Notting Hill Genesis sees 29 per cent fall in surplus
Notting Hill Genesis’ (NHG) surplus fell by 29 per cent year on year, as the G15 landlord suffered a drop in sales.
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According to its financial results for the 2021/22 year, published in November, the 67,000-home housing association achieved a net surplus of £102.3m.
This was £19.6m above the £82.7m budget it set at the start of the year, but a drop from £144.7m in 2020/2021.
Overall, the social landlord’s group turnover fell from £909.1m to £836.9m. NHG said the £72.2m decline was mostly due to a £79.7m fall in sales revenues, from £332.9m to £253.2m.
Surplus on disposable assets dropped from £73.6m to £32m.
The margin on its private sales fell from 18 to 12 per cent, and on its shared ownership first tranche sales from 25 to 14 per cent. NHG said last year’s margin was lifted by the reversal of a stock write-off the previous year.
Sales surplus on joint ventures decreased from £7.1m to £1m after NHG sold a higher number of private units last year. It said the units were in the process of development this year.
However, there was a rise in the number of shared ownership units staircased, contributing to the surplus from the sale of assets increasing from £37.7m to £49.2m in 2022.
Furthermore, NHG reduced the number of its unsold homes by around 50 per cent, from 548 to 275.
The landlord completed 387 homes, transferred 76 homes to various rental tenure types and 15 homes between sales types, sold 424 homes to individual purchasers, and disposed of 160 homes in a bulk sale.
NHG said it had sufficient liquidity of £1bn on 31 March 2022. Gearing dropped slightly from 49.6 per cent to 47.6 per cent. In August, S&P, the credit rating agency, reaffirmed NHG’s rating of A- with a stable outlook.
However, NHG said increased rent arrears had been a continued concern, hitting bad-debt provision.
In 2021/22, rising inflation put pressure on its operating costs, which rose from £438.3m to £450.5m, and it said this may also affect residents’ ability to pay their rent in the coming years, which could lead to higher arrears.
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Developments and repairs
NHG completed 1,346 homes in 2021/22, four more than the previous year and above its 1,224 target.
The housing association identified £142m to invest in improving its existing homes between now and 2030.
It has increased its major building safety works budget for 2022/23 by £20m. NHG said this is part of a three- to four-year programme of £80.8m. Overall, it estimates it will spend about £230.6m, partly funded by the government’s Building Safety Fund and other sources.
Abayomi Okunola, who has served as chief financial officer at NHG since August 2021, said that 2021/22 was a year of reducing risk at the housing association.
He said the landlord has cut the amount spent on new housing since 2018, because the housing market in London was not buoyant enough to absorb the number of private and shared ownership homes being completed.
NHG expects to stay at a level of £300m to £400m over the next few years, Mr Okunola added.
“We continued to monitor the key risks which could be adversely affected by the COVID-19 pandemic at board level, including rent arrears, occupancy levels, valuations, unsold homes and liquidity.”
Ian Ellis, chair of NHG, said: “The gradual return to normality is starting to be reflected in our operational performance, which began to improve towards the end of the year.
“Having strong financial foundations is crucial if we are to realise our ambitions for improving our existing homes and the services we provide to residents.”
NHG’s annual results were delayed and almost coincided with the G15 landlord’s trading update for the half-year up to 30 September.
Overall, over the six-month period, turnover fell by 12 per cent, to £368.9m, while operating surplus increased by 7.4 per cent to £124.1m.
NHG said the increase in surplus can be attributed to a 19.1 per cent increase in social housing lettings, to £73m, and other social and non-social income rising by 181 per cent to £13.2m.
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