London landlord temporarily suspends bond listings amid delay in accounts publication

On 27 September, NHG said that each of the bonds includes a requirement for it to provide to M&G Trustee Company (the bond trustee) a copy of its own and its consolidated financial statements for each financial year within 180 days of the end of the financial year.

In the update, the 67,000-home group said it is currently finalising the statements for its financial year ending 31 March 2024 and there will be a “short delay”.

NHG said in the update: “We have ensured the exceptional items mentioned in our market statement on 28 June 2024 have been thoroughly reviewed and agreed, and this robust due diligence has taken time. Therefore, there will be a short delay to completion, subject to concluding on final validation checks and approvals, that will extend past our initial deadline of 27 September 2024.”

The provider added in the update: “The issuer has sought, and obtained, the consent of the bond trustee to postpone such requirement no later than 25 October 2024.”

The exceptional items in the trading update on 28 June are building safety liabilities and asset impairments totalling £110m as well as £12m of non-recurring operational items.

This update of NHG’s unaudited results for 2023-24 also revealed that the timing of the provider’s development programme meant that sales were £13m lower than in 2022-23. Taken collectively, this has resulted in an annual deficit of £82m, the provider revealed in the update.

The housing association warned two months prior to this that it would post a deficit in its financial year to the end of March 2024. 

NHG has declined to comment further.

On the delay to the publication of accounts, a spokesperson for the Regulator of Social Housing said: “We expect all providers to submit the required regulatory information to us in a timely fashion, including their annual financial accounts.

“This is essential for allowing proper scrutiny and the specific expectations are set out in our Governance and Financial Viability Standard. We follow up with landlords which are late in submitting regulatory information.”

NHG is currently graded G1/V2 by the regulator.

The housing association has an A rating with a negative outlook with Fitch Ratings, which was affirmed in October last year.

Aditi Bhandari, an associate director in the international public finance team at Fitch Ratings, said: “We received an intimation from Notting Hill Genesis (NHG) prior to the issuance of the RNS stating their accounts sign-off would be delayed beyond the 180 days stipulated in their loan agreements.

“We view this as more of a workload issue impacting the sector. We also note that the review for NHG is currently underway. Our annual review is expected to be completed ahead of its October 26 deadline.”

On 13 September this year, S&P Global downgraded the landlord’s outlook to negative and maintained its A- rating.

At the time, S&P said: “The financial performance of Notting Hill Genesis (NHG) will remain structurally weaker than previously expected since the group accommodates larger investments on its existing properties.

“While we estimate NHG’s debt will reduce as the group disposes of large stock and reduces its development targets, lower adjusted non-sales EBITDA will weigh on its already weak debt metrics.

“We revised the outlook to negative because of the risks associated with NHG’s ambitious plans to reduce debt, which could prevent a strengthening of its financial metrics.”

S&P has been contacted for comment.

Update: at 11.18am, 03/10/2024

The article has been updated with a comment from Fitch Ratings.