Notting Hill Housing Group Funders Day 2017 Paul

Notting Hill Housing Group Funders Day 2017 Paul Hodgkinson – NHHT Chair

Agenda • Chair’s Introduction Paul Hodgkinson Board Chair Kate Davies Chief Executive John Hughes Group Development Director Paul Phillips Group Finance Director • Chief Executive’s Presentation • Group Development Director’s Presentation • Group Finance Director’s Presentation • Questions and Answers 2

Funders Day 2017 Our Strategy - Kate Davies Chief Executive

Summary • It’s been a very good year: – Financially – Operationally • Economic and political changes create uncertainty but provide challenges and opportunities for us The Bloom in Hammersmith and Fulham 4

Our Strategy 5

Our Residents Altogether Better • PRH Customer Satisfaction Index - 75% • Void Turnaround - 24 days (23 days 16/17) • Group Income Collection 100. 81% (100. 86% 16/17) Figures as at October 2017 6

Our Homes Active Asset Management • 74 homes sold (£ 26. 3 m) • 562 family homes acquired Of which: − 56 went to disposal boroughs − 254 to host boroughs − 73 to moves − 178 to NHCH − 1 as a reciprocal offer Old Castle Street, Tower Hamlets 7

Providing More New Homes Westgate Centre, Hackney • 1, 571 plots acquired so far this financial year • Planning submitted for 541 homes • And 589 homes completed • Effective land buying team • More complex estate and town regeneration opportunities 8

Our Financial Strength • Assets valued at £ 11. 9 bn • 2016/17 surplus of £ 142. 2 m (2016: £ 125. 4 m), leading to closing reserves of £ 2, 253. 6 m (2016: £ 2106. 8 m) • Operating margin of 35% Royal Albert Wharf, Newham 9

Digital Transformation • £ 7 m investment – Re-invented processes – Working with technology partners (integrating Legacy to Cloud and web/mobile) • Incremental cost reductions – 3 -year payback – Automation & efficiency – Operational integration through Digital with partners (eg Wates and Plentific) • Resident self-service • Real-time data 10

Our people and our work • Staff Satisfaction improved to 87% – up in 17 of 30 questions • Improved management development • 70%+ recruited from within • IIP Gold 11

Closer partnerships • Local authorities e. g. Haringey, Southwark, Greenwich, Barnet and Hounslow Lampton Road, Hounslow Topping out ceremony • Tf. L • Private sector partners 12

The merger • Genesis HA • Similar history and values • Adding assets, relationships and other resources 13

Challenges remain • Housing in London is not affordable • Difficulty of creating affordable supply • Grenfell • Issues for residents e. g. welfare reform • Market Sale Risk • Digital services 14

Funders Day 2017 Our Development Programme John Hughes

Locations of Schemes 16

Acquisitions 2016/17 2017/18 3, 102 485 (ytd) 17

Starts on Site 2016/17 2017/18 2, 425 635 (ytd) 18

Completions 2016/17 2017/18 1, 152 326 (ytd) 19

GLA Programme Grant £ 172 m, nearly 5, 262 homes funded to 2021 20

Planning Permissions 4 schemes, 1, 433 new homes 21

New Opportunities • Transport for London development panel framework – Landmark Court • GLA – Gallions 3 B • LB Havering – Rainham • LB Brent – South Kilburn Estate 22

Funders Day 2017 Finance Presentation Our Finances – Paul Phillips

Introduction I will cover: • 2016/2017 Results • 2017/2018 Results to date • NHH Exposures • Future prospects • Comment on merger 24

2015/2016 Results 2016/2017 Results 25

2016/2017 Results Will comment on the entities with external debt: • Notting Hill Housing Trust • Notting Hill Home Ownership 26

Group Revenue Account Key facts • Surplus up by 14% from £ 125 m to £ 142 m • Turnover down by 1% from £ 415 m to £ 412 m • Turnover from Social Housing lettings up by 4% from £ 215 m to £ 223 m • Surplus excluding sales up from £ 37 m to £ 56 m • Surplus on sale of existing properties up from £ 27 m to £ 32 m 27

Group Balance Sheet Key facts • We invested £ 373 m (2016: £ 314 m) in new housing • £ 26 m of Grant receivable (2016: £ 6 m) • Housing at cost now £ 3, 065 m (2016: £ 2, 927 m) - VP value over £ 11. 9 bn • Borrowings up from £ 1, 298 m to £ 1, 336 m • Gearing 42% - from 43% in 2016 28

NHHO Revenue Account Key facts • Turnover (excluding intercompany) down by £ 22 m (16%) to £ 120 m • Surplus before gift aid decreased from £ 72. 2 m to £ 66. 6 m. • Gift aid to NHHT and Notting Hill Community Housing of £ 58 m (2016: £ 75 m) 29

NHHO Balance Sheet Key facts • Invested £ 204 m (2016: £ 199 m) in new housing • Properties held for sale stood at £ 196. 4 m, of which £ 79. 2 m was for sale to other Group members • £ 16. 7 m of properties held for sale represented finished homes • Housing assets at cost stood at £ 619 m • Borrowings up from £ 306 m to £ 389 m 30

Folio London Limited • Folio London’s purpose is to operate Notting Hill Housing’s market rent portfolio • The number of homes owned and managed by Folio increased from 517 to 736 during the year due to the sale of one scheme of 106 units from Presentation Market Rent with the remaining coming from new build units. • At 31 March 2017 the value of investment properties was £ 142 m (2016: £ 139 m) 31

2017 -2018 Results to date 32

Key events so far In the last year: • Results have held up well so far - with the half year surplus £ 14 m above budget. • Moody’s has downgraded us from A 2 (negative) to A 3 (stable) as a result of the changes to the sovereign. • Moody’s commented adversely on treasury policy breach (maintaining 11 months’ cover for future uncommitted expenditure rather than 18 during merger discussions). • S&P rating unchanged at A+ (-ve outlook) 33

Sales to date As at 31 October, the position was as follows. • We had sold 73 shared ownership homes at a surplus of £ 5. 4 m. • We had sold 58 outright sales homes at a surplus of £ 9. 9 m. In general, sales continue well, and we have a further 146 shared ownership and 80 outright sales expected for the remainder of this financial year. 34

Other Points Unaudited position to 30 September 2017 • Board budgeted surplus of £ 88 m for the full year • Budget surplus lower than last year due to fewer sales. • Surplus to 30 September - £ 60. 8 m • Full year surplus should exceed budget before mark to market effects • 186 staircasing sales - surplus of £ 13 m 35

Statement of Comprehensive Income (£m) Group Half year to 30 Sept. 2016/17 Actual Budget Actual Turnover 175. 5 189. 1 411. 7 Cost of sales (29. 7) (39. 1) (87. 7) Operating costs (81. 6) (83. 5) (178. 4) Operating surplus 64. 2 66. 5 145. 6 Surplus - asset disposals 15. 3 3. 8 32. 1 Net interest payable (21. 4) (23. 6) (44. 4) 2. 9 - 8. 8 60. 8 46. 7 Gains/(losses) - derivatives Surplus before tax 142. 2 36

Statement of Financial Position (£m) Group - Actual As at 30 Sept. 31 Mar. ’ 17 Actual Housing properties 3207. 6 3, 149. 7 Other fixed assets 587. 3 509. 6 Net current assets (excl. debt) 362. 8 314. 5 Debt Other long term liabilities (1, 467. 5) (1, 336. 3) (373. 8) (383. 7) Net assets 2, 316. 4 2, 253. 8 Reserves 2, 316. 4 2, 253. 8 37

Consolidated cash flow (£m) Group - Actual Half year to 30 Sept. 2016/17 Cash from operations 16. 8 161. 6 Net interest paid (38. 4) (62. 8) (141. 9) (261. 6) Sale of housing properties 35. 2 71. 9 Investment in joint ventures (0. 9) 8. 2 (131. 2) 36. 4 Other (4. 0) 21. 8 Increase/(Decrease) in cash (2. 0) 24. 5 Purchase & construction of housing Net debt drawn/(repaid) 38

30 September 2016 ratios Gearing Interest Cover NHHO 67% 1, 517% NHHT 51% 328% 39

Notting Hill Housing Trust NHH Exposures Page 40

NHH exposures - build for sale 2017 No Vacant plots On site - spent £m £m 2, 351 73 117 856 166 120 - 231 115 41 16 18 3, 207 468 352 On site - committed Completed homes unsold Total 2016 As at 29/11/2017 41

House price risk Points to note: • We have contracted for sale of £ 8 m of the homes on site • We started 625 homes for sale in the last year and expect to start 305 in the next year 42

NHH exposures - shared ownership 2017 No 2016 £m £m Vacant plots 1, 886 65 76 On site - spent 1, 291 181 117 - 262 140 94 27 19 3, 177 508 333 On site - committed Completed homes unsold Total As at 29/11/2017 43

NHH exposures - land bank 2017 2016 No £m £m Plots for rent 768 6 13 Plots for shared ownership 1, 886 65 76 Plots for outright sale 2, 351 73 117 Plots for market rent 392 10 12 Total 5, 397 154 218 As at 29/11/2017 44

NHH - current loan book 31 October 2017 £m Drawn at variable rates 163 Drawn at variable rates - hedged 240 Drawn at fixed rates Drawn on an index linked basis Total drawn Undrawn and committed Total 1, 271 30 1, 704 574 2, 278 Also holding £ 217 m in cash 45

Future Prospects Page 46

Prospects • Initial view of 2017/2018 budget suggests a group surplus similar to 2016/2017 budget (excludes Mt. M of derivatives) • We continue to build and hope to start c 2, 100 homes this financial year • We hope to secure a £ 200 m loan from the European Investment Bank in early 2018. • We hope to complete the merger with Genesis early in 2018. • Long term plans show the Group, the Trust and NHHO in a healthy position 47

Merger with Genesis - Progress Announced a merger with Genesis Housing in July 2017. § Expect to amalgamate the two organisations, subject to banking negotiations and shareholder approval. § Genesis’ credit rating is two notches below NHHT. § S&P have said they do not currently expect the merger to be credit negative for NHHT. § Moody’s have said they will not comment until early 2018 - shortly before completion. 48

And finally… If you have been…. . 49

And finally… If you have been…. . Thanks for listening 50