Financial Overview

The financial performance of the Group reflected the differing market conditions of our two main operating businesses, Hill Partnerships and Hill Residential.

Hill Residential, like many housebuilders in the private housing sector, faced several challenges during 2023. The planning system remains problematic, and uncertainty over the government’s guidance on fire safety resulted in a number of commencement delays on developments across our operating area, particularly in London. 

Inflation during the period far exceeded the Bank of England’s target which has meant interest rates increasing to levels not seen since before the global financial crisis. Both factors have caused consumer demand for new homes to reduce. Our sales rate during the period was in the region of 0.5 sales per site per week with total completions of 726 new homes at an average selling price of £513,000. More recently, with inflation falling towards the Bank of England target of 2%, prompting anticipated reductions in mortgage rates and a recovering economy, we have seen our sales rate increase to around 0.7 sales per site per week.

Hill Partnerships delivers affordable housing on behalf of registered providers across our operating area, as well as building private for sale homes for Hill Residential. These contracting activities have been operating against a backdrop of increasing build costs over the past two to three years which eased in the financial year. 

During the period we saw these cost pressures reduce slightly enabling reported margins to improve.  This was particularly so in our London and Special Projects regions which operate largely within the M25 where activity levels across the capital have fallen generally, resulting in decreased workload for our supply chain. This has also allowed these regions to increase output volumes, enhanced further by the additional three-month activity from the extended financial reporting period.

The Group’s contracting pipeline stands at over £3.7bn (2022: £2.1bn).

Net assets on 31 March 2024 increased to £368.9m with the Group continuing its policy of retaining the majority of annual profits to invest in new land.

The Group spent £155.1m (excluding related taxes and fees) on new land during the period. This investment accounts for almost all of the increase in work in progress which stood at £486.4m at the period end (2022: £314.8m), with a further £79.7m invested in joint ventures, including profits yet to be distributed from those partnerships.

Our development pipeline stands at over 27,000 units. This comprises 8,800 units with planning and a further 4,100 controlled on a subject to planning basis. The longer-term strategic portfolio includes 14,100 units owned or controlled under option or other promotion agreements. 

All combined, the potential revenue of the controlled development pipeline (12,900 homes) exceeds £10bn (2022: £6.7bn).

Net cash ended at £86.4m having borrowed £70m from our £220m Revolving Credit Facility for the first time in over three years. This facility is committed until December 2026.

The Group has started 2024 on a positive note. We expect cost pressures to ease further and with higher demand for private homes enabling some upward movement in house prices, we anticipate that our margins will improve over the remainder of our current business plan period and into the next.

We can deliver all our current year affordable housing targets from secured contracts. Our private for sale order book comprises 50% of the unit numbers for the current year, with increasing demand from domestic and overseas customers. We therefore expect to see pro-rata growth in activity compared to the period to 31 March 2024, solidifying delivery of our 2025 business plan targets.

Tony Parker FCA, BSc (Hons)
Group Finance Director