Notting Hill Genesis (NHG) has reported a 38 per cent drop in its half-year surplus after a fall in income from market sale properties and cladding-related costs took their toll.
The 66,000-home landlord saw its surplus slide to £54.9m in the six months to 30 September. Turnover also fell, down 13 per cent to £483.9m.
The decline in surplus was due to a 42 per cent drop in turnover from private sale properties to £103.8m, the group said. The previous year NHG saw a big bounce in income from sales at its Canada Water, Wooddene and Manor Place Depot developments.
Despite the lower market sale income, NHG sold more properties in the period – 314 – compared to 243 the previous year.
The G15 landlord also saw its operating costs rise 14 per cent to £216.2m in the half-year. “This is mainly due to the increase in accelerated depreciation in respect to the write-off of cladding on buildings, and flood costs,” the group said.
In October last year NHG evacuated around 1,000 residents from its six-block Paragon development in west London over safety concerns. The group said it is continuing to monitor the situation “carefully”.
It added: “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 per cent vacant possession and are reviewing future options.”
The results also showed a bounceback in completions for NHG after being hit by the pandemic in the same period last year. The group handed over 683 homes – a 55 per cent increase year-on-year. Four in 10 of the properties were for social and affordable rent, NHG said.
The landlord said that work has recommenced on its development pipeline and remediation work, which is likely to affect cash flow. It has repaid the £300m it borrowed from the Bank of England’s Covid Corporate Finance facility.
Group debt as at 30 September was down slightly down, at £3.29bn.
NHG said: “We continue to monitor the impact of the COVID-19 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.”
Yomi Okunola, NHG’s chief financial officer, added: “In general, these results show that we remain a financially robust organisation with substantial liquidity.
“However, we continue to operate in an uncertain external climate as we slowly recover from the pandemic. Maintaining our focus on value for money will be crucial to ensuring continued strong finances so that we can invest in our stock which is crucial to our commitment to enhance our residents’ experience as well as building much-needed new homes.”
Looking ahead, NHG said it is budgeting for a full-year surplus of £82.7m. “The budget includes no allowance for mark-to-market movements in financial derivatives, or for movements in the value of investment properties,” it said.