Annual Report & Accounts 2015/16 - NHBC Home

1 Annual Report & Accounts 2015 /16We are the UK s leading independent standard-setting body and provider of warranty and insurance for new purpose is to work with the UK house-building industry to help improve the construction standards of new homes for the benefit of the industry and homeowners. What we doWe provide inspection services, guidance and training to engage with the industry, the Government and key stakeholders to help shape housing policy and provide protection for homeowners through our range of Buildmark warranty 2015 /16 we: carried out 798,000 inspections identified 357,000 items to be corrected by builders received over 89,000 Building Control registrations undertook around 8,000 Health and Safety inspections paid net claims of million delivered 5,500 delegate days of training published six NHBC Foundation highlights 2 Group overviewChairman s statement 8 Chief Executive s statement 10 Chief Financial Officer s statement 14 Strategic reportWho we are.

2 What we do 18 Market overview 24 Our strategy 26 Risks to our business 30 Wider impact 34 GovernanceBoard 40 Council 44 Corporate governance Report 46 Directors Report 50 Audit Committee Report 52 Board Risk Committee Report 54 Investment Committee Report 56 Remuneration Committee Report 58 Nominations Committee Report 60 Consumer Committee Report 62 Standards Committee Report 64 Scottish Committee Report 66 Northern Ireland Committee Report 68 Directors remuneration Report 70UK GAAP financial statements 882 Key highlightsClaims paid for the benefit of homeowners ( m) 2015 /162014/152013/14909786 Profit before tax ( m) 2015 /162014/152013/1491532 Registrations ( 000s) 2015 /162014/152013/14153154139 Completions ( 000s) 2015 /162014/152013/14140130115To tal income ( m) 2015 /162014/152013/14 Effective homes under cover ( 000s) 2015 /162014/152013/1483482784615314 0118 Net assets ( m) 2015 /162014/152013/14467440447 Net technical provisions ( m) 2015 /162014/152013/14959995966 Annual Report and Accounts 2015 /1631 NHBC provides warranty cover for million UK homes, all with variable proportions of their 10-year cover remaining.

3 The effective homes under cover figure is derived from the remaining active warranty periods, calculated from our unearned premium reserve. This has been restated since last year as a result of a reassessment of earning pattern Restated from previous years due to new UK financial performanceVolumes remained broadly in line with the previous year with growth in Scotland, Northern Ireland and the north and east of England, offset by reductions in Wales, London and the south east of strong growth in registrations seen in recent years resulted in the number of homes completed in 2015 /16 increasing by 7%.

4 The number of effective homes under cover1 rose 12,000 in the year, as a result of significant growth in registrations over the past few rise in total income was largely driven by increased average fees due to a greater proportion of higher value fall in profit largely reflects lower investment returns and costs associated with additional technical resource and achieving Solvency II paid fell 6 million versus 2014/15. Significant storm-related claims were experienced in 2013/14 which drove up claims expenditure in 2014 decrease of 4% from last year includes the impact of the purchase of Adverse Development Cover.

5 Our reserving philosophy remains unchanged with a consistent and appropriate degree of prudence 6% increase reflects a rise in profit after tax, which includes a 14 million tax credit in respect of prior ,953 REGISTERED millionHOMES COVERED BY BUILDMARK153,430 HOMES REGISTERED IN 2015 /164 Registration volumes consolidated in the year. There remains some way to go to reach pre-recession proportion of detached and semi-detached homes registered increased slightly in the year whilst the proportion of terraced homes fell by 2%. The volume of flats registered remained the same as the previous year and continues to be buoyed by the high proportion of flats built in by typeRegistrations by type2015/16 Bungalows2%Detached houses28%Flats/maisonettes31%Semi-detach ed houses23%Terraced houses16%Key highlightsNew build registrations ( 000s)2006/072008/092009/102010/112011/12 2012/132013/142014/152007/08186181851021 181121111391542015/1615311%East(2014/15: 10%)16%Greater London(2014/15: 17%)5%Yorkshire & the Humber(2014/15: 6%)15%South East(2014/15: 15%)10%South West(2014/15.)

6 10%)798,000 INSPECTIONS AT KEY BUILD STAGES5,500 TRAINING DAYS CARRIED OUT139,864 HOMES COMPLETED IN 2015 /169%West Midlands(2014/15: 9%)2%Northern Ireland (incl. Isle of Man)(2014/15: 2%)8%Scotland(2014/15: 8%)8%East Midlands(2014/15: 8%)4%North East(2014/15: 4%)9%North West(2014/15: 8%)3%Wales(2014/15: 3%) Annual Report and Accounts 2015 /165 The geographical spread of our Registrations in 2015 /16 shows that the highest concentrations remain in Greater London and the south east. However, registrations across the UK have consolidated in the year, with minor growth in the east and north west offset by minor falls in Greater London and Yorkshire & the by region6 Key highlightsOur key prioritiesMaintain and improve the construction quality of new homesSupport the needs of builder customersProvide support to homeowners when they need it We undertake appropriate inspections of every home registered with us.

7 We analyse industry feedback on build quality and assess our claims experience to shape our Standards and support the industry. We invest in research, practical guidance and training. We engage with the industry to understand its needs and provide the services it requires. We monitor the satisfaction of our builder customers and positively respond to feedback. We work hard to support our homeowner customers when they need us and treat them fairly. We monitor the satisfaction of our homeowner customers and positively respond to 2015 /16 we: Completed of key stage inspections.

8 Released six NHBC Foundation publications. Delivered 5,500 delegate days of 2015 /16 we: Achieved a Net Promoter Score amongst our builder customers of 42%. Achieved a score of in our Builder Satisfaction 2015 /16 we: Paid net claims of million. Achieved an average score of out of 5 in our Homeowner Satisfaction Survey of our Claims and strengthen our reputationEnsure we have sufficient capital to fulfil our obligationsDevelop the potential of our staff and invest in their futures We engage with the industry, key stakeholders and Government. We strive to improve recognition and awareness of our brand with consumers.

9 We continuously review our pricing, investments and reinsurance to safeguard our capital. We manage risks to capital through our carefully controlled risk appetite. We aim to attract and retain excellent staff. We engage with staff to create a great place to work built on key objectives and behaviours. We invest in our staff through training and professional 2015 /16 we: Achieved a score of 77% in our Stakeholder Reputation Survey. Met with key industry and Government figures, presented at political party conferences, organised MP site visits and hosted major industry events.

10 Established a measure for consumer engagement with our brand and 2015 /16 we: Held net technical provisions of 959 million. Held a Solvency ratio of 181%, well in excess of our Board-approved risk appetite and the Prudential Regulation Authority 2015 /16 we: Welcomed 88 new colleagues to the business. Maintained a One Star accreditation in the Best Companies Employee Opinion Survey with a score of 661. Funded 741 staff subscriptions to over 50 professional overview Chairman s statement Chief Executive s statement Chief Financial Officer s statementEbling View Deneham Taylor Wimpeyrole.