Onward Group returns to surplus despite contractor failure costs

Onward Group has returned to surplus despite having to write-down the value of two development schemes due to contractor failure.

The 35,000-home north-west landlord made a surplus of £10.7m, compared to a £22.5m loss the previous year, which was impacted by a £36m one-off loan breakage cost linked to Contour Homes joining the group.

However, the group’s operating surplus, which excludes one-off items, fell year-on-year from £21.5m to £19.8m.

Onward had to write down the value of its Basford East and Helsby development schemes by a total of £3.5m due to contractor Lane End Developments going into administration last summer.

Basford East, near Crewe, Lancashire, and Helsby in Cheshire, are expected to deliver 350 homes in total and are described by Onward as “flagship” schemes. The developments were delayed, with work suspended on site leading to increased contractor costs and further hold-ups.

It said: “This has been a challenging year for Onward, notably from the impact of the increased cost of utilities but also from a range of other inflationary pressures and contractor viability risk.

“Onward applied an average rent increase for the year of CPI +1% which was based on CPI of 3.1%. During the year the Group has been subject to contract and other price increases exceeding this level and as such has absorbed much of these additional costs. This has put pressure on the operating surplus in 2023”.

Onward completed 308 homes in the year, a 27% increase on the 242 completed in 2021/22.

The group increased its turnover 7.5%, from £159.8m to £171.9m. This was boosted by the rent increase of 4.1%, which helped push general needs income up from £107m to £113m. Shared ownership first tranche sale income increased from £6.3m to £8.5m.