TIDM85FA
RNS Number : 8389R
Notting Hill Genesis
09 November 2021
Notting Hill Genesis Trading Update
Six months ended 30 September 2021
Overview
Notting Hill Genesis (NHG) was formed in April 2018 from the
merger of Notting Hill Housing and Genesis Housing Association. We
build and maintain quality, affordable homes, creating diverse and
thriving communities. This is our primary purpose, and everything
else we do supports that aim. We are one of the largest housing
associations in England, providing around 66,000 homes across
London and the south east.
The first half of the year was dominated by various lockdowns
due to the Covid-19 coronavirus pandemic. We continued to evaluate
the potential impact on various areas of the business, which is
discussed further throughout the trading update.
The following trading update compares our unaudited accounts for
the six months ended 30 September 2021 with the unaudited
equivalent position, being the six months ended 30 September
2020.
Statement of comprehensive income
6 months 6 months
ended 30 ended 30
Sep 2021 Sep 2020 Movement
GBPm GBPm GBPm
----------------- ----------------- ---------
Turnover 419.3 483.9 (64.6)
Cost of sales (117.5) (147.7) 30.2
Operating costs (216.2) (190.2) (26.0)
Surplus on disposal of fixed assets 29.1 9.2 19.9
Gains from joint ventures 0.8 3.0 (2.2)
----------------- ----------------- ---------
Operating surplus 115.5 158.2 (42.7)
----------------- ----------------- ---------
Net interest payable (66.1) (71.5) 5.4
Movements in respect of financial
derivatives 5.5 2.1 3.4
----------------- ----------------- ---------
Surplus to 30 September 54.9 88.8 (33.9)
----------------- ----------------- ---------
Trading update
Overall, turnover decreased by 13.3% to GBP419.3m, while
operating surplus decreased by 27.0% to GBP115.5m from GBP158.2m.
The decline in surplus can be attributed to the reduction of
private sales, down 41.5% from GBP177.5m to GBP103.8m primarily due
to a higher level of sales, last year, at Canada Water, Wooddene
and Manor Place Depot sites.
We sold 314 homes (30 September 2020: 243 homes) during the six
months ended 30 September 2021. Due to the higher number of units
staircased, the surplus on sale of fixed assets increased by 216.3%
from GBP9.2m to GBP29.1m.
Operating costs have increased by 13.7% from GBP190.2m to
GBP216.2m. This is mainly due to the increase in accelerated
depreciation in respect to the write-off of cladding on buildings,
and flood costs.
Joint venture income has decreased by 73.3% from GBP3.0m to
GBP0.8m.
Net interest paid has decreased by 7.6% to GBP66.1m due to the
reduction of drawn loans by GBP92.0m and the utilisation of the
Bank of England Covid Corporate Finance facility for approximately
18 months at a favourable rate.
The fair value movement of hedged financial derivatives has
resulted in a positive movement of GBP5.5m (30 September 2020:
GBP2.1m).
Statement of financial position
30 Sep 2021 31 Mar 2021 Movement
GBPm GBPm GBPm
------------ ------------ ---------
Housing properties 6,591.5 6,594.1 (2.6)
Other tangible assets 122.4 118.6 3.8
Investment properties 1,139.8 1,109.5 30.3
Net current assets 99.2 185.0 (85.8)
------------ ------------ ---------
Total assets less current
liabilities 7,952.9 8,007.2 (54.3)
------------ ------------ ---------
Loans due in more than one
year 2,962.6 3,048.1 (101.2)
Unamortised grant liability 1,157.8 1,165.3 (7.5)
Other long-term liabilities 288.2 312.7 (8.8)
Capital and reserves 3,544.3 3,481.1 63.2
------------ ------------ ---------
Total funding 7,952.9 8,007.2 (54.3)
------------ ------------ ---------
Investment and debt analysis
Housing properties have decreased by GBP2.6m during the six
months ended 30 September 2021. The decrease is mainly due to the
disposal of housing assets of GBP60.3m and deprecation charge of
GBP37.4m, which has been partially offset by GBP91.7m spend on
affordable homes under development. The group has also incurred
GBP5.2m capitalised reinvestment work on existing properties during
the period.
We completed 683 properties (30 September 2020: 442 properties)
since 1 April 2021, of which 269 (39%) (30 September 2020: 81
(18%)) were specifically built for social or affordable rent. An
additional 36 (30 September 2020: 41) homes have been delivered via
stock transfers or the purchase and repair programme.
We currently have more than 8,921 (30 September 2020: 10,082)
homes in our overall development programme, of which 60% (30
September 2020: 61%) are designated as affordable or social tenure
types. The movement of 1,161 relates primarily to handovers and
sale of part the Aylesbury Estate first development scheme (581
homes).
Investment properties have increased by 2.7%, which is primarily
due to additional spend on investment properties under development.
Investment properties are revalued annually by an external third
party valuer at 31 March. Investment properties have not been
revalued at 30 September in either year.
Due to the pandemic and the ensuing market uncertainties, the
board and management continue to review the carrying value of
investments. Management have also considered the likelihood of
recovery of all debtors with specific consideration to the level of
arrears, and likelihood of non-payment.
Group debt as at 30 September 2021 was GBP3,293.8m (as at 31
March 2021: GBP3,379.3m) and undrawn facilities as at September
2021 were GBP820.1m (as at 31 March 2021: GBP879.3m).
We continue to monitor the impact of the Covid19 crisis on every
area of operations where restrictions were placed. However, we
remain a financially robust organisation with substantial
liquidity. We also retain good relationships with our principal
lenders and are ready and able to access the capital market as
necessary.
Work has recommenced on our development pipeline and remediation
and is likely to affect cashflow, which we continue to manage
carefully. Furthermore, we issued a GBP250m sustainable bond in
June 2021, and repaid the GBP300m Bank of England Covid Corporate
Finance facility.
Other financial information
6 months 6 months
ended 30 ended 30
Sep 2021 Sep 2020 Movement
GBPm GBPm GBPm
---------- ---------- ------------------
Capitalised interest 4.7 8.7 (4.0)
---------- ---------- ------------------
Housing depreciation 37.4 25.7 11.7
---------- ---------- ------------------
Other depreciation 4.4 4.9 (0.5)
---------- ---------- ------------------
The decrease in capitalised interest is mainly attributable to
the carrying value of on-site schemes at 30 September 2021, which
is GBP242.9m lower than the carrying value of schemes on-site at 30
September 2020.
Housing depreciation has increased in the six months to
September 2021 due to costs associated with the write-off of
cladding.
Key performance statistics
6 months 6 months
ended 30 ended 30
Sep 2021 Sep 2020 Movement
% % %
---------- ---------- ---------
Surplus as % of turnover 13.1 18.4 (5.3)
---------- ---------- ---------
Operating margin 27.6 32.7 (5.1)
---------- ---------- ---------
Operating margin - social housing
lettings 25.0 33.7 (8.7)
---------- ---------- ---------
Surplus as % of income from lettings 22.4 36.7 (14.3)
---------- ---------- ---------
Rent losses (voids and bad debts
as % of rent and service charges
receivable) 2.7 2.6 (0.1)
---------- ---------- ---------
Rent arrears (gross arrears as
% of rent and service charges
receivable) 10.2 9.0 (1.2)
---------- ---------- ---------
Interest cover (surplus before
interest payable, depreciation
and amortisation of housing properties
as % of interest payable) 267.0 246.0 21.0
---------- ---------- ---------
Gearing (total loans as a % of housing properties at cost) fell
from 40.0% at 31 March 2021 to 39.1% at 30 September 2021.
Full year position
Following the evacuation of approximately 1,000 residents across
the Paragon six-block residential development in west London in
October 2020, we continue to monitor the situation carefully. Over
the past year, we have endeavoured to rehouse all social tenants,
either within our own stock or in suitable alternatives with other
providers and to buy back leasehold/shared ownership interests.
These activities continue; currently, we have more than 85% vacant
possession and are reviewing future options.
The board set a budgeted surplus of GBP46.5m for the six months
ended 30 September 2021, and we achieved GBP54.9m, an uplift of
GBP8.4m. Full year budgeted surplus to 31 March 2022 remains at
GBP82.7m. The budget includes no allowance for mark to market
movements in financial derivatives, or for movements in the value
of investment properties.
For further information, please
contact:
Financial enquiries
--------------
Yomi Okunola, Chief Financial
Officer 07506 713 236
--------------
Media enquiries
--------------
Kate Jeffreys, Director of Communications 020 3815 0072
--------------
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END
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