A2Dominion reports significant rise in costs and investment into existing homes in 2022/2314 September 2023
We have published our Annual Report & Accounts for 2022/23, recording a turnover of £389.1m (2022: £465.8m) and a net deficit of £12.8m (2022: £40.4m surplus). This follows increased investment into our existing homes to ensure they are safe and comply with new regulations, as well as significant increases in our operational costs, and planned fall in sales income.
A significant part of our reduced operating margin and operating surplus (£50.3m) comes as a result of the economic conditions we and the sector are now facing. This includes £16.9m of impairments of active development schemes, £7.9m of abortive costs for schemes deemed no longer viable, and a further £7.6m of scheme write-downs within cost of sales.
Annual Report 2023
Combined, these £32.4m of costs have contributed towards the Group’s reduced operating margin of 11.2% (2022: 20.1%), which would otherwise have been 19.5%.
We also saw a planned reduction in our sales and development programme which, coupled with construction delays, led to a fall in sales income of £40.6m. We also increased investment into maintaining and improving our homes from £39.6m in 2022 to £54.7m.
Notwithstanding, our balance sheet remains strong, with £1.04bn of net assets and over £350m of available undrawn facilities, demonstrating our ability to weather the current and future challenges the economic environment presents.
Moving forward we will invest even greater resources into redevelopment and service improvements. We have taken stock of our operational and financial performance, continued investment to address safety and building quality issues, and the needs of our customers.
Ian Wardle, A2Dominion’s Chief Executive Officer, said: “A2Dominion hasn’t been immune to the tough economic challenges. This year’s financial performance has felt the full impact with rising inflation, interest rates, and energy costs, alongside tougher market conditions for construction and a reduced sales and development programme.
“We’ve also chosen to continue significant investments into remediating our tall and complex buildings and improving core landlord services.
“All these factors have contributed towards significant rises in our operational costs and pressures on our profitability. Work is already underway to reduce our operating expenses, borrowings and interest costs, which will help ensure our continued financial sustainability and resilience over the medium to longer term.
“Overall, we continue to be a financially strong organisation, with many of our services performing well. However we also recognise that there are some important areas where we need to improve and we are committed to putting this right.”
Key highlights from the report:
- 86.3% customer satisfaction with responsive repairs services
- 85,000+ responsive repairs
- New Damp & Mould and Enhanced Housing Management teams
- £11.2 million generated in social value
- 2,200+ customers claimed over £7 million in financial support
- 745 new homes completed
- 340 homes started on site
- 1,748 homes to be built in our two-year development pipeline
- Fitch A credit rating
- 82% employee engagement score.