Clarion sees operating surplus drop as inflation and cyber attack impact take toll
Clarion has reported a six per cent drop in year-to-date operating surplus as it felt the impact of inflation and last year’s cyber attack.
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The UK’s largest housing association saw its operating surplus fall from £249m to £234m in the nine months to the end of December 2022.
The 125,000-home landlord attributed the drop to “higher levels of cost inflation, increased expenditure on repairs and maintenance and additional provisions against rent arrears linked to the cyber attack last summer”.
A Clarion spokesperson told Social Housing: “As a result of the cyber incident we were unable to take phone or portal payments and also temporarily suspended Clarion-initiated direct debits.
“Whilst recovery plans were put in place to resume services as soon as possible, we prudently increased our provision, particularly given the backdrop of a cost of living crisis.”
The G15 group previously reported in its half-year update that the cyber attack had impacted its surplus.
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In the nine-month period, the G15 association also saw its turnover drop – down to £758m compared with £783m in the same period last year.
Clarion said that the fall in turnover was “predominantly driven by a decrease in sales income, partially offset by additional net rental income”.
Outright market and shared ownership sales generated an income of £172m, lower than £222m in the same period the previous year, the group said. However its margin on sales increased to 14 per cent, up from 11.7 per cent.
Clarion has also seen its completions drop in the year to date. It reported 1,251 handovers, compared to 1,586 in the same period last year.
“While this remains a strong level of new housing delivery it also reflects the currently challenging economic and market conditions,” the group said.
Clarion said it continues to invest “significantly” in its existing homes with expenditure of £92m in the nine months, up from £89m in the same period last year.
The group said it has in place a “clear action plan” for tackling condensation, damp and mould. In December, it announced that it will be hiring 100 extra staff to help prevent and treat the issue in residents’ homes, as part of a new £5m annual investment package.
The housing association said that it has also written to all residents with support and advice on how to best prevent damp and mould in their properties.
Like a number of housing associations, Clarion has been in the spotlight for the condition of some of its homes and its complaint-handling. A report by the Housing Ombudsman last October found multiple service failures.
Clarion said it is maintaining a “cautious approach” to investment in new homes with expenditure of £344m, down from £497m in the same period last year.
This is due to “challenging new build market conditions”, the group said, which include materials shortages and pricing challenges.
Housing fixed assets stood at £8.3bn, up from £7.9bn as at 31 March 2022, the group said.
Drawn debt was £4.4bn, down from £4.5bn at 31 March 2022, Clarion said.
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