Troubled A2 Dominion posts deficit following write-downs and aborted schemes

A2 Dominion has posted a £12.8m deficit after recognising £32.4m of losses following write-downs and costs due to aborted developments.

The 36,000-home housing association today, in its financial statement for 2022/23, revealed it made a deficit of £12.8m, compared to a surplus of £40.4m the year before. Its turnover fell 16% from £465.8m to £389.1m over the same period. The accounts follow the news earlier this week that A2 Dominion is being investigated by the Regulator of Social Housing over a potential breach of the governance and financial viability standard.

London-based A2 Dominion revealed it has recognised a £16.9m impairment due to an increase in development costs. This relates to 523 units that previously had a net book value of £30.2m.

It said it had also incurred £7.9m of costs from a number of potential developments that were aborted due to the feasibility of schemes changing “given the current economic conditions”, along with £7.6m of further write-downs relating to the cost of sales.

A2 Dominion’s fall in turnover was due in part to a complete lack of land sale income, compared to £55m the previous year, and a £40m drop in property sale income due to scheme delays - higher than the £23.7m anticipated. Its operating costs increased by 27.1% to £57.7m.

The association built 745 homes, which was below its target of 775 and less than the 971 it completed the previous year.

Ian Wardle, chief executive of A2 Dominion, said the association is working to reduce its operating expenses, borrowings and interest costs to help ensure the organisation’s “continued financial sustainability and resilience”.

He 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.” He added that A2 Dominion has continued to invest in remediating buildings and improving its landlord services.