Quarterly performance update

Clarion Funding plc

23 January 2024

 

Clarion Funding plc

CLARION HOUSING GROUP Q3 2023/24 PERFORMANCE UPDATE

Clarion Housing Group's Quarterly Performance Update covering the period to 31 December 2023

Financial performance

The unaudited management accounts for the year to 31st December 2023 show a turnover of £720.3 million (22/23 £758.3 million), and an operating surplus of £160.5 million (22/23 £233.9 million). Of the £73 million reduction in operating surplus, £69 million of this is attributable to a lower surplus on disposals. This continues to reflect the more cautious approach to disposals we have taken in the current economic climate as well as the large stock transfers that occurred early in the prior year. Other elements include a lower surplus on development sales and higher operating costs, although the majority of the operating cost increases are substantially offset by higher rental income following the 7% rent increase in 2023.

The Group has continued to invest significantly in improving its existing homes, with £96.7 million invested by the end of September 2023 - increased from £91.7 million over the same period the prior year. A total of £380.1 million was also invested in our new homes programme - lower than the previous year in line with the balanced approach being adopted due to challenging market conditions.  

Housing fixed assets stood at £8.55 billion, up from £8.31bn as at 31 March 2023. Drawn debt was £4.63 billion, up from £4.46 billion as at 31 March 2023. Liquidity stood at £0.81 billion (31 March 2023: £1.02 billion) with committed and fully secured loan facilities at £5.38 billion (31 March 2023: £5.41 billion). 

Operational performance

Customer satisfaction has been good, exceeding our internal targets with scores last measured at 84.5% for overall customer satisfaction (target: 80%) and 90.7% for satisfaction with last repair (target: 85%).

Rent arrears has improved to 7.9%, from 8.1% at the end of the last quarter. While the level is improving, it remains higher than usual due to the continued legacy impact of the cyber security incident in 2022, where a proportion of our direct debits were affected. Our teams continue to deliver targeted and bespoke support to help residents maximise their income and manage their finances.

The Group had completed 811 new homes by the end of December 2023. Most of these homes - 71% - were for affordable tenures. The current pipeline remains in excess of 20,000 homes.

Outright market and shared ownership sales generated income of £91.6 million, with a margin of 10.7%.

Sustainability

Energy and technology group Octopus Energy has partnered with The Hill Group and Clarion Housing Group in a landmark strategic partnership to develop the nation's most extensive 'Zero Bills' housing development, comprising 89 homes at Hollymead Square in Newport, Essex. Residents will pay no energy bills for a minimum of five years, guaranteed.

Of the 89 homes, 64 will be sold on the open market. The remaining 25 will be made available for affordable rent and shared ownership by Clarion. These will be the first completed 'Zero Bills' homes available for affordable rent.

Meanwhile, Latimer, the development arm of Clarion Housing Group, has again been recognised as the most sustainable not-for-profit housebuilder in the country, according to the NextGeneration Benchmark, achieving a Gold Award.

The 'NextGeneration' initiative is the sustainability benchmark for the UK's housebuilding sector. Latimer has been named joint third among all housebuilders in the 2023 report and has achieved a Gold Award for its continued commitment to driving sustainability in affordable house building.

Supporting our residents and communities

Over the first nine months of the year, the Group's charitable foundation, Clarion Futures, supported 1,465 people into work and 5,002 into training, as well as helped 61 people to set up their own business, through its free jobs and training service.

Demand on Clarion Futures' money service continues to be high, and 16,195 residents have benefitted from money guidance from Clarion Futures and its external partners since April 2023.

A total of £1,132,303 has been awarded in grant funding to community-based organisations, including food banks and local charities tackling issues such as loneliness and isolation, and other organisations delivering projects that benefit wider society.

Credit ratings

During the quarter, S&P completed its annual review and affirmed Clarion Housing Group's A- rating, with a stable outlook. Moody's took action to take Clarion off 'negative' outlook in October, with the agency citing; "the proactive actions taken by the issuer to mitigate the adverse effects of the weaker operating environment, thereby limiting development risk." Clarion is rated A3, with a stable outlook.

ENDS

For more information, please contact:

Andrew Hill, Director of Treasury and Corporate Finance, Clarion Housing Group - 0203 840 0164 / [e-mail]  

Lucy Pond, Senior Communications Manager, Clarion Housing Group - 0207 378 5555 / [e-mail]  

Disclaimer

The information contained herein (the "Trading Update") has been prepared by Clarion Housing Group Limited (the "Parent") and its subsidiaries (the "Group"), including Clarion Funding plc, Affinity Sutton Capital Markets plc, Circle Anglia Social Housing Plc and Circle Anglia Social Housing 2 Plc (the "Issuers") and is for information purposes only.

The Trading Update should not be construed as an offer or solicitation to buy or sell any securities issued by the Parent, the Issuers or any other member of the Group, or any interest in any such securities, and nothing herein should be construed as a recommendation or advice to invest in any such securities.

Statements in the Trading Update, including those regarding possible or assumed future or other performance of the Group as a whole or any member of it, industry growth or other trend projections may constitute forward-looking statements and as such involve risks and uncertainties that may cause actual results, performance or developments to differ materially from those expressed or implied by such forward-looking statements. Accordingly, no assurance is given that such forward-looking statements will prove to have been correct. They speak only as at the date of the Trading Update and neither the Parent nor any other member of the Group undertakes any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments, occurrence of unanticipated events or otherwise.

None of the Parent, any member of the Group or anyone else is under any obligation to update or keep current the information contained in the Trading Update. The information in the Trading Update is subject to verification, does not purport to be comprehensive, is provided as at the date of the Trading Update and is subject to change without notice.

No reliance should be placed on the information or any projections, targets, estimates or forecasts and nothing in the Trading Update is or should be relied on as a promise or representation as to the future. No statement in the Trading Update is intended to be an estimate or forecast. No representation or warranty, express or implied, is given by or on behalf of the Parent, any other member of the Group or any of their respective directors, officers, employees, advisers, agents or any other persons as to the accuracy or validity of the information or opinions contained in the Trading Update (and whether any information has been omitted from the Trading Update). The Trading Update does not constitute legal, tax, accounting or investment advice.

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