Clarion posts lower turnover after scaling back build plans

Clarion’s annual turnover has dropped 5% as its development sales revenue plummeted

The 135,000-home housing association, in its financial statement for the year to 31 March, reported turnover of £1.01bn, down from the £1.06bn reported the previous year.

The drop was driven by a fall in income from sales. The group sales income fell from £307m to £220m year-on-year, with open market sales income falling from £157m to £99m and shared ownership income dropping from £150m to £121m. The fall was partially offset by a £28m increase in income from social housing lettings.

Clarion said the reduction in sales income reflects lower completions as it “took a more cautious approach to development in the current climate.”

Clarion completed 2,032 homes in the year - 11% fewer than the previous year’s total of 2,276.

>>See also: Clarion’s surplus hit by contractor failure and cyber attack

>>See also: ‘Bigger and complicated is what we enjoy’: an interview with Clarion’s Richard Cook

>>See also: Can housing associations keep development going as the rest of the market slows?

As previously reported by Housing Today, Clarion has quietly scaled back its long-term development ambitions. In its 2018/19 financial statements Clarion expressed an ambition to build 5,000 homes a year. Twelve months later this had dropped to 4,000.

Then, in its accounts for 2021-22, the aim had changed again, with Clarion pledging to “consistently build 3,200 homes a year”. This is still a huge expansion for an organisation that was only building 1,200 a year pre-2019.

The financial statement also confirmed Clarion’s surplus fell 48% after being hit by several large “one-off” costs including expenditure relating to contractor failure and dealing with a cyber-attack. This was slightly more than the 45% fall stated in an unaudited quarterly trading update in April.

Clarion reported an overall surplus of £96.8m, down from the £185.8m reported the previous year. The surplus was hit by £45m in breakage costs related to refinancing.

It was also affected by a £24m impairment charge relating to “contractor failure.”

The collapse of offsite contractor Mid Group last summer led to work halting on a 17-storey tower block for Clarion in Bristol. Manchester contractor Beaumont Morgan which was building a 271-home block for the association in Salford also went into administration last year.

The group said last summer’s cyber-attack cost the firm £5m in costs to deal with the incident directly and a further £12m in bad debt provisions as it impacted Clarion’s rent collections.

Clarion also increased the amount of money it invested in maintaining and improving existing homes from £364m to £397m.

It last year faced criticism over conditions in some of its properties. It featured in an ITV documentary earlier this year which highlighted issues on its Eastfields estate in Merton. It was also served with a severe maladministration judgement by the Housing Ombudsman in April 2022 for failing to handle complaints adequately and was ordered to pay £2,300 in compensation. In May the same year it was hit with a second judgement, prompting the ombudsman to investigate if there are systemic failings at the landlord. Neither the ombudsman nor the Regulator of Social Housing found systemic failure at the association.