East Midlands Housing Group Investor Presentation Presenting Team: - PowerPoint PPT Presentation

East Midlands Housing Group Investor Presentation Presenting Team: Chan Kataria - Group Chief Executive Andrew Kilby - Executive Director Finance December 2015

Key highlights  Established in 1946, now one of the largest housing groups in England  Rated AA- by Standard & Poor’s  Long and successful track record of operations, services and development program delivery  Strong focus on low-risk social housing activities  Very high demand for social housing in areas of operations  High operating margin of c. 30%  Financially robust with strong coverage ratios (not relying on property sales)  Stable and experienced management team with strong group board oversight  Strong risk management culture at all levels of the organisation  Recognised “partner of choice” with key stakeholders Our vision: “To be widely recognised as the best social housing and care businesses in the country, leading the market as service provider and employer” 2

Agenda 1. EMH Group introduction and overview 2. Impact of Government policy changes on EMH 3. Financial performance 4. Funding and treasury strategy 5. Transaction highlights 6. Appendices 3

EMH Group at a glance Key highlights Turnover – Breakdown by type FY 15A Established in 1946  5% Leading social housing provider in the UK  Owns and/or manages c18,000 properties 17%  Social Housing Lettings Providing over 10,000 hours per week of care and support  Care and Support Annual turnover >£94m, employing over 1,100 people  Other Clear and streamlined group and governance structure  78% Stable and experienced management team with strong group  board oversight Geographically focused on the East Midlands, a region  Social housing lettings – Breakdown by type FY 15A characterised by a very high demand for social housing A reputation for high quality service delivery:  5%  Investors in People (silver) and top 100 Apprenticeship General Needs Employer 28% Supported Housing &  Highest rating for Governance and Viability from the Social Housing for Older People Housing Regulator (G1 / V1) Low Cost Home Ownership 67% Core values: I DO ACE (integrity, diversity, openness, accountability, clarity, excellence) 4

History – a long and successful track record of operation EMH Group – key milestones 5

Geographical profile and growth Homes owned across the East Midlands Evolution of turnover 94.3 91.3 90.0 72.3 70.0 £m 58.0 50.0 44.1 30.0 FY 11 FY 12 FY 13 FY 14 FY 15 Evolution of housing units owned and managed 17,833 17,432 18,000 17,254 17,013 16,000 Units 14,000 11,545 12,000 10,000 FY 11 FY 12 FY 13 FY 14 FY 15 6

Development programme – Overview Development programme ¹ Development programme – Priority areas Breakdown by usage 17% Mansfield Ashfield 83% Erewash South Derbyshire Social and affordable rent Shared ownership Charnwood Breakdown by funding NW Leicestershire Leicester Harborough Blaby 22% Kettering 72% Wellingborough Daventry High priority areas Northampton Other priority areas Section 106 Developed ¹Breakdown from 3 year programme of identified units 7

Development programme – current pipeline Key highlights Development strategy designed to reflect the specific needs of local authorities  Strong albeit flexible pipeline with currently 893 units  Development pipeline strongly linked to financial plan with regular monitoring controls  Focus on affordable rent and shared ownership  Currently 10 market rented units in pipeline  Grant funding of £13m secured via AHP2 15/18 programme to deliver 607 units; grant from OPS £2.5m  “Hello Homes” shared ownership sales brand  Currently only 14 shared ownership units unsold  Shared ownership sales over last 3 years 181, average sales price c£130k, average first tranche sale 32%  Pipeline – Completed vs Committed Completed Committed Pipeline Feasibility Year Total Rent SO Rent SO Rent SO Rent SO 2015-16 82 48 52 20 5 0 0 0 207 2016-17 0 0 176 28 54 22 13 1 294 2017-18 0 0 162 17 73 13 123 4 392 Total 82 48 390 65 132 35 136 5 893 Pipeline – Developed vs. section106 Completed Committed Pipeline Feasibility Year Total Developed S106 Developed S106 Developed S106 Developed S106 2015-16 55 75 44 28 0 5 0 0 207 2016-17 0 0 158 46 76 0 14 0 294 2017-18 0 0 162 17 75 11 123 4 392 Total 55 75 364 91 151 16 137 4 893 8

Streamlined group structure EMH Group – New legal structure Key highlights  Group structure amalgamation completed in September East Midlands Housing Group Limited (EMH Group) 2013 Non-charitable C&CBS Registered Provider  Legal structure based around two business divisions, EMH Homes and Enable, as well as three specialist entities EMH Treasury Plc Sharpes Garden Services Special purpose vehicle Limited  Clear separation and ring-fencing of social housing (SPV) activities regulated by the HCA  Significant benefits achieved including: EMH Housing & Regeneration Enable Housing Association Limited (EMH Homes) Limited  More efficient governance and focused Executive Registered provider Not registered with HCA Charitable C&CBS Charitable C&CBS Management team Closed membership Closed membership  Higher degree of consistency in operational management EMH Homes while maintaining local preferences Midlands Rural Housing and Enable Care and Home Village Development Support Limited Associated Limited  Holistic approach to asset management strategy Not registered with HCA Charity Commission registered Non-charitable C&CBS Company limited by guarantee  £1.3m efficiency savings and greater economies of scale Group parent Enable Main operating entities Specialist entities 9

A strong governance structure in place EMH Group Board Key highlights  Adherence to National Housing Federation’s (NHFs) revised Sets strategic direction of the group Code of Governance  Highest governance rating provided by the regulator  Set the long term strategic direction for the organisation  Strengthened governance structure :  Ensure that the board fulfils its duties in terms of compliance and monitoring risk  Group and subsidiary boards reduced to 9 members  Ensure an effective business plan and budget is in place  Independent board members (except for chief executive)  Ensure that performance is monitored and managed of each board nominated following an in-depth skills- through internal controls and delegation based selection process  Approve key policies to allow the organisation to achieve  Succession in place over the next few years; moving its objectives towards harmonised board structure  Each Board member is appraised and the effectiveness of the Board as a whole is evaluated on an annual basis Subsidiary Boards Board committees  Clear separation between strategic role of the Board and executive role of the management team Operational delivery Audit  Systematic focus, review and identification of key strategic risks EMH Homes Enable Treasury  Subsidiaries ’ Boards responsible for the operational delivery of the business plan  Responsible for the delivery of the Remuneration business plan 10

A strong and stable executive management team EMH Group – Executive Management Team Key highlights Highly stable and experienced senior  management team Chan Kataria Group Chief Executive  Current Group Chief Executive only the third one since creation in 1946  CEO has been a statutory appointee in troubled organisations Chris Ashton Andrew Kilby  CEO is sector representative on key trade Executive Director Executive Director Housing Finance bodies  EMT has over 100 years of sector expertise Margaret Mitchell Jim Patman Track record of transformational change  Executive Director Executive Director Human Resources Strong relationships with key stakeholders, Development  including the regulator and local authorities Play a leading role in a range of organisations,  including National Housing Federation, Joanna Grainger Joanne Tilley Chartered Institute of Housing, Placeshapers Executive Director Executive Director Business Support Care & Support and Health and Supporting People commissioning bodies 11