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Clarion surplus falls in first statement since merger

The largest housing association in the country saw a 26% fall in its surplus in the last financial year, according to its annual statement.

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Clarion surplus falls in first statement since merger

Clarion – the 125,000-home landlord formed through the merger of Circle and Affinity Sutton – recorded a surplus of £173m for 2016/17, down from a combined total of £234m for the two organisations in the previous financial year.

Turnover fell to £796m from £824m, mostly due to a £30m reduction in sales revenue.

Mark Washer, chief financial officer at Clarion, told Inside Housing he would like to see the number of homes built for outright sale increase.

Of the 50,000 homes the association intends to build over the next decade, he said 15% would be for direct sale.

“The programme of efficiencies is inevitably a medium-term programme. You wouldn’t have expected to achieve those. You’re bringing together two organisations and you would start to make some of those efficiencies but that’s more of a three-year journey to achieving those efficiencies in full,” he said.


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The association also spent £207.7m on either building or improving its social housing properties. Its fall in income from market sales was not replicated in social housing lettings, where its operating surplus decreased only slightly from £236.5m to £231.1m.

Keith Exford, chief executive of Clarion, said: “This is a very good start for the new Clarion Housing Group and an excellent set of results. One of the fundamental principles of our overall strategy is to maintain financial strength to increase both our capacity and resilience.”

Clarion’s programme of stock rationalisation is also continuing. In 2016/17, it recorded a surplus of £37.3m on disposal of properties, up from £32.2m the previous year. In April, Mr Exford said the association could sell up to 10,000 properties that are geographically isolated.

Mr Washer said: “Maintaining our financial strength is absolutely key to us. We don’t think that we can properly achieve our social and charitable objectives – we can’t build as many homes, for example – if we don’t maintain that underlying financial strength.

“One pillar of that financial strength is how much debt you’re prepared to take on. While debt is fundamental to housing associations, we have adopted as part of the business case for merger the principle that we didn’t want to max out on debt.”

Clarion has plenty of room to pay interest on its outstanding debts, with interest cover of 210% – well above the sector average of 170%.

It also has room for further borrowing, with current debt amounting to 45.6% of equity, below the sector average of 49.5% and well below the company’s own maximum benchmark of 70%.

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