 6,470 £210m £320m £245m £76m
Public Bond 4,183 £200m £293m £232m £60m
Other 3,609 £138m £195m £167m £27m
Unsecured Facilities* NA £105m NA NA NA
Unencumbered Properties (est) 1,553 NA £98m NA £98m
Total 15,815 £654m £906m £644m £261m
* £30m of unsecured facilities do not require an unencumbered asset cover test and £75m require unencumbered asset cover test
• Surplus security does not include security required to cover MtM on fixed rate loans
• The largest bank lender currently has £270m of security valued at EUV-SH
• An exercise has been undertaken to maximise the valuations of these properties to MV-ST which
could add up to £150m based on indicative valuations.Business plan
The business plan is built around a strategy designed to
improve financial ratios at Yorkshire.
The current intention over the next 5 years is to :
• Increase Operating Surplus on average by 11.9%
• Increase Interest Cover on average by 11.2%
• Increase gearing fractionally in the early years (by
2%) with the improvement reducing to 1% after 5
years8 Refinancing Strategy
Refinancing strategy & impact
Objectives Progress to date
• Restructure debt portfolio to achieve: • Repaid small expensive legacy facilities
• More efficient security utilisation • Renegotiated major bank facilities
• Reduction in the annual interest charge to YH.
Projected Impact
• Alignment of covenants
• Simplified and consolidated the debt portfolio • Reduce the cost of debt by over £2m p.a
Current Debt Restructuring • Lower the cost of capital by 0.3%
• Removal and renegotiation of old inefficient and • Improve Interest Cover ratio by 11% per annum
expensive facilities • Increase retained earnings by 12% per annum
• Recognition of MtM’s on some expensive historic • Improve average life of debt
swaps to achieve long term financial benefits
• Uplift security capacity up to £150m
• Utilising a portion of the £200m bond tap to
restructure existing facilities9 Summary
Yorkshire by name….
….Yorkshire by nature...10 Appendices
Summary Financials
2016 2017 2018 2019 2020 2021
Published Published Published Published Published Published
Income and expenditure account (£m)
Total turnover 96 101 101 113 116 142
Operating surplus 28 41 33 35 27 35
Net surplus for the year 14 19 16 11 17 9
Statement of financial position (£m)
Fixed assets 805 827 849 884 962 1,025
Net current (liabilities)/assets -8 -4 91 69 138 106
Total assets less current liabilities 797 823 940 953 1,100 1,131
Long term loans 341 352 451 448 559 563
Social housing grant 284 282 282 279 290 301
Other creditors 3 1 1 9 17 23
Revaluation reserve 29 29 29 29 29 29
Revenue reserve 140 159 177 188 205 215
Group funds 797 823 940 953 1,100 1,131Board members Executive team
Ingrid Alison Eleanor Ian Isabel Nick Atkin Cath Owston
Fife Hadden Stead Costigan Hunt Chief Executive Executive Director
(chair) Customer Experience
Jacqueline Leann Matthew Richard Russell Andy Gamble Andy Oldale
Esimaje-Heath Hearne Blake Flanagan Galley Executive Director Executive Director
Growth & Assets Finance & Governance
Full biographies are available on our website: www.yorkshirehousing.co.ukYou can also read
