Clarion Funding plc Quarterly performance update (7695X)

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RNS Number : 7695X

Clarion Funding plc

27 April 2023

Clarion Funding plc

CLARION HOUSING GROUP Q4 2022/23 PERFORMANCE UPDATE

Clarion Housing Group's Quarterly Performance Update covering the period to 31 March 2023

Clarion Housing Group announces the following update ahead of its Annual Report for the year ended 31 March 2023.

Note: Figures quoted in the update are based on unaudited management accounts, which are subject to review and further adjustments, for example in the areas of pensions, investment property and financial instrument valuation and taxation. Comparative data is from the audited financial statements for the year ended 31 March 2022 ("2021/22").

Financial performance

The Group is pleased to report its financial position at the end of the financial year 2022/23. The unaudited management accounts for the 12 months to 31 March 2023 show a turnover of GBP1,001 million (2021/22: GBP1,059 million), delivering an operating surplus of GBP263 million (2021/22: GBP303 million) and a full year pre-tax surplus of GBP101 million (2021/22: GBP186 million).

These unaudited results are reflective of a challenging operating environment and increased demand on services, although the reduced surplus is primarily driven by one-off events and projects. These include a one-off GBP45 million interest charge resulting from a decision to complete a debt portfolio rationalisation project which strengthens the Group's credit position, a GBP24 million impairment and provision charge against development schemes (generally additional costs due to contractor failure) and GBP17 million associated with the cyber-attack (predominantly bad debt provisions). Although significant, these are one-off, non-recurring costs, with an underlying net surplus in line with the prior year and a robust performance that demonstrates the resilience of the Group in challenging times.

The Group has continued to invest significantly in its existing homes - GBP148 million was invested in improvements, an increase from GBP136 million the previous year. GBP456.8 million was invested in our new homes programme, a decrease on the GBP583 million invested the previous year due to the more cautious approach we have adopted in recognition of the challenging market conditions.

Housing Fixed Assets stood at GBP8.39 billion, up from GBP7.90 billion as at 31 March 2022. Drawn debt was GBP4.46 billion, up marginally from GBP4.45 billion as at 31 March 2022. Liquidity stood at GBP1.02 billion (31 March 2022: GBP1.12 billion) with committed and fully secured loan facilities at GBP5.41 billion (31 March 2022: GBP5.44 billion).

In March, the Group utilised its strong liquidity position to complete a project to rationalise its debt portfolio, simplifying the structure and reducing loan administration. The project included the restructure of GBP173 million of fixed rate loans and the prepayment of a GBP32 million pre-merger legacy loan from a special purpose vehicle, RSL No.1 Limited. As a result of this project there will be a one-off exceptional interest expense of GBP45 million in 2022/23 and an ongoing reduction in interest costs in future years.

Operational performance

The Group continues to be focussed on its customer service, and overall customer satisfaction was last measured at 79.9%, marginally below the internal target of 80%. Repairs performance was good, with satisfaction last measured at 89.6% (internal target: 85%).

Thanks to recovery efforts following the cyber incident, arrears has improved and at year end has reduced by 0.7% since the end of December 2022, to 8.7%. Tenancy sustainment teams and our charitable foundation, Clarion Futures, also continue to provide a range of support and advice for residents facing financial difficulties.

The Group has completed 2,032 homes over the course of the financial year (2021/22: 2,276) - of which 78% were for affordable tenures. The current pipeline stands at 20,970 homes.

Outright market and shared ownership sales generated a sales income of GBP219.6 million (2021/22: GBP307.4 million), with a margin of 11% (2021/22: 12%) including GBP5 million of the development impairment costs.

Sustainability

Clarion Housing Group is investing GBP108 million to upgrade the energy efficiency of thousands of its homes after a consortium of social housing providers, led by the Group, was awarded GBP48.9 million from the Government's Social Housing Decarbonisation Fund (SHDF). The funding will allow Clarion to upgrade an additional 5,300 homes as part of its nationwide retrofit programme.

Clarion has also won a prestigious industry award recognising its excellence in delivering its landmark retrofit programme to improve the energy efficiency of hundreds of social homes. Alongside its supply chain partners, the Group won 'Best Social Housing Retrofit Programme' at the 2023 Retrofit Academy awards.

Supporting our residents and communities

Over the year, the Group's charitable foundation, Clarion Futures, has supported 2,114 people into jobs and 5,918 into training. In addition, 74 people have been helped to set up their own business. Demand for support from our Clarion Futures Money service remains high in light of continued pressures on cost of living, and 17,656 money guidance and financial inclusion interventions have been made by the service and its external partners over the last 12 months.

During the year, we have awarded a total of GBP598,984 in grant funding to organisations including food banks, community groups and local charities tackling issues such as loneliness and isolation .

Board member appointments

Clarion has appointed Sasha Morgan, current Director at the Social Mobility Commission, and finance and governance specialist Sharon Critchlow, to its Housing Association Board.

Sasha joins the Board having held a number of key roles in government departments, including the Department for Education and the Cabinet Office. More recently, at the Social Mobility Commission, she has overseen a suite of influential studies that have filled evidence gaps on social mobility and raised the profile of the social mobility agenda in the media and amongst parliamentarians.

Sharon brings with her 20 years of board level experience and is currently a Global Council Member and member of the Remuneration Committee at ACCA. During her career, processes developed by Sharon have been recognised by the Financial Conduct Authority (FCA) as best practice and she was listed globally in the Top 50 Women in Accounting 2020 and 2021 for global influence in the profession.

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For more information, please contact:

Andrew Hill, Director of Treasury and Corporate Finance, Clarion Housing Group - 0203 840 0164 / [e-mail]

Lucy Pond, Senior Communications Manager, Clarion Housing Group - 0207 378 5555 / [e-mail]

Disclaimer

The information contained herein (the "Trading Update") has been prepared by Clarion Housing Group Limited (the "Parent") and its subsidiaries (the "Group"), including Clarion Funding plc, Affinity Sutton Capital Markets plc, Circle Anglia Social Housing Plc and Circle Anglia Social Housing 2 Plc (the "Issuers") and is for information purposes only.

The Trading Update should not be construed as an offer or solicitation to buy or sell any securities issued by the Parent, the Issuers or any other member of the Group, or any interest in any such securities, and nothing herein should be construed as a recommendation or advice to invest in any such securities.

Statements in the Trading Update, including those regarding possible or assumed future or other performance of the Group as a whole or any member of it, industry growth or other trend projections may constitute forward-looking statements and as such involve risks and uncertainties that may cause actual results, performance or developments to differ materially from those expressed or implied by such forward-looking statements. Accordingly, no assurance is given that such forward-looking statements will prove to have been correct. They speak only as at the date of the Trading Update and neither the Parent nor any other member of the Group undertakes any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments, occurrence of unanticipated events or otherwise.

None of the Parent, any member of the Group or anyone else is under any obligation to update or keep current the information contained in the Trading Update. The information in the Trading Update is subject to verification, does not purport to be comprehensive, is provided as at the date of the Trading Update and is subject to change without notice.

No reliance should be placed on the information or any projections, targets, estimates or forecasts and nothing in the Trading Update is or should be relied on as a promise or representation as to the future. No statement in the Trading Update is intended to be an estimate or forecast. No representation or warranty, express or implied, is given by or on behalf of the Parent, any other member of the Group or any of their respective directors, officers, employees, advisers, agents or any other persons as to the accuracy or validity of the information or opinions contained in the Trading Update (and whether any information has been omitted from the Trading Update). The Trading Update does not constitute legal, tax, accounting or investment advice.

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April 27, 2023 12:17 ET (16:17 GMT)