Clarion sees surplus nearly double despite higher costs

However Clarion reported that its operating costs rose to £338.8m in its most recent half-year, compared to £328.3m in the same period last year as it said demands on its services remain "elevated". 

The group’s cost of sales also rose by 36 per cent to £83.4m. 

Clarion completed 792 properties in the first half of its financial year, up from 606 in the first six months of the previous year. Of the 792 handovers, 78 per cent were for affordable tenures.

Mark Hattersley, chief financial officer at Clarion, branded it a “strong financial performance”.

He said: “I am proud of what we have achieved by the mid-point of the year, and while we are heading into what can be the more challenging winter period, we are well placed to continue to deliver for our residents and retain a financially robust position.”

Investment in new and existing homes

Clarion invested £196m in new homes and major regeneration programmes in the first half of 2024-25, a drop from £234m in the first half of last year, with 91 per cent (£179m) of this investment relating to affordable homes.

The reduced investment compared to the prior year reflected some later starts on site, Clarion said. The group has a current pipeline of 20,532 new homes.

During the first half of 2024-25, Clarion invested £41m in its existing homes, compared to £66m in the first half of the previous year. This was on top of £136m in revenue maintenance spend in the half-year, a slight fall from £139m in the first six months of 2023-24.

Clarion said the year-on-year variance is primarily related to “timing differences in the phasing of the work”, with increased expenditure anticipated in the second half of the year.

“Whilst delays on site and phasing of work have reduced our total investment in affordable housing when compared to the first half of 2023-24, it remains significant and well in excess of our annual net surplus,” Clarion said in its results.

Jock Lennox, chair of Clarion, said: “Cognisant of our exposure to a challenging market and volatile supply chain costs, we have been taking a cautious approach to development, but these numbers still represent a strong level of delivery and are improved on the same period last year when we built 606 new homes.

Elsewhere, Clarion reported £1.4bn in liquidity during the first half of 2024-25, a rise from £864m in the six months to 30 September 2023. The landlord’s gearing ratio fell slightly from 49 to 48 per cent over the same period.

Looking forward, the group said in its half-year report: “The sector remains under pressure, with demands on services still elevated and with increased costs now incorporated in business plans.

But it added: “There are buds of positivity in the outlook now that inflation has moderated, the housing market shows signs of improvement, and the new government has confirmed its support for the sector through a longer-term rent settlement and £500m of additional grant funding.”