85FA Notting Hill 54

Notting Hill Genesis unaudited trading update for financial year ending 31 March 2024

28 June 2024 London - Notting Hill Genesis, one of London's largest not-for-profit housing associations, is today providing a trading update ahead of the publication of its audited 2023/24 annual report and financial statements in September.

We have made good strategic progress over the past financial year and, despite the challenges of inflation and repair costs, performance in the core housing association business is commensurate with the prior year. However, and as we set out in the trading update in April, we identified some significant one-off items which have materially impacted the overall surplus for the year.

These items relate substantively to recognition of building safety liabilities and asset impairments totalling £110m as well as £12m of non-recurring operational items. In addition, timing of our development programme meant that sales were £13m lower than 2022/23. Taken collectively this has resulted in an annual deficit of £82m.

Strategic update

Our group board are committed to making significant improvements and upgrades to our homes, as set out in our Better Together strategy to improve our residents' lives through better connections, homes and places, which we published last summer. The strategy reflects resident feedback on what is important to them and is underpinned by a commitment to make a significant investment in our estate over the next 10 years.

We have made a good start, with our refurbishment and improvement programme and the transformation of our finance and operations functions, both supporting the future delivery of better quality homes and a far better experience for residents. We have also made a considerable investment in improving customer experience with a focus on better complaint handling, service charge management and repairs, in line with what our residents have told us matters most to them.

Increasing the supply of homes for Londoners, whatever their circumstances, is an important part of our mission. Over the past five years, we have made a meaningful contribution to new supply through the development of more than 5,000 new homes. We are also playing a significant role in two of London's largest regeneration schemes, the Aylesbury Estate in Southwark and Grahame Park in Colindale. But inflation and higher interest rates have altered the economics of development, particularly for not for profit organisations like Notting Hill Genesis. We have therefore concluded that continuing to develop new homes at the same rate would not be financially sustainable and would jeopardise our ability to make the much needed improvements to residents' homes. 

Our new homes focus going forward will be on our regeneration schemes and other projects to which we are already committed. That means we will still plan to deliver around 3,000 new homes over the next five years - an average of 600 a year. This decision also allows us to increase investment into our estate, which will rise from £500m over the next 10 years to £770m.

Our social purpose of providing affordable homes for Londoners has never been more important. It guides all our decisions and is enabled by our financial strength. Going forward it is critical that we maintain and build this resilience to ensure we have an organisation that can sustainably deliver the housing Londoners so desperately need.

Development and sales

The following table provides details of acquisitions, starts on site and completions in 2023/24 compared to 2022/23.

Figure 1: Development programme as at 31 March 2024

We started the financial year with 33 unsold homes and took handover of an additional 329 homes (152 shared ownership and 177 private sale) during the year. As at 31 March 2024 only 50 homes were unsold.

Figure 2: Unsold homes as at 31 March 2024

Treasury update

The group has access to liquidity of £863.9m, comprising available loan facilities of £768.1m and free cash of £93.8m. The weighted average life of drawn debt is 12.4 years, carrying a weighted average cost of 4.28%.

Figure 3: Group debt position as at 31 March 2024

£31.6m of drawn loans are due for repayment within one year with 69.3% due to mature after five years.

Figure 4: Group drawn debt maturity profile

93% of the group's interest payments net of hedging arrangements is fixed cost.

Figure 5: Group debt mix

As at 31 March 2024, the group had 17,213 unencumbered assets with estimated security value of £3.4 billion to support medium term funding requirements.

Subsequent to financial year end, a further 1,244 homes were secured to the £2 billion secured note programme, increasing the security value to £1.1 billion.

Figure 6: Security charged