dean tufts & ellie lodge november 2019 - a2dominion group · 2019-11-15 · • current market...

Investor Presentation

Dean Tufts & Ellie Lodge

November 2019

Overview

Westvale Park, Surrey


A2Dominion Group – Overview

• Over 38,000 units in London and the South East

• Social/affordable

• Shared Ownership

• Supported/sheltered

• Student accommodation

• Private rented and private sale

• Working across 83 local authorities, currently on site building nearly 1,600 units across 8 LAs.

• Member of the G15

• A major developer and facilities manager with long track-record

• 7,601 units in development pipeline across 24 LAs (2,300 through Joint Ventures)

• Delivering 1,200 units per annum, as per the Board’s Land and Development Strategy

• Rated by regulatory authority (RSH) at G1 / V2- confirmed August 2019

• 99.7% of units compliant with Decent Homes Standard

• 1,006 staff operating from 4 key offices

• Fitch Credit Rating A+


Profit for a social purpose is at the heart of what we do

Strengthening Our Business

- A+ Credit rating from Fitch- Value for money - £7m efficiency

savings planned for next year - Partnerships & JV’s

Investing In Homes & local Communities

- £13.5m Fire safety works - 2018 / 19 - £32.9m maintaining

& upgrading existing homes

Providing new high quality homes & places

- 900 – 1,200 new homes across tenures

Delivering customer-led services

- Improve customer satisfaction - Fit for the Future Programme - Digital services


Governance – Board of Management

Ian Cox

Chair, Group Board

Governance & Remuneration Committee

David Coates

Audit, Risk & Assurance Committee

Customer Insight Panel

Sara Dickinson

Treasury Committee


Caroline Tiller


Customer Insight Panel

Caroline Tolhurst

Development & Property Panel


Peter Walker


Treasury Committee

Darrell Mercer

Group Chief Executive

Anne Waterhouse

Executive Director (Central & Finance Services) & Deputy

Chief Executive


Governance – Board of Management

Darrell Mercer

Group Chief Executive

Anne Waterhouse

Executive Director

(Central & Finance Services) & Deputy Chief Executive

Andrew Boyes

Executive Director

(Change & IT)

Andrew Evans

Executive Director (Operations)

Nick Hutchings

Executive Director

(Managing Director, Commercial)

Dean Tufts

Executive Director

(Finance & Strategy)


Group Structure

A2Dominion Housing Group

(non-asset holding charitable registered

provider

A2Dominion South (charitable registered

provider)

A2Dominion Homes (charitable registered

provider)

A2Dominion Residential

(commercial vehicle)

A2Dominion Developments

(commercial vehicle)

A2Dominion Housing Options (non-charitable

registered provider)


Notable Events in 2018/19

• Group’s G1/V2 rating confirmed in August 2019, following In-depth assessment.

• Arranged new loan facilities of £465m with five new lenders to the Group –RCF, PP, forward dated EMTN and MORhomes.

• Delivered 875 new homes with a variety of tenures – affordable and private rented, shared ownership and private sale.

• Obtained £85m of grant in the year to develop homes as part of the 2016/21 London Affordable Homes programme.

• Achieved 100% gas safety record for social housing units, and lowest ever social housing rent arrears (3.32%).

• Sales receipts of £112m (target £103.4m). £4.7m first tranche sales (margin 35%).

• Achieved total efficiency savings of £7.4m in 2019 as a result of procurement activity and long term efficiency savings.

• Several awards for our teams & developments, including:

• Beechwood Grove & Keybridge nominated across three categories Inside Housing Development Awards

• Bicester (Elmsbrook) – won CEEQUAL sustainability award

• Queens Wharf – won silver in Apartment Scheme of the Year What House? Awards 2017: Winner of Best Sustainable Development and Best Market Sale Development of the year (Inside Housing)

• Risk management - won Best Risk Management category at the Housing Association National Accountancy Awards

Financial Results

Arlington Lofts, Camden


Financial Performance – Year End to 31 March 2019


Financial Performance – Half Year to 30 September 2019 (unaudited)


Fire Safety

• The Group has 140 buildings >18 metres in height (equates to 6 storeys). None have wall-to-wall ACM cladding.

• Visual inspections of all 140 units were undertaken and 76 intrusive surveys were carried out.

• This resulted in approval for a three year programme to rectify issues, for which a £13.5m provision has been set aside in the 2019 accounts.

• However following on from Advice Note 14, we are now undertaking intrusive surveys on all remaining blocks.

• Remediation costs will be paid for by A2Dominion. Improvements will be recharged to leaseholders (e.g. sprinkler systems).

Benchmarking

Queen’s Wharf, Hammersmith


Operational performance summary


EBITDA

1. Calculation excludes surplus on sale of fixed assets. 2. 2017 / 18 measures are restated to exclude income and costs relating to leasehold property services.

Stock

Jigsaw, Ealing


Stock Type & Age


Stock profile

Map Ref. Local Authority

Properties in

Management

Development

Pipeline Total

24 Spelthorne 7,559 357 7,916

6 Ealing 3,588 1,031 4,619

13 Hounslow 2,816 308 3,124

16 Oxford City 2,773 316 3,089

12 Hillingdon 2,068 375 2,443

10 Hammersmith & Fulham 1,271 249 1,520

15 Lewisham 37 1,396 1,433

31 Westminster 1,332 12 1,344

2 Bromley 1,222 0 1,222

32 Winchester 1,149 0 1,149

1 Bristol 851 260 1,111

7 Elmbridge 478 533 1,011

Other 12,989 2,764 15,753

Total 38,133 7,601 45,734

Local authorities with greater than 1,000 units

in management & development


Stock profile

Welfare Reform

Fellows Square, Cricklewood


Welfare Reform Update

• The Welfare Reform working group continues to monitor and report regularly on the effects of welfare reform and the effectiveness of A2D’s action plans:

• Social housing rent arrears at March 2019 were 3.32% (2018: 3.35%);

• The number of tenants paying via direct debit has increased to 38.41% (2018: 33.73%; 2017: 30%);

• Phased roll out of Universal Credit is continuing – currently 2,595 live UC claims, all of which are being actively monitored;

• Trusted Partner status with DWP help claimants manage direct payment to A2D of their rent.

• Key challenges for the future include:

• Accelerated rollout of UC in local authorities;

• Specific UC issues including ‘5 week no payment,’ sanctions on claimants and DWP internal failures;

• Increases in tribunals, Employment and Support Allowance (ESA) appeals and council tax complications.

• Context:

• 71.7% of A2D’s rental income is paid directly by tenants (2018: 62.7%)

• 90.9% of residents already have a paying relationship with A2D (2018: 81.8%)


Social Responsibility & Ethical Investment

• £3.2m invested into community investment activities and associated resources

Reducing isolation Improving life chances

Improving community cohesion Big impact days

Health & Wellbeing Employment

Apprenticeships Financial inclusion

Enterprise

Provide subsidised services with wider community benefits by delivering care & support for vulnerable people & investment in local communities

Development Plan

Keybridge, Vauxhall


Funding model


Development Activities & Track Record

• A2Dominion has a strong track record in developing property. In the last 11 years we have developed around 10,340 units.

• In-house developer keeps direct costs low.

• Strong relationships with LAs and other developers/house builders.

Year Social Rent

Intermediate/

Market Rent

Shared

Ownership Private Sale Other Totals

2008/9 820 0 626 78 29 1,553

2009/10 719 165 224 73 72 1,253

2010/11 664 134 137 131 41 1,107

2011/12 432 35 386 247 1 1,101

2012/13 387 0 130 119 0 636

2013/14 141 0 121 216 103 581

2014/15 304 0 69 206 0 579

2015/16 333 268 196 330 0 1,127

2016/17 322 182 71 179 0 754

2017/18 121 109 53 413 78 774

2018/19 137 296 88 354 0 875

Totals 4,380 1,189 2,101 2,346 324 10,340


Development Strategy & Bids

• Strategy for 2015 – 2020 is to develop between 900 and 1,200 units each year, set to continue for 2020 – 2025.

• Emphasis on location and ROI rather than quantity.

• Tenure split to be 40% Private Sale, 20% Shared Ownership, 20% Affordable Rent and 20% Market Rent.

• Regional split of 50% London and 50% South East (outside London).

Grant Secured (2018-21 programme)

• The Group has formed a Strategic Partnership with the GLA as part of their 2016/21 London Affordable Homes Programme, agreeing to deliver 60% of affordable homes across the London programme, and securing over £85m of grant funding. This funding will help to provide 2,150 affordable homes in London contributing to the Mayor’s target of 116,000 new starts by 2022.

Additional Grant Secured

• Successfully secured £11.7m grant from Homes England for two schemes in the South East – Brooklands in Spelthorne which will provide a total of 284 affordable units and The Boulevard in Crawley providing 91 affordable units.


Development Pipeline 7,601 Units

The board and management team have put controls and appraisal checks in place to manage the risk of this activity.

A2D approaches development with the following guiding principles:

• Affordable Housing development in London/South East requires capital subsidy;

• The subsidy must be provided from prior year surpluses;

• Maintaining A2D’s financial strength, requires a limit to the level of subsidy;

• There must be a balance between growth in Affordable Housing and the need to maintain and improve financial strength.

Local Authority

Development

Pipeline

Lewisham 1,396

Ealing 1,031

Elmbridge 533

Southwark 521

Hillingdon 375

Spelthorne 357

Oxford City 316

Hounslow 308

Waverley 305

Lambeth 300

Bristol 260

Reigate & Banstead 257

Hammersmith & Fulham 249

Surrey Heath 248

Cherwell 232

Wandsworth 230

Camden 164

Guildford 143

South Oxfordshire 78

Westminster 12

Other 286

Total 7,601


Development & Sales Summary

*JV Sales represent all units sold by JVs; the Group's interest in JV's is 50% of all turnover and costs.

Pipeline: 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029

Affordable 79 186 374 550 211 182 0 98 0 0

Market rent 0 276 73 60 26 0 0 0 0 0

Shared ownership 53 165 389 252 377 76 39 68 0 0

Commercial Rent 0 63 0 0 0 0 0 0 0 0

Student Accommodation 0 0 75 0 0 0 0 0 0 0

Keyworker 0 18 0 66 54 0 0 0 0 0

Private Sale 387 46 251 170 165 69 0 0 2 0

TOTAL 519 754 1,162 1,098 833 327 39 166 2 0

Bluesky:

Affordable 0 0 0 0 0 120 285 257 296 360

Market rent 0 0 0 0 0 20 48 43 50 60

Shared ownership 0 0 0 0 0 100 238 214 248 300

Private sale 0 0 0 0 0 161 378 343 394 480

TOTAL 0 0 0 0 0 401 949 857 988 1,200

Joint Ventures Total * 271 231 396 129 345 472 212 177 211 0

Total development units 790 985 1,558 1,227 1,178 1,200 1,200 1,200 1,201 1,200


Market Rent Update

• The key objective for A2D’s market rent programme is to achieve a commercial return for social reinvestment purposes.

• In addition, the flexibility in market rent compared to social tenures will assist A2D to better manage the financial risk of the overall property portfolio.

• A2D has continued to add to its market rent portfolio, with circa 300 extra units developed or acquired during 18/19.

• Current market rent portfolio has achieved 18% investment growth (valuation / cost).

• Target of a further 180-240 market rent units each year.

• Target yield is 3.75% net on average across the portfolio, net yield FYE 2019 was 3.85%.

• To be developed in A2D core areas and/or in locations that are within a 20 mile radius of a key worker management office.


Market Rent Development Activities – New Schemes Update

New Schemes Area Cost £m Value £m Completed FY 2020 FY 2021 FY 2022 FY 2023 Total

Commercial Rd London 29.2 44.7 95 95

Harbourside Bristol 10.4 16.4 46 46

Gun Wharf London 4.8 5.3 15 15

Green Man Lane London 23.6 31.9 63 63

City Wharf London 36.9 43.5 65 65

The Panorama Ashford 13.1 17.8 111 111

Sinclair House, Ealing London 3.7 4.3 11 11

Centenery Quay Southampton 18.8 21.4 110 110

Hibiscus House Feltham 3.8 5.1 21 21

Maternity Hospital Ashford 11.3 16.5 59 59

Cannons Gate Bristol 23.8 35.7 101 101

City Rd Winchester 1.5 2.3 8 8

London Road, Hounslow London 10.8 13.2 40 40

High Street, Hounslow London 0.9 1.1 5 5

Uxbridge Road, Ealing London 4.0 4.1 10 10

Redcliff Bristol 71.8 38.5 128 118 246

Keybridge House London 101.3 127.4 155 4 159

Geron Way London 17.1 27.6 54 54

Subtotal 386.8 456.8

Brooklands Ashford 27.1 n/a 0 73 73

York Rd London 74.1 n/a 0 119 119Simon House Oxford 12.5 n/a 0 30 30

Gibbs House Oxford 18.4 n/a 0 60 60

Albany Place (Therfield) Leatherhead n/a 0 25 25

Langley House Crawley 17.2 n/a 0 83 83

Total 1097 112 237 103 60 1609

Debt, Cash & Treasury Management

Elmsbrook, NW Bicester


Debt Portfolio Summary

• Over 48.5% of our current drawn debt portfolio is bank loans, with margins ranging from 0.25% (plus LIBOR) to 5.97% (fixed).

• Weighted average margin on drawn loan facilities, at March 2019, is 4.33%.

• 18,777 properties are charged to lenders.

• 11,784 housing properties are unencumbered, of which 8,498 are available to be charged.

As at 30 September 2019 Facility size Drawn %

Total loans £1,250.6m £756.9m 48.5%

Total bonds (including “Club” bonds) £803.1m £803.1m 51.5%

Total debt £2,053.7m £1560.0m

Less Cash (£21.2m)

Net Debt £1,538.8m

Variable rate borrowing £217.1m 13.9%

Index Linked £1.6m 0.1%

Fixed rates > 12 months £1,173.8m 75.3%

Variable with ISDA swaps > 12 months £167.5m 10.7%

Total £1,560.0m 100.0%


Asset Values & Security

• All social housing stock is valued annually, on EUV-SH basis, the total value of which is currently £2.60bn.

• Non-social housing is valued at Fair Value – currently £587m.

• Total value of our completed stock at MV-VP is £9.0bn.

• Properties are charged to lenders on either EUV-SH or MV-T basis

• The estimated value of unencumbered properties at EUV-SH is £1.18bn

Units

Units owned 31,870

Housing units owned 30,561

Charged to lenders 18,777

Unencumbered units 11,784

Average EUV-SH value £100,000

Average MV-T value £175,000

Note – Values are based on March 2019 figures.


Property Valuations

Completed units plus units under

construction

Social Housing

£m

Shared Ownership

£m

Key Worker

£m

Market Rent

£m

Other (e.g.

Commercial &

student)

£m

Total

£m

Cost 2,491.9 369.7 128.6 336.6 71.2 3,398.0

Net book value 2,160.6 369.3 103.4 336.6 71.2 3,041.1

Completed units Social Housing

£m

Shared Ownership

£m

Key Worker

£m

Market Rent

£m

Other (e.g.

Commercial &

student)

£m

Total

£m

On vacant possession basis (MV-VP) 6,651.9 1,274.4 420.6 538.7 136.6 9,022.2

On existing use for social housing

basis (EUV-SH) / Fair Value*2,024.2 388.3 185.3 450.7* 136.6* 3,185.1

Property valuation table

Source: A2Dominon Group Annual Report & Accounts 2019

Appendices

Matilda House, Oxford


i. Group Structure


ii. Group Structure

*80%/20% equity contribution with 75%/25% profit share A2DD/NKH

dean tufts & ellie lodge november 2019 - a2dominion group · 2019-11-15 · • current market...

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