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| Name | Symbol | Market | Type |
|---|---|---|---|
| Notting Hill 54 | LSE:85FA | London | Bond |
| Price Change | % Change | Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 126.289 | 0 | 00:00:00 |
TIDM85FA
Notting Hill Genesis
25 November 2020
Notting Hill Genesis Trading Update
6 months ended 30 September 2020
Overview
Notting Hill Genesis (NHG) is one of the largest housing associations in England, providing around 66,000 homes across London and the South East. NHG works in the community, providing homes for lower-income households. This is our primary purpose, and everything else we do supports that aim.
The COVID-19 coronavirus pandemic has evolved rapidly in 2020, and NHG has evaluated the potential impact of this on various areas of the business. This is discussed in further detail throughout the trading update.
The following trading update compares the NHG unaudited accounts for the six months ended 30 September 2020 with the unaudited prior year equivalent position, being the six months ended 30 September 2019.
Consolidated Statement of Comprehensive Income
Hot Features
Premium
6 months
ended 30 6 months ended
Sep 2020 30 Sep 2019 Movement
GBPm GBPm GBPm
----------------- ------------------------------------------- -----------------------------------
Turnover 483.9 343.5 140.4
Cost of sales (147.7) (59.9) (87.8)
Operating costs (190.2) (200.0) 9.8
Surplus on
disposal of
fixed
assets 9.2 13.3 (4.1)
Gains from joint
ventures 3.0 11.8 (8.8)
----------------- ------------------------------------------- -----------------------------------
Operating
surplus 158.2 108.7 49.5
----------------- ------------------------------------------- -----------------------------------
Net interest
payable (71.5) (60.7) (10.8)
Movements in
respect of
financial
derivatives 2.1 3.7 (1.6)
----------------- ------------------------------------------- -----------------------------------
Surplus to 30
September 88.8 51.7 37.1
----------------- ------------------------------------------- -----------------------------------
Trading Update
Overall, turnover increased by 40.9% to GBP483.9m, while operating surplus increased by 45.5% to GBP158.2m from GBP108.7m. The growth in surplus can be attributed to increase in private sales up 587.4% from GBP25.8m to GBP177.5m primarily due to sales at the Canada Water, Wooddene and Manor Place Depot sites.
We sold 243 homes (30 September 2019: 337 homes) during the 6 months ended 30 September 2020. Due to the lower number of units staircased and less favourable surplus achieved on other sales, the surplus on sale of fixed assets decreased by 30.8% from GBP13.3m to GBP9.2m.
Joint venture income has decreased by 74.4% from GBP11.8m to GBP3.0m as there has been less sales activity in this area in 2020.
Net interest paid has increased by 17.8% to GBP71.5m due to the additional finance costs in relation to the sale of the Canada Water site and the reduction in interest capitalised.
The fair value movement of hedged financial derivatives has resulted in a positive movement of GBP2.1m (30 September 2019: GBP3.7m).
Consolidated Statement of Financial Position
As at 30 As at 31
Sep 2020 March 2020 Movement
GBPm GBPm GBPm
---------- ------------ ---------
Housing properties 6,648.5 6,593.0 55.5
Other tangible assets 128.9 133.1 (4.2)
Investments 1,075.5 1,064.2 11.3
Net current assets 404.1 454.2 (50.1)
---------- ------------ ---------
Total assets less current
liabilities 8,257.0 8,244.5 12.5
---------- ------------ ---------
Loans due in more than one
year 3,296.8 3,364.7 (67.9)
Unamortised grant liability 1,229.8 1,212.2 17.6
Other long-term liabilities 303.1 322.1 (19.0)
Capital and reserves 3,427.3 3,345.5 81.8
---------- ------------ ---------
Total funding 8,257.0 8,244.5 12.5
---------- ------------ ---------
Investment and Debt Analysis
Housing properties have increased by 0.8% during the 6 months ended 30 September 2020. We have completed 442 properties (30 September 2019: 630 properties) since 1 April 2020, of which 81 (18%) (30 September 2019:127 (20.2%)) were specifically built for social or affordable rent. An additional 41 (30 September 2019: 128) homes have been delivered via stock transfers or the purchase and repair programme. We currently have over 10,082 (30 September 2019: 12,540) homes in our overall development programme, of which 61% (30 September 2019: 58%) are designated as affordable or social tenure types. The movement of 2,458 relates primarily to handovers, 651 as a result of aborted schemes and 803 homes on the sale of the Canada Water site.
Investments have increased by 1.1%, which is primarily due to expenditure on market rent properties in our Folio business. 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 COVID-19 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 2020 was GBP3,418.3m (as at 31 March 2020: GBP3,486.2m) and undrawn facilities as at September 2020 was GBP879.6m (as at 31 March 2020: GBP474.5m).
It is currently difficult to measure the potential impact of Covid 19 crisis on every area of operations on which restrictions remain in place. However, NHG remains a financially robust organisation with substantial liquidity. NHG retains good relationships with its principal lenders, and is ready and able to access the capital market as necessary.
Principal Financing Activities
During the half year, the Bank of England confirmed NHG as eligible to access its Covid Corporate Finance Facility from July 2020 with a limit of GBP300.0m. As at 30 September, GBP255.0m had been utilised.
In addition, our market rent subsidiary, Folio London Limited secured GBP250.0m by issuing a seven year bond. The bond was secured on 1,523 homes in London and Chelmsford. The yield was 1.248%. The bond was priced on 21 September 2020 and the proceeds received on 5 October 2020. The funds were used to reduce intra group financing.
Other financial information
6 months 6 months
ended 30 ended 30
Sep 2020 Sep 2019 Movement
GBPm GBPm GBPm
---------- ---------- ------------------
Capitalised interest 8.7 11.9 (3.2)
---------- ---------- ------------------
Housing depreciation 25.7 26.1 (0.4)
---------- ---------- ------------------
Other depreciation 4.9 4.0 0.9
---------- ---------- ------------------
The decrease in capitalised interest is mainly attributable to the carrying value of on-site schemes at 30 September 2020, which is GBP243.0m lower than the carrying value of schemes on site at 30 September 2019. In addition, the impact of the first UK-wide lockdown due to COVID-19 in March 2020, meant that some development sites halted construction for some time. All developments are now back on site.
Housing depreciation has remained broadly consistent year on year.
Key performance statistics
6 months 6 months
to 30 Sep to 30 Sep
2020 2019 Movement
% % %
----------- ----------- ---------
Surplus as % of turnover 18.4 15.1 3.3
----------- ----------- ---------
Operating margin 32.7 31.6 1.1
----------- ----------- ---------
Operating margin - Social Housing
lettings 33.7 25.5 8.2
----------- ----------- ---------
Surplus as % of income from lettings 36.7 22.2 11.2
----------- ----------- ---------
Rent losses (voids and bad debts
as % of rent and service charges
receivable) 2.6 2.8 (0.2)
----------- ----------- ---------
Rent arrears (gross arrears as
% of rent and service charges
receivable) 9.0 7.7 1.3
----------- ----------- ---------
Interest cover (surplus before
interest payable, depreciation
and amortisation of housing properties
as % of interest payable) 246.0 205.6 40.4
----------- ----------- ---------
Gearing (total loans as a % of housing properties (including investment properties and unsold homes) fell from 40.7% at 31 March 2020 to 40.5% at 30 September 2020.
Full year position
We are currently undertaking a comprehensive safety review across a six-block residential development in West London, the Paragon, following receipt of expert advice regarding the construction of the buildings. Approximately 1,000 residents were asked to vacate their homes to protect their health and safety, while further investigative work is being carried out.
The financial impact on NHG arising from the Paragon works will be included in the financial statements for the year ending 31 March 2021.
The Board set a budgeted surplus of GBP50.1m for the 6 months ended 30 September 2020, achieving GBP88.8m, with a full year budgeted surplus to 31 March 2020 of GBP101.2m. Although the current operating environment is more volatile than usual, and the costs arising at the Paragon remain uncertain, we currently expect to achieve the budgeted surplus.
Neither the budget, nor the year end estimate include allowances for mark to market movements in financial derivatives, or for movements in the value of investment properties.
For further information, please
contact:
Financial enquiries
--------------
Paul Phillips, Chief Financial
Officer 020 3815 0031
--------------
Media enquiries
--------------
Kate Jeffreys, Director of Communications 020 3815 0072
--------------
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END
NRAPPGBAGUPUURA
(END) Dow Jones Newswires
November 25, 2020 04:02 ET (09:02 GMT)
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