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Guinness sees surplus dampened by increased interest costs and reduced profit from sales
The Guinness Partnership posted a reduced surplus of more than £10m for the six months to 30 September 2023, owing to rising interest costs and lower homes sales.
The G15 landlord reported a total surplus of £22.6m for the first six months of the 2023-24 financial year, down from £36.5m during the same period in 2022-23.
In its latest trading update, Guinness said the year-on-year reduction was caused by “increased net interest costs and lower levels of surplus generated from sales of existing homes”.
Operating surplus during the period also fell slightly to £48.7m, down from £49.2m in the first half of 2022-23.
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Turnover increased to £218m – compared with £198m in September 2022 – due to the rent increase of 7%, as well as the letting of newly built homes and the transfer of engagements of its Guinness Care support business.
However, costs more than offset this rise in turnover, with spending on repairs and empty homes increasingly significantly.
The landlord’s operating margin fell to 22.4%, down from 24.9% the previous year. It spent £77m on maintenance and investment in existing homes during the comparative periods.
The association sold 132 shared ownership homes, which resulted in a surplus of £800,000, while staircasing generated an additional £1.3m.
Although the landlord reported 294 shared ownership and outright sale properties unsold as of 30 September 2023.
At the same time, 359 new homes had been completed, of which 346 were for affordable tenures.
Construction has started on a further 210 homes and Guinness expects to complete 883 new homes this financial year, with 823 homes starting on site.
Cladding investigations have been completed on all 16 of the association’s high-rise buildings identified for building safety work. All buildings with aluminium composite material cladding have been fully remediated.
Work to replace the high-pressure laminate cladding on seven remaining high-rise buildings is ongoing, with four started on site and the remaining three to begin in 2024.
The landlord has completed cladding replacement on 20 of 87 medium-rise buildings identified for work, with a further 28 due before March 2024.
The remaining 39 will be completed over the coming years as none have a high-priority classification, the association said.
Guinness completed a merger with Shepherds Bush Housing Association at the end of last year.
SBHA will continue to deliver local services to its residents across west London under its existing SBHA brand.
The combined group will have a turnover of £500m and expects to invest nearly £700m in existing homes over the next five years.
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