Anchor’s surplus falls by over £10m due to impairment charge

In addition, Anchor saw its operating costs rise from £521m to £594.4m.

“We received lower proceeds from property sales in the year arising from a combination of delays in practical completions and more challenging market conditions, and we recognised an impairment charge of £9.6m at one scheme where the previous contractor had gone into liquidation,” Sarah Jones, chief executive of Anchor, and Christopher Kemball, chair, said in the results.

“This, alongside the impact of rising cost inflation in the year, had a dampening effect on our operating surplus, which at £36.7m was £0.8m lower than the previous year.”

Meanwhile, Anchor’s turnover rose by 13.2 per cent from £73.2m in 2022-23 to £628.7m in the last financial year.

Anchor said in its results: “The increase in turnover includes £33.6m from a full year of operating the Halcyon care homes acquired in November 2022 compared with £11.9m from five months in the previous year, along with higher service charges reflecting the higher cost of utilities and increases in regulated social housing rents and care home fees.”

Development

During 2023-24, Anchor completed 573 new homes at nine locations across England, above its target of 480 homes and almost seven times as many homes completed in the previous year (82).

The provider acquired 14 new care homes since November 2022, two of which have opened during the year, so it now owns or operates 121 in total.

“Through our development programme, we have a significant pipeline and anticipate delivering an average of at least 500 homes a year over a rolling 10-year period,” Ms Jones and Mr Kemball said.

However, Anchor said that materials and labour shortages also impacted its development activities, with three developments comprising 197 units that had been expected to open during the year, now expected to open in 2024-25.

The landlord said that despite lower property sales during the year, turnover and contribution from new developments that were open or opened in 2023-24 were “in line with expectations for both price and volume”.

Anchor said that in 2023-24 it undertook a review of the activities of its development subsidiary, Anchor Lifestyle Developments Limited (ALDL), whose principal purpose is to develop retirement properties for sale.

Anchor said: “Delays to sales stemming from a number of factors, including development delays during and post-COVID and historic contractor and sub-contractor failures, have increased the intragroup interest accruing on ALDL’s stock balances at a time of high prevailing interest rates.”

The housing association said it has therefore taken a number of steps to “stabilise” the financial position of ALDL.

Alongside the intragroup sale and tenure conversion of Atlas Lodge, Anchor entered a partial debt for equity swap with ALDL.

The results showed that ALDL issued two shares to Anchor for a consideration of £31.7m, which was subsequently offset against the intragroup loan, reducing the outstanding balance and mitigating future interest charges.

Anchor’s aggregate investment in ALDL has been impaired by £15.5m and this write-down has been reported as a financing charge within interest payable at Anchor, according to the accounts.

Investment in existing stock

In 2023-24 Anchor’s programme of investment in existing properties delivered 715 planned works jobs totalling £29.4m, a drop from 940 planned work jobs worth £39.2m in the previous year.

The social landlord spent £45.5m in total capital expenditure on major works and improvements to its existing properties, a slight fall from £47.1m in the previous year.

Elsewhere, Anchor said its balance sheet “remains strong” with total net assets of £592.3m as of 31 March and gearing at 28.9 per cent, a slight rise from 28.5 per cent from previous year. The housing association reported £144.6m in undrawn facilities at year end, a fall from £185.6m in the same period last year.