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Surplus at Midlands landlord down slightly amid warning maintenance spend will have ‘adverse impact’ in future
The Longhurst Group has achieved a net surplus of £6.4m in the first half of this year, but has warned planned spending on maintenance will have an “adverse impact” on this figure in future.
The association issued the warning as part of its latest trading update provided to the London Stock Exchange.
The landlord said the slight decline in its net surplus for the first six months up to the end of September aligned with its business plan for this stage in the financial year.
The association told the stock market: “Increased expenditure in relation to responsive, void and planned maintenance is forecast to have an adverse impact on the surplus and key performance metrics in the second half of the financial year.”
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Its operating costs increased by £8m to £58m. This increase was the result of “the current economic environment and our investment in property repairs and maintenance, with the rise in cost inflation impacting on our operating margin”, it said.
Longhurst owns and manages around 24,000 homes across the Midlands and East of England. It operates more than 80 care and support schemes.
Elsewhere in its Q2 update, the landlord reported a slight increase in turnover, to £83m. The housing association explained this was down to the net impact of increased social housing lettings turnover.
At the same time, it reported decreased income from shared ownership first-tranche sales.
Operating surplus and gearing were both stable, at 24% and 52%, respectively.
Longhurst’s level of gearing increased slightly due to the renewal of a revolving credit facility that included £25m of additional sustainability-linked funding, announced in March, and the final £50m sale in April 2023 in relation to the forward sale of £100m bonds.
Its interest cover stands at 205%.
The landlord completed 239 homes over the reporting period, compared with 234 in 2022.
Rob Griffiths, deputy chief executive and chief financial officer at Longhurst, said: “Overall, the group’s results for the first six months were in line with budget for this stage of the financial year.
“Operationally, we continue to see an increase in demand on repairs and maintenance services and, as a result, we have brought in additional contractor resource to help alleviate the backlog of repairs jobs.
“Performance on shared ownership sales has remained buoyant during the first six months of the year. Our surplus on first-tranche sales is ahead of budget, which has been achieved through fewer sales than had been budgeted through to the end of September.
“The reduction in sales in the first six months against budget is due to delays in the handover of properties from the strategic partnership development programme.”
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