Large London landlord reveals £90m deficit in delayed accounts

The liabilities also contributed to a dramatic drop in NHG’s EBITDA MRI interest cover figure – based on the regulator’s value-for-money metrics – to 6.6 per cent, down from 92.9 per cent the year before.

However the figure, which is a key indicator of an organisation’s liquidity, is expected to increase to 80.9 per cent in the current financial year, NHG said. 

The group revealed that of its 158 blocks that had needed fire safety work, 47 are completed and work is under way on the remainder with “many close to completion”.

However looking ahead, NHG said that costs for fire remediation work remained at £173m over the next seven years. 

The group also said it was writing down £21.2m in costs relating to resident service charges instead of seeking recovery of “significant historical amounts”.

It said that residents will receive “clarity” due to an improved account process. 

The group’s bottom line was also hurt by an eight per cent rise in operating costs to £555.5m. 

NHG’s turnover fell to £711.8m, compared to £728.1m the year before. This was largely due to a 35 per cent drop in sales revenue to £67.2m, which NHG blamed on the timing of its development programme. 

A total of 121 homes were sold, consisting of 118 shared ownership and three for open market sale. 

The fall in sales revenue was offset by an increase in rental income of £21.4m to £527.2m. 

Based on the regulator’s metrics, NHG’s overall operating margin was -0.1 per cent, compared to 16.8 per cent the year before. 

On development, NHG reported a sharp year-on-year rise in completions to 822, but the figure was well down on its target of 1,281.

Of the homes completed, 394 were low-cost rental, 152 were shared ownership or London Living Rent, 177 were market sale and 99 were private rental.

NHG said it had taken the “difficult but necessary decision” to scale back its development plans due to higher interest rates and build costs. Similar moves have been seen at other large landlords. 

Earlier today, Social Housing revealed that John Hughes, NHG’s long-serving development director and deputy chief executive, has left the organisation.

As a result of cutting back on development, NHG said it was increasing the amount it planned to spend on its existing stock from £500m to £770m over the next 10 years.

Patrick Franco, chief executive of NHG, branded his first full year in charge as one of “challenge, change and progress”.

He added: “Despite the macroeconomic environment, in particular higher interest rates and inflation, we have taken important steps to become a more resident-focused organisation and have made good progress against our Better Together strategy.”

Mark Smith, who took over as the group’s finance boss in April, said that it remained a in a “strong position” and its underlying performance is “stable”.  

Ian Ellis, NHG’s chair, said the board is confident that accounting for the one-off items “puts us in a stronger position for the future”.

NHG said that trading in the current financial year has been “as expected” and that a half-year update will be published later this month.

The landlord had also suspended trading in its bonds due to the delayed accounts. However it said that it has applied for the bonds to be reinstated.