TIDM85FA
RNS Number : 6087N
Notting Hill Genesis
01 June 2022
Notting Hill Genesis unaudited trading update for the financial
year ending 31 March 2022
FY 2021/22 trading update
Notting Hill Genesis (NHG) intends to publish its full-year (FY)
2021/22 audited accounts by the end of July. In the unlikely event
of a delay beyond July, we will notify the market of the updated
timing via an RNS announcement.
Ahead of publication of our FY 2021/22 audited accounts we
provide within this announcement an update on:
-- Operational performance
-- Key events and areas of focus
-- ESG and our Sustainable Finance Framework (SFF)
-- Development and sales
-- Treasury position
Operational update
Over the last year we successfully managed the challenges of
covid, whilst also developing coherent strategies to address the
demands of building safety and net zero carbon. We are aware of the
overall global economic pressures and taking action to mitigate the
adverse impact on our residents and business.
The covid pandemic has affected our business, slowing down sales
and lettings and increasing tenant arrears. These impacts were
however anticipated and effectively managed. We are gradually
finding life returning to normal, with strong improvements in all
areas. We are holding all our governance meetings in person and
encourage our suppliers, auditors and other partners to meet us
face to face whenever possible.
Now that we can revisit our residents at home, we are moving
forward our repairs programme. We have made a strategic decision to
invest more in our homes so that we can continue to let them for
generations to come. We are committed to making our buildings safer
and secure. Our 'Re:new' programme will upgrade our homes towards
net zero carbon requirements and improve the fabric of our homes to
make them warmer and easier to heat. We have budgeted significant
investment over the next decade to guarantee the longevity of our
stock and improve living conditions for all our residents.
Alongside this, we also delivered 1,346 new homes.
We deployed a significant fire safety programme of rectification
of facades and firestopping on our taller buildings. Where
possible, we have required the original contractor to put things
right and have sought government funding, insurance monies and
third-party contributions. Nevertheless, a significant cost must be
borne by our organisation and sufficient funds have been set aside
to deal with what remains to be done. Throughout, we have done our
utmost to keep all affected residents assured about their safety
and to help any leaseholders who need to sell their homes. Our
communication programme has been extensive.
The combination of two years of merger integration, followed by
two years of covid restrictions, has impacted on our efficiency and
effectiveness. We enter the new financial year with a strategy
focused on making the organisation more customer-centric, improving
homes and neighbourhoods, maximising value for money in our service
delivery and deepening our commitment to safety and the green
agenda.
Figure 1: A summary of key operational performance
indicators
Indicator Description FY 2022 FY 2021
Number of homes let as a % of those
Occupancy available 98.80% 98.00%
------------------------------------------ ------- --------
Re-let time Number of days taken to re-let a home 72 days 66 days
------------------------------------------ ------- --------
Rent collection rate Rent collected as a % of rent receivable 99.3% 100.50%
------------------------------------------ ------- --------
Current tenant arrears as a % of annual
Current arrears rent due 5.80% 5.50%
------------------------------------------ ------- --------
Tenants who have some/all rent paid
Housing benefit tenants by housing benefit direct 33% 36%
------------------------------------------ ------- --------
Universal credit Tenants who have some/all rent paid
tenants by universal credit direct 23% 20%
------------------------------------------ ------- --------
Homes with landlord's gas certificate
Gas servicing as % of those requiring one 99.91% 99.93%
------------------------------------------ ------- --------
Key events and areas of focus
-- Canada Water sale: we previously reported the sale of NHG's
remaining interest in a site in the Canada Water area of Southwark
to Art Invest Real Estate. The site sold for GBP140m with a GBP60m
balance payable. A further GBP30m was paid on 31 December 2021 and
the balance of GBP30m is due in September 2022
-- The Paragon estate: following decant of all the blocks in
October 2020 due to safety concerns, we carried out a series of
surveys and investigations to determine the baseline condition of
all 6 blocks at Paragon and to inform on full remediation cost
-- Fire remedial works: the safety of our homes and customers is
paramount to what we do. We have removed ACM from the 7 schemes
with buildings over 18m that we were responsible for. We have also
carried out 681 visual surveys and 370 intrusive surveys (including
all buildings over 18m) and reduced waking watch by installing
temporary alarms. We have completed remedial works on a further 17
blocks in addition to the ACM works. We are still confident that
the overall net cost will be within what we have provided for
(GBP173m) in our strategic plan
At the commencement of financial year 2021/22, the Board set a
budgeted surplus of GBP82.7m. Despite challenges faced, our
finances have remained strong and robust. After taking account of
the above factors, we expect to publish results that show a surplus
significantly higher than this.
ESG and our SFF
NHG has issued a sustainable finance framework which can be
accessed from our website. We estimate that around 12,000 homes
will require investment to reach an EPC 'C' level or better. We
estimate that this will cost just over GBP20m and these
improvements will be delivered by 2030.
There is an expectation that our stock will need to be carbon
neutral by 2050. This is likely to cost about GBP700m on current
estimates. However, there is a high level of uncertainty as to the
costs and, indeed, the appropriate technology. Given this, we have
factored these costs (apart from the first GBP20m referred to in
the previous paragraph) into the final 20 years of the 30-year
business plans.
Making our ESG performance information more accessible will
demonstrate to our residents and other stakeholders the positive
impact that we are making against these goals. It will demonstrate
that by investing in our organisation, stakeholders are
contributing to positive social and environmental impacts.
We aim to develop new affordable and sustainable homes, as well
as improving the sustainability of our existing homes. Through our
strategic objectives we will carry out our mission to "build and
maintain quality affordable homes, creating diverse and thriving
communities." Residents are at the core of everything we do.
Development and sales update
We plan to continue to expand our business through development
growth. We have set a target to deliver 7,000 new homes by 2027 by
delivering 1,400 homes per year. The programme will be composed of
about 70% regulated affordable homes. Figure 2 below details
breakdown by tenure.
Figure 2: Composition of development targets
Tenure Homes per year
Affordable rent 500
---------------
Shared ownership 350
---------------
Intermediate market rent 150
---------------
Private sale 200
---------------
Market rent 200
---------------
TOTAL 1,400
---------------
The overall amount of money spent on new homes in 2021/22 was
GBP335m; an increase of GBP82m in comparison to 2020/21. We are
forecasting an increase to GBP388m in 2022/23 which will continue
to grow in future years.
The following table provides details of acquisitions, starts and
completions in 2021/22 compared to 2020/21. The joint venture sales
are managed by our JV partner and are not included in the unsold
homes numbers.
Figure 3: Development programme as at 31 March 2022
Acquisitions Starts Completions
Tenure 2021/22 2020/21 2021/22 2020/21 2021/22 2020/21
--------- --------- --------- --------- --------- ---------
Low cost rental 363 354 570 465 448 391
--------- --------- --------- --------- --------- ---------
Shared ownership 301 206 505 290 382 495
--------- --------- --------- --------- --------- ---------
Market rent - - - - 303 37
--------- --------- --------- --------- --------- ---------
Private sale 222 219 310 192 5 299
--------- --------- --------- --------- --------- ---------
Joint ventures - - - - 208 120
--------- --------- --------- --------- --------- ---------
Total 886 779 1385 947 1,346 1,342
--------- --------- --------- --------- --------- ---------
During 2021/22 we saw solid sales performance, reducing our
unsold homes by 50%. This was achieved through plot sales and the
sale of 160 homes at Brent House to an institutional investor on a
bulk basis.
Of the 275 homes unsold as at 31 March 2022, 65% have been
unsold for over six months.
Figure 4: Unsold homes as at 31 March 2022
Category Shared Private 2021/22 2020/21
ownership sale Total Total
Unsold homes as at 1 April 313 235 548 610
---------- ------- ------- -------
Homes completed as originally
intended 382 5 387 794
---------- ------- ------- -------
Homes transferred to London
Living Rent tenure (76) - (76) (43)
---------- ------- ------- -------
Homes transferred to market
rent tenure - - - (228)
---------- ------- ------- -------
Homes transferred between sales
tenures 15 (15) - -
---------- ------- ------- -------
Homes sold on a plot by plot
basis (313) (111) (424) (477)
---------- ------- ------- -------
Bulk sale to private investor (106) (54) (160) (108)
---------- ------- ------- -------
Unsold homes as at 31 March
(units) 215 60 275 548
---------- ------- ------- -------
Treasury update
As at 31 March 2022, NHG had GBP1,041.2m of available liquidity,
comprising GBP964.7m of undrawn available bank facilities and
GBP76.5m cash. Our average life of drawn debt is 15.6 years and our
average costs of drawn debt is 4.04%.
Figure 5: Group debt position as at 31 March 2022
GBPm Facilities Drawn Undrawn
Notting Hill Genesis 3,556.8 2,721.8 835.0
---------- ------- -------
Notting Hill Home Ownership
Limited 273.1 143.4 129.7
---------- ------- -------
Folio Treasury Limited 250.0 250.0 -
---------- ------- -------
GenFinance II plc 250.0 250.0 -
---------- ------- -------
Group 4,329.9 3,365.2 964.7
---------- ------- -------
Figure 6: NHG debt maturity profile
Years Debt maturity Debt maturity
GBPm %
2023 25.9 0.8%
2024 31.2 0.9%
2025 31.0 0.9%
2026 28.0 0.8%
2027 120.2 3.6%
2028-32 927.9 27.6%
2033-42 1,108.8 32.9%
> 2042 1,092.2 32.5%
--------------------------- --------------
3,365.2 100.0%
--------------------------- --------------
Our fixed / floating mix as at 31 March 2022 was as follows:
Target
Category Lower Central Upper Actual
----- ------- ------
Fixed 50% 75% 120% 99%
----- ------- ------ ------
Floating 5% 20% 40% (1%)
----- ------- ------ ------
Inflation-linked 0% 5% 15% 2%
----- ------- ------ ------
As at 31 March 2022 our security and unencumbered asset position
was as follows:
Units Security value
No GBPm
Charged and allocated 39,507 7,382
-------- --------------
Numerical apportionment security
pool 2,245 357
-------- --------------
Unencumbered 18,079 3,064
-------- --------------
Under the GBP2,000,000,000 secured note programme, 2,245 units
are currently charged to the numerical apportionment security
pool.
This trading update contains certain forward-looking statements
about the future outlook for NHG. Although the Directors believe
that these statements are based upon reasonable assumptions, any
such statements should be treated with caution as future outlook
may be influenced by factors that could cause actual outcomes and
results to be materially different.
Enquiries
Investor enquires in relation to this trading update should be
directed to:
Abayomi Okunola Wasiu Fadahunsi
Chief Financial Officer Corporate Finance Director
Email: Yomi.Okunola@nhg.org.uk Email: Wasiu.Fadahunsi@nhg.org.uk
Telephone: 020 3815 0031 Telephone: 020 3815 0356
Media enquires in relation to this trading update should be
directed to:
Wayne Tuckfield
News and Media Manager
Email: Wayne.Tuckfield@nhg.org.uk
Telephone: 020 3815 0184
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END
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