Clarion Housing Group releases half year results

Clarion Housing Group today announces a strong set of half year results which show the Group is firmly on track to achieve its overall vision and aims.

Note: Figures quoted are based on financial accounts prepared in accordance with FRS 104 Interim Financial Reporting, and reviewed by the Group’s auditors. 

Highlights:

  • Net surplus of £96 million on a turnover of £407 million
  • Operating margin of 42%
  • 6% reduction in underlying operating costs versus prior year
  • Resident satisfaction of 81.1%
  • 661 new homes constructed and 815 started
  • Current development pipeline of circa 11,900 new homes
  • Delivered social value of £44 million through community investment activities

The reviewed Interim Report and Accounts 2017/18 can be found here

Financial performance

Clarion has continued to deliver strong financial performance with a surplus of £96 million (H1 2016/17: £84 million) on a turnover of £407 million (H1 2016/17: £395 million), delivering an operating margin of 42% (H1 2016/17: 39%). The key drivers of the Group’s rise in operating margins have been a £12 million (3%) increase in turnover, coupled with a £15 million (6%) reduction in underlying operating costs.

With net assets of £1.43 billion (FY 2016/17 £1.31 billion), our Statement of Financial Position metrics remain strong. During the period we have invested £143 million in new social homes (H1 2016/17: £133 million) and £38 million in existing social homes (H1 2016/17: £38 million).

Debt and liquidity remained in line with expectations as the Group’s investment programme continued (see below), partly funded by strong cash generation from operations. The Group’s internal set of Financial Golden Rules – which serve as a framework for maintaining financial resilience and credit strength – were all met.

Operational performance

Operational performance remains strong, as reported in the quarterly update (read here). For example, overall resident satisfaction was above the Group’s internal long term target of 80% at 81.1% (H1 2016/17: 80.1%) whilst total sales margin for the period was robust at 31% (H1 2016/17: 24%). 661 new homes were constructed (H1 2016/17: 574) during the period whilst 815 were started (H1 2016/17: 739); the pipeline of new units currently stands at circa 11,900 new homes. This includes the Group’s plans to invest £1 billion in regeneration in the London Borough of Merton, a project which will deliver 2,800 new homes.

Key partnerships announced during the period include a strategic partnership with the Mayor of London to deliver at least 5,000 new homes in the capital by 2021 and another with Southwark Council for 600 new homes where Clarion will be investing £125 million across 10 sites as part of Southwark’s Regeneration in Partnership Plan. Outside of London the Group has recently secured a site in York with the potential to develop 280 new homes.

Mark Washer, chief financial officer at Clarion Housing Group, said:

“The Group has delivered excellently against its strategic objectives during the first half of the year and we have continued to meet and exceed all of our service level improvement targets. We are firmly on track to report an excellent performance at the end of the year.

“Our development ambitions are to build 50,000 new homes over ten years. In keeping with our social purpose, two thirds of our programme will be affordable. Underpinning this ambition has been the launch of our £3 billion Secured Euro Medium Term Note programme during the period. This will provide the Group with a versatile platform allowing us to access the debt capital markets quickly, in line with our strategy to diversify our funding sources.”