Investor Presentation
February 2015
1
Stonewater
Overview
• Raglan HA merger 1st Jan 2015 with Jephson
• Both HA’s:
–
–
–
–
Geographically diversified
Regulated activities only – social rent and Homebuy
Developing
Financially stable
• Long gestation mitigates merger risks
• 31,000 units / £150m turnover / £1.7 billion assets
2
Stonewater
Merger: Rationale
•
•
•
•
•
New group of 31,000 homes
New and improved services for customers
Consolidate geographical footprint
£5.8m / year efficiencies from year 5
Development
– Use efficiencies to add to development
3
Stonewater
Structure
Stonewater Ltd
(Ra glan Housing
As s ociation Ltd)
12,100
Registered Provider
Stonewater (5) Ltd
(Ra glan Homes Ltd)
550
Registered Provider
4
Stonewater
Procurement Ltd
(Ra glan Design &
Bui ld Ltd)
Stonewater (2) Ltd
(Jephson Homes HA Ltd)
11,600
VAT-eff't Dev Co
Stonewater
Commercial Ltd
Registered Provider
Stonewater (3) Ltd
Stonewater (4) Ltd
(Jephson HA Ltd)
4,400
(Ma rches HA Ltd)
2,600
Registered Provider
Registered Provider
Stonewater
Funding plc
(Raglan Developments Ltd)
(Ra glan Finance plc)
Dormant
Financing Vehicle
Stonewater
Management Structure
Board
3x Operations
Committees:
Assets &
Development
Committee
Finance
Committee
Risk & Audit
Committee
Governance &
HR Committee
South, West,
East & North
Executive
South
5
West
East & North
Transformation
Committee
Stonewater
National Spread
6
Stonewater
Achieving Merger Benefits
Service to Customer
–
–
–
–
–
Improve access to services – 24/7, single point
Enhance services
Financial inclusion
Customer engagement & community development
Services for older & vulnerable residents
Improve
– KPI’s
– Customer satisfaction
– Reduce “avoidable demand”
7
Stonewater
Business Risks & Mitigants:
• Merger risks
)
addressed separately
• Welfare Reform )
• Regulatory change
• Housing & development markets
• Financial markets
• Inflation
• Pensions
8
Stonewater
Merger Risk
Explicitly addressing risk
– Working together - Strategic Groups & workstreams
– Intercompany Agreement reduces risk
– Board formed of professionals
Risk register – 3 phases
– Transition
• IT
– Implementation
• IT, Cultural differences
– Strategic operational risks
9
Stonewater
Welfare Reform
• Analysis of tenants and income affected
–
–
–
–
1604 affected by Bedroom Tax, 22 by Benefit Cap
Bedroom tax arrears £499k, expected to decline
13800 on full or partial Housing Benefit
Arrears 3.5% (gross of HB), 2.4% core
• Measures
– Support residents, pre-vet new tenants
– More rigorous procedures & enforcement
– Benchmarking; pilot projects
• WR implementation slow
10
Stonewater
Raglan Standalone Performance
2013-14:
– Turnover +11% to £71.3m (14/15 forecast £75.8m)
– Operating surplus +20% to £25.3m (14/15 £25.1m)
– Covenants (bank basis)
• Gearing down to 59% from 66% (covenant 85%)
• Interest cover 308% from 268% (covenant 105-110%)
Liquidity
– Current cash & facilities cover most of 4-year
development programme
11
Stonewater
Jephson Performance
• 2013/14
– Turnover £81.3m (14/15 forecast £81.6m)
– Operating surplus £23.7m (14/15 £23.8m)
– Surplus for year £9.2m
(14/15 £10.1m)
• Liquidity
– Current cash & facilities sufficient till March 2016
• Covenants
– Interest cover: JHAL 247%, JHHAL 135%, Marches 221%
– Gearing: JHAL 23%, JHHAL 42%
– Asset cover: Marches 139% (105% covenant)
12
Stonewater
Underlying Merged Business
• Op margin: from 28% (Yr 1) to 35% (Yr 5)
• Op cashflow: from £42m (Yr 1) to £63m (Yr 5)
• Achievable development programme
– £175m between 2 partners
• Projected covenants
– SHL interest cover from 130% (Yr 1) to 150% (Yr 5)
– Debt-to-Turnover falls from 4.7 (Yr 1) to 4.4 (Yr 5)
and rapidly thereafter
• Limited refinancing requirement
13
Stonewater
Treasury & Funding
Group facilities:
Cash: £61.4m
£891m: £740m drawn
as at 31st Dec 2014
Policy: Cash & undrawn facilities > committed development
Uncharged (chargeable) security: 3800 properties
Standalone swaps Mark-to-Market: £111m
(13 Feb 2015)
Collateral: unsecured threshold £32m, cash £5m, property £74m (out of
£124m secured)
Credit rating: Moodys A1 (stable outlook)
14
Stonewater
Development Programme
• Conservative strategy, geographically spread
• 750 units per year, programme by programme
• ½ land & build (with grant), ½ s106
• ¾ rented, ¼ shared ownership, no market risk
Rented
Shared Ownership
Devpt Spending
HCA Case Projections
15
14-15
481
154
635
15-16
596
136
732
16-17
459
162
621
17-18
175
29
204
18-19
72
7
79
-£91.2m -£76.1m -£30.6m -£11.3m
-£8.4m
Appendix 1: Entity Income & Expenditure
Year to
31 March 2014
Jephson
Consolidated
£m
£m
71.3
81.3
(42.0)
(54.0)
(4.0)
(3.6)
25.3
23.7
Surplus on disposal
8.9
0.7
Net interest
Surplus for the year
(14.2)
(15.3)
20.0
9.2
Turnover
Operating Costs
Cost of Sales
Operating surplus
16
Raglan
Consolidated
Appendix 2: Entity Balance Sheets
At 31 March 2014
17
Raglan
Consolidated
Jephson
Consolidated
Fixed Assets
Housing Properties
Grants & subsidies
Depreciation
Other
Total Fixed Assets
£m
£m
796.7
(349.4)
(47.3)
2.2
402.1
891.8
(347.7)
(84.8)
8.4
467.7
Current Assets
Current Liabilities
Net Current Assets
79.2
(22.8)
56.3
26.8
(19.9)
6.9
Total Assets less C.L.
458.5
474.6
369.0
3.9
0.1
85.4
458.5
357.2
68.9
48.5
474.6
Represented by:
Creditors > 1 year
Pension Scheme Liabs
Provisions
Designated Reserves
Revenue Reserves
Appendix 3: Consolidated Business Plan
Year to 31 March
2014 (A)
(£'m)
2015 (F)
(£'m)
2016
(£'m)
2017
(£'m)
2018
(£'m)
2019
(£'m)
2020
(£'m)
153.5
(97.0)
(7.5)
49.0
157.4
(101.1)
(7.4)
48.9
166.9
(107.9)
(11.3)
47.6
176.1
(112.0)
(12.0)
52.1
181.0
(113.1)
(9.4)
58.5
181.3
(114.2)
(3.3)
63.8
184.0
(114.9)
0.0
69.1
9.6
5.8
5.5
1.4
1.5
0.5
0.6
(29.5)
(29.0)
(32.8)
(35.1)
(38.5)
(42.7)
(41.6)
29.2
25.6
20.3
18.3
21.5
21.6
28.0
Housing Properties
Grant
Depreciation
Other
Total Fixed Assets
1,689.2
(697.1)
(129.6)
10.6
873.1
1,747.4
(700.8)
(141.2)
9.9
915.2
1,947.2
(713.7)
(193.8)
10.0
1,049.7
2,032.0
(717.1)
(214.8)
8.8
1,108.9
2,079.5
(719.0)
(237.2)
7.7
1,131.1
2,111.6
(719.4)
(260.9)
7.3
1,138.7
2,139.6
(719.1)
(277.6)
6.8
1,149.7
Current Assets
Current Liabilities
Net Current Assets
79.9
(40.1)
39.8
83.0
(32.9)
50.1
100.9
(47.4)
53.5
62.6
(47.2)
15.4
84.6
(47.0)
37.7
52.1
(46.8)
5.2
54.2
(46.8)
7.4
Total assets less CL
913.0
965.3
1,103.2
1,124.4
1,168.8
1,143.9
1,157.1
Long term loans and provisions
Capital and reserves
711.1
201.8
742.7
222.6
868.0
235.1
870.9
253.5
893.8
274.9
847.3
296.6
832.5
324.6
913.0
965.3
1,103.2
1,124.4
1,168.8
1,143.9
1,157.1
Turnover
Operating Costs
Cost of Sales
Operating Surplus
Surplus on disposals
Net interest
Surplus for the year
18