A2Dominion Housing Group Annual Report & Accounts

A2Dominion Housing Group Ltd

14 September 2023

 

A2Dominion reports significant rise in costs and investment into existing homes in 2022/23

A2Dominion Housing Group Limited has published its Annual Report & Accounts for 2022/23, recording a turnover of £389.1m (2022: £465.8m) and a net deficit of £12.8m (2022: £40.4m surplus). This follows the Group's increased investment into its existing homes to ensure they are safe and comply with new regulations, as well as significant increases in its operational costs, and planned fall in sales income.

A significant part of the housing association's reduced operating margin and operating surplus (£50.3m) comes as a result of the economic conditions the organisation and sector is now facing. This includes £16.9m of impairments of active development schemes, £7.9m of abortive costs for schemes deemed no longer viable, and a further £7.6m of scheme write-downs within cost of sales. Combined, these £32.4m of costs have contributed towards the Group's reduced operating margin of 11.2% (2022: 20.1%), which would otherwise have been 19.5%.

The Group also saw a planned reduction in its sales and development programme which, coupled with construction delays, led to a fall in sales income of £40.6m. It also increased its investment into maintaining and improving its homes from £39.6m in 2022 to £54.7m.

Notwithstanding, A2Dominion's balance sheet remains strong, with £1.04bn of net assets and over £350m of available undrawn facilities, demonstrating its ability to weather the current and future challenges the economic environment presents.

Moving forward the Group will invest even greater resources into redevelopment and service improvements. It has taken stock of its operational and financial performance, continued investment to address safety and building quality issues, and the needs of its customers.

Ian Wardle, A2Dominion's Chief Executive Officer who joined the housing association in September 2022, said:

"A2Dominion hasn't been immune to the tough economic challenges. This year's financial performance has felt the full impact with rising inflation, interest rates, and energy costs, alongside tougher market conditions for construction and a reduced sales and development programme.

"We've also chosen to continue significant investments into remediating our tall and complex buildings and improving core landlord services.

"All these factors have contributed towards significant rises in our operational costs and pressures on our profitability. Work is already underway to reduce our operating expenses, borrowings and interest costs, which will help ensure our continued financial sustainability and resilience over the medium to longer term.

"Overall, we continue to be a financially strong organisation, with many of our services performing well. However we also recognise that there are some important areas where we need to improve and we are committed to putting this right."

Key highlights from the report:

•   86.3% customer satisfaction with responsive repairs services

•   85,000+ responsive repairs

•   New Damp & Mould and Enhanced Housing Management teams

•   £11.2 million generated in social value

•   Supporting 2,200+ customers to claim over £7 million in financial support

•   745 new homes completed

•   340 homes started on site

•   1,748 homes to be built in our two-year development pipeline

•   Fitch A credit rating

•   82% employee engagement score.

The full audited financial statements can be found in the following location:

https://www.a2dominiongroup.co.uk/about/reports-and-accounts

Summary Financial Performance
GROUP STATEMENT OF COMPREHENSIVE INCOME AND EXPENDITURE	2023 £M	2022 restated £M
Turnover	389.1	465.8
Cost of sales	(96.1)	(181.6)
Operating costs	(270.7)	(213.0)
Surplus on sale of fixed assets	14.4	13.3
Share of jointly controlled entity operating profit	6.7	9.2
Operating surplus	43.4	93.7
Operating margin	11.2%	20.1%
Net interest charges	(66.9)	(65.5)
Change in fair value of investments	(0.8)	8.4
Movement in fair value of financial instruments	4.7	2.7
Movement in fair value of investment properties	0.6	9.0
Taxation	7.1	(6.4)
Non-controlling interest	(0.9)	(1.5)
Net (deficit)/surplus for the year	(12.8)	40.4

GROUP STATEMENT OF FINANCIAL POSITION	2023 £M	2022 restated £M
Tangible fixed assets and investments	3,600.2	3,624.0
Current assets	275.3	420.9
Creditors including loans and borrowings	(1,783.5)	(1,952.6)
Deferred capital grant	(1,050.8)	(1,070.8)
Non-controlling interest	(1.4)	(1.7)
Total reserves	1,039.8	1,019.8

A copy of the Annual Financial Statements has also been submitted to the National Storage Mechanism and will shortly be available for inspection:  https://data.fca.org.uk/#/nsm/nationalstoragemechanism

ENDS

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