Notting Hill Genesis confirms £130m deficit amid ‘persistently difficult’ market

As the 60,000-home group revealed previously, it was affected by a £119m revaluation of its build-to-rent arm, Folio, which is currently up for sale.

The annual report also showed that NHG’s borrowing to its subsidiary, Folio London Ltd, increased to £73.1m compared to £23.8m last year.

NHG also booked £42.1m in write-downs related to building safety work, impairments on development schemes and cost overruns on a project in Croydon, south London.

The group’s spending on interest payments and “similar charges” also rose to £147.3m.

Patrick Franco, chief executive of NHG, said the economic and market backdrop remain “persistently difficult”.

Elsewhere in its annual report, NHG said it expects building safety costs on a net basis to be £173m over the next seven years.

As well as spending, this takes into account “potential recoveries from the Building Safety Fund, contractors and the National House Building Council”, the landlord said.

Of its 172 blocks that need work, 47 have been completed and work is underway on 70 others.

Like many large landlords, NHG is dialling down its development plans. In its last full year, the group recorded 786 completions, a fall from 822 the year before. A total of 380 low-cost rental homes were handed over in its latest year, as well as 253 for shared ownership.

The G15 landlord’s starts fell more sharply, dropping by 58% year-on-year to 359 in the last full year. But NHG said it is still aiming for 3,000 new homes over the next five years.

On its existing stock, the group said it spent £33m on improving 2,245 homes, which included installing 780 A-rated boilers. It is planning to spend £800m on its existing stock over the next 10 years.

NHG was handed a C3 for consumer standards last year, partly due to a backlog of more than 2,000 fire remediation actions and failure to meets its own timescales for repairs, maintenance and planned improvements.

At the same time, it was downgraded to a non-compliant G3 for governance due to issues of “serious regulatory concern”.

Mr Franco said: “Delivering the required change will take time, but as an organisation we have responded positively and have redoubled our efforts to become a more resident-focused organisation.

“I am pleased with the strategic and operational progress made in the year and the steps we are taking to regain regulatory compliance. Our transformation is gathering momentum and I am confident in our ability to deliver progress in the years ahead.”

Mr Franco pointed to a new resident forum that had been set up and a slight improvement in tenants’ satisfaction with repairs.

NHG’s figures also showed an overall operating margin of 11%, compared to -0.1% last year. The group’s gearing figure fell to 46.2% due to the “phasing of capital investment and sales receipts”.

The association’s EBITDA MRI (earnings before interest, tax, depreciation and amortisation, major repairs included) interest cover figure – a key metric for financial health – rose to 53%, which is still historically low, but well above last year’s figure of 6.6%.

Rent arrears were 5.6%, compared to 5.5% last year, and to the target of 4.8%, NHG reported. 

The group’s net debt rose slightly to just over £3.6bn. Cash at hand and in the bank fell to £36.1m, compared with £95.2m at the same point last year.