Investor Relations Briefing

Genesis Housing Association

19 November 2015

Session outline

• Welcome from Chairman, Charles Gurassa

• Neil Hadden, Chief Executive– Overview of 2014/15– Our performance

• Elizabeth Froude, Executive Director of Resources– Financial and performance information

• Neil Hadden– Proposed merger with Thames Valley Housing Association

Charles Gurassa

Chairman

Welcome

Neil Hadden

Chief Executive

Schemes

City Park West, Chelmsford New Providence Wharf, Newham

Woodberry Down, Hackney Vision (New Hendon Village), Barnet

Rawalpindi, Newham

Zenith House, Barnet Stoke Quay, Ipswich

Mildmay, Shoreditch

Mid year overview

• Launch of the new corporate strategy, Creating and Sustaining Thriving Communities

• Announced proposed merger with Thames Valley Housing Association

• Establishing positive relationships with local authorities – planning and new business bidding

• Thought leadership – we are well positioned

• Working with Government on the scope of deregulation in the sector

• Active engagement to mitigate the impact of welfare reform

– Comprehensive support package for residents affected by the Benefits Cap

Investing in existing stock

• £18.3m Asset Investment Programme (AIP) for 2015/16

• 2014/15 - £12m major repairs, £7.9m responsive repairs, £5.5. cyclical works

• Cyclical works initially prioritising major stock holding boroughs

– Westminster, Brent and Camden– Rolling stock condition surveys; 3000 completed so far

New build performance

236 new homes completed since April

30 percent affordable, 18 percent low cost home ownership, 52 percent market sale or rent

Annual target of c1000 units

767 new homes under construction (nine schemes), 144 new homes at pre-construction

Elizabeth Froude

Executive Director, Resources

What happened last yearGenesis HG accounts

2014/15 2013/14 changetotal no.of units 32,639 33,439 -2.4%turnover £m £mrent: social housing 212.1 216.7 -2.12%rent: LCHO 22.8 24.3 -6.2%sales and non-social housing 47.0 23.9 +96.7%total turnover 281.9 264.9 +6.4%costsrent: social housing -(150.6) -(168.5) -10.6%rent: LCHO -(15.7) -(14.4) +9.0%sales and non-social housing -(46.0) -(20.0) +130.0%net reversal of impairment 0.0 2.6 -100.0%total costs -(212.3) -(200.3) +6.0%

operating surplus 69.6 64.6 +7.7%operating margin % 24.7% 24.4% +0.3%

surplus on fixed asset sales 26.7 28.8 -7.3%net interest paid -(59.8) -(53.3) +12.2%net surplus before tax 36.7 40.1 -8.4%balance sheettotal assets 1,904 1,745 159fixed assets 1,659 1,581 78drawn loans 1,271 1,152 -119capital market issues 253 253

Source: Genesis HA audited accounts, year ended 31 March

Last year – under the surface

2013/14 2014/15 Turnover (excluding sales) 187.2 193.6Operating costs (126.9) (128.2)Operating surplus before sales 60.3 65.44

32.21% 33.79%

Third Party Managed 67.1 66.4Landlord payments (55.4) (54.7)

11.7 11.66

Sales 87.6 101.8Cost of sales (57.3) (71.1)Sales Surplus 30.3 30.7

Interest & tax (53.3) (59.8)Impairment 2.6 (0.2)Depreciation (11.1) (11.5)

Surplus ( After Tax) 40.5 36.3

Financial update – September 15

2014/15 2015/16 BUDGET

2015/16 YTD Sep

2015/16 Forecast

Turnover (excluding sales) 193.6 200.3 101.6 199.4Operating costs (128.2) (129.3) (69.5) (129.0)Operating surplus before sales 65.44 71.0 32.1 70.5

33.79% 35.45% 31.56% 35.33%

Third Party Managed 66.4 59.6 30.1 61.0Landlord payments (54.7) (49.0) (26.1) (51.1)

11.66 10.56 3.98 9.91

Sales 101.8 89.1 45.8 137.3Cost of sales (71.1) (60.1) (33.6) (105.9)Sales Surplus 30.7 29.0 12.2 31.4

Interest & tax (59.8) (59.9) (31.2) (63.7)Impairment (0.2) 0Depreciation (11.5) (12.1) (6.1) (12.1)

36.3 38.6 11.0 35.9

In summary

Half year behind budget– Reduced income – Increased maintenance spend

Forecast / targeting to recover net surplusGood considering:

– £10m more maintenance year on year (£35.0m)– £3.6m less interest capitalised (slower development)

Core business controlling costs– Overheads static year on year– Converting all income increase to profit– Margin continuing to grow (35.3 percent, from 33.8 percent in

2014/15)

Fiscal Budget - what’s new

• Rent losses – 1% reduction

• Right to Buy

• Pay to Stay

• National Minimum Wage

• Benefit Cap

• Additional major repairs

Response to Fiscal Budget

• Maintain development numbers

‒ 1000 units, different mixture of tenures

• Maintain Asset Management Programme, £160m in five years

• Overhead reductions £5m in years 1 – 3

• Right to Buy and Pay to Stay

‒ 1500 Right to Buy over six years‒ 1100 Pay to Stay converts per year over three years

• Benefit cuts, £750,000 additional arrears/ bad debt provision

• National Minimum wage

‒ £375,000 year 1; £1.2m by year 3

What does the plan look like?

• Maintains all key metrics, covenants and VfM targets

• Mitigations and elective spend substantial

• Worst scenario on stress testing – five year line of sight

• Core Performance Scorecard metrics revisited‒ Embedded routine monitoring

• Core Governance protocols – cope with diversity

• Merger – even more robust‒ Amplified version of Genesis plan

Neil Hadden

Chief Executive

Stronger Together

A merger? Why?

• Government has set a challenging policy landscape

• 1% rent cuts, Right to Buy – ministers want consolidation

• Much less money available for investment in affordable homes – and we have to be leaner

• We have to be agile, resilient and innovative: including in digital (Corporate Strategy)

• Combining our strengths, taking the best of both – creates a bigger organisation – 47,000 homes

• This means more influence, more able to deliver new homes

• We believe we can deliver 3000 new homes pa.

Why TVHA?

• Similar approaches, similar values, good leadership

• Geographical footprint – west of London (we are not active in most of their areas)

• Both organisations have a sound business approach and a strong desire to support our customers

• We both have strong commercial arms, earning surpluses that allow us to invest where it’s most needed

• Both organisations are committed to providing affordable housing and growing other products too

• We’re like-minded organisations with ambitious plans for our customers.

More about TVHA

• 250 staff, led by Geeta Nanda (CEO)

• Formed in 1966 (similar time to PCHA)

• 14,900 homes owned or under management

• An excellent, award-winning commercial arm – Fizzy

• Like us, active in market rent and shared ownership

• Like us, strong commitment to affordable housing and place shaping

• A charitable arm – Thames Valley Charitable Association

• Won the 2012 ‘What House?’ Gold Award

• Their vision – “For everyone to build their lives from the base of a good home.”

Progress so far

• Both organisations’ Boards have approved an “Outline Business Case” for merger

• A lot of work has gone on to make sure both TVHA and Genesis are the right partners

• Reviews of finances, development pipeline, major regen projects and much more

• But also: are our values aligned? Our approaches?

• Checking that our customer priorities align too

• Making sure that digital innovation can happen apace as partners – this is a key driver

What happens next?

• We have started work on developing a “Full Business Case” for merger – this goes to the two Boards in January

• Both Boards must approve the proposal

• We are informing all of our stakeholders and briefing them – and will do so through November, including today

• Crucially, we’re informing our customers and residents

• But there is no vote among our customers – our Board takes the decision

Questions?