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Financial impacts of COVID-19 on AHBs
Webinar: 30th June 2020, 3pm
Miriam Kavanagh
Head of Financial Regulation, Governance
& Registration
Voluntary Regulation
Office
Finance Webinar
June 30th 2020
3pm
Medium and Long-
Term Financial
impacts
of COVID-19 on AHBs
Introduction & welcome attendees01
Miriam Kavanagh - Head of Financial Regulation,
Governance and Registration. Housing Agency, Regulation
Office
Medium and Long-Term Financial impacts of COVID-19 on
AHBs
02
Neil Anderson - Director of Finance, Tuath Housing
Financial impacts of Covid-19 on Tuath Housing
03
04
05 Ray Fanning- Head of Finance, Respond
Financial impacts of Covid-19 on Respond
Cliodhna O’Leary - Head of Finance, HAIL
Financial impacts of Covid-19 on HAIL
Question & Answer Session
3:00pm Start
4:30pm Finish
POLL
552 AHBs Registered
275 AHBs VRC
197 Tier 1s
56 Tier 2s
22 Tier 3s
AHB Sector Scale & Size
Tier 1
Tier 3
Tier 2
3,375 Units
28,419 Units.
5,198
Units
POLL
*17 Tier 3 AHBs & 56 Tier 2 AHBs. Figures
are not audited, consolidation for
directional purpose only
Housing Assets
Gov. Capital Grants
CALF
Financial Context - 2018
€605M
€3.1BN
€1.36BN
€295M
€3M
€0.7BN
€0.29BN
€15M
HFA
Ti e r 3 * Ti e r 2 *
COVID – 19 Initial Impact
Housing Impacts
Suspension of non-essential
services, rent reductions &
arrears, repairs
Care & Support ServicesDevelopments
Initially development sites
closed due to restrictions,
impact to delivery.
Homeless Services
Successful short-term
solutions implemented with
AHBs & DRHE
AHBs were fast to act with
short-term solutions created in
‘emergency period’.
Immediate Impacts
Patient care, staff & patient
risk of infection.
Increase in costs for PPE and
support staff.
Context: Unit Growth Tier 3 AHBsPlanned Growth - Forecas ts
2019
3,024 4,171 3,886
2020 2021
11,081
€BN
Forecast total debt €5.22BN in 2023
€0.0
€0.5
€1.0
€1.5
€2.0
€2.5
€3.0
€3.5
€4.0
€4.5
€5.0
2018 2019 2020 2021
Projected Debt - Tier 3 AHBs
Gov Grants CALF HFA & Other Loans
Planned Growth - Un i t s
COVID Impact on Unit Growth
Survey Results
Yes, 64%
No, 36%
2020
Question: Have you assumed unit growth will be impacted due to COVID-19?
Yes, 33%
No, 67%
2021
• 64% of organisations assume unit growth will be
impacted in 2020
• 33% of organisations assume unit growth will be
impacted in 2021
• Feedback on Impact on Growth:
• Delays in delivery due to restrictions
• Up to 25% reduction vs. targets
• Delays in closing acquisitions
• Delays in allocations due to viewings restrictions
• Revised 2020 budgets
Rental & Housing Income
COVID- 19 Impacts to Housing Income
€0
€50
€100
€150
€200
€250
€300
2018 2019 2020 2021
Forecasted Income
Rental Income Other Housing Income Non Housing Income
€M
• Unemployment impacting differential rents
• No Rent Reviews
• Slow down in development/acquisition impacting
P&A
Fundraising Income
From 17 Tier 3 Forecasts
• Significant fundraising amounts forecasted for 2020
and 2021.
• COVID-19 has negatively impacted fundraising
income.
• Reduction in fundraising highlighted by AHBs as a top
risk to their organisation.
• Some AHBs expect that fundraising could drop by
25%.
“90.31% indicated that their charities’ fundraising plans for
2020 had been cancelled or postponed “ Charities Regulator
POLL
Repairs & Maintenance
• 60% of organisations reported they have
recorded a material change in
expenditure since the start of the
COVID-19 crisis.
• AHBs highlighted that they had deferred
planned maintenance works due to
COVID-19 restrictions.
• Reductions in day-to-today repairs.
• Only essential repairs were carried out.
• Need to think about backlog in the
medium term.
€16.8€19.1
€9.9€8.8
€7.1€8.2
€1.5€1.6
€0.0
€5.0
€10.0
€15.0
€20.0
€25.0
€30.0
€35.0
€40.0
2020 2021
Forecasted Repairs & Maintenance Spending
Reactive/Routine Maintenance Planned Maintenance
Cyclical Maintenance Void Maintenance
€M
STRESS TESTING & FORECASTING
Question: Have you revised the budget/forecast?
• 60% of organisations have revised their organisations stressed
scenarios for 2020 (31% for 2021).
• Changes to assumptions include:
• Rental reductions
• Reduction in Fundraising Income
• Change to planned maintenance spending
• Reduced interest payments
• Increase services and PPE extra costs
• Additional IT costs for remote working
• Only some organisations have conducted stress testing on
revised plans
Yes, 40%
No, 60%
Yes, 67%
No, 33%
2020
2021
POLL
?
Economic Outlook
World Bank Report
“A second wave of Covid-19 would wipe out any chance of economic
recovery in Ireland either for this year or next.” OECD
ESRI Report May 2020
Second Wave?
• The global economy will shrink by 5.2% in 2020
• Deepest recession since WWII
• Emerging market and developing economies (EMDEs) are expected to
shrink by 2.5% this year, their first contraction as a group in at least sixty
years.
Most Likely Scenario:
• GDP Declines by 12.4% 2020
• Consumer spending drops 13%
• Unemployment at 17% for 2020
Irish Fiscal Advisory Council Report May 2020
• Gov. deficit projected to be €13 billion in 2021 & likely to
remain large for many years
• Unemployment at 9% for 2021
“Ireland is only at the end of the
beginning of the current economic
shock caused by Covid-19 and the
future scale of its economic impact is
uncertain.”
Central Bank of Ireland
Revised Cashflow to the end of 2021
Fully revised financials for the remainder of 2020 and 2021
Stress tested 2020 and 2021 for the perfect storm
The Board has fully reviewed and understands the economic, operational and financial impacts in the stressed scenarios
Regulation Office Expectations
Mitigating Actions
THANK YOU
TREASURY• Cash management
• Visibility of cash balances in Financial Statements
• Cash min/max balance
STRESS TESTING• Part of overall risk framework
• Scenario selection should be linked to risk identification
• Scenarios should not be too conservative
• Vulnerabilities of the Business Plan
• Mitigating actions
KEY RATIOS
ASSUMPTIONS• All key underlying assumptions should be clearly identified
• Any changes from the previous year highlighted and explanation
provided
• Business Plan and Financial Forecast linked
A p p e n d i x :
A S S E S S M E N T F I N D I N G S
• Gearing & Liquidity
• Clearly defined risk appetite
around KPIs