Quarterly Performance Update

Clarion Funding plc

30 October 2025

 

Clarion Funding plc

CLARION HOUSING GROUP Q2 2025/26 PERFORMANCE UPDATE

Clarion Housing Group's Quarterly Performance Update covering the period to 30 September 2025

Financial performance

Our unaudited management accounts show Clarion delivered a strong financial performance in the first half of 2025/26, with strong core operating results despite ongoing market headwinds impacting development sales.

Group turnover for the period was £521.9 million (2024/25: £541.8 million), reflecting increased rents across our core rental business but offset by lower turnover from our development sales. This includes lower year-on-year first tranche shared ownership and private sales, driven by our decision to manage supply along with the challenging market conditions. This careful management of supply has resulted in stock levels remaining in line with the prior year.

Operating surplus rose to £160.7 million (2024/25: £137.9 million), supported by higher rental income and a £16.5m increase in disposal surplus in the first half.

Net surplus before taxation and fair value adjustments increased to £88.7 million (2024/25: £65.4 million), primarily reflecting the gain at operating surplus, along with lower financing costs and lower performance from our joint ventures. Included within the results are £12.9 million of development related impairments, predominately arising from contractor failure and the revised cost to complete schemes underway.

Clarion continued to invest significantly in both new and existing homes, with £242.8 million invested in new housing supply (2024/25: £204.0 million) and £58.1 million in improvements to existing homes (2024/25: £41.4 million). The new home expenditure includes two schemes in Leeds and Manchester which have recently received Building Safety Regulator approval at gateway 2, enabling starts on sites. The increase in existing home investment was largely driven by planned building safety works including fire risk assessment remedial works and cladding replacement, alongside investment in planned programme works and energy efficiency upgrades through our warmer homes initiatives.

The value of housing fixed assets rose to £8.96 billion (2024/25: £8.72 billion), reflecting sustained investment in the development and maintenance of high-quality, safe homes across our portfolio.

Clarion's drawn debt stood at £4.60 billion, compared to £4.59 billion at the same point in 2024, reflecting a broadly stable debt profile. The Group's liquidity at quarter end was £1.11 billion (2024/2025: £1.26 billion), with the move reflecting the decision to proactively manage down liquidity by £100m earlier in the year.

The continued delivery of a strong financial performance was recognised yesterday when the Regulator for Social Housing uplifted our financial viability rating from V2 to V1, alongside our existing G1 governance rating. This recognition emphasises the benefits of the prudent way we have managed the business in recent years, even in the face of a challenging external environment.

We also received a C2 consumer grading; this is the first time this has been within the scope of the inspection. The grading reflects and supports our plan to continue to improve how we deliver for our customers.

Operational performance

Customer satisfaction remained strong in the first half of the financial year. Overall customer satisfaction reached 84.9% (2024/25: 84.4%), while repairs satisfaction was 91.0% (2024/25: 91.4%). Arrears stood at 6.03% by the quarter end (2024/25: 6.91%), reflecting the success of ongoing efforts in income support and engagement with residents.

In development, the Group started 552 new homes, of which 401 were affordable and 151 were private sales. Completions reached 678 homes (2024/25: 792), of which 511 (75%) were vitally needed affordable units.  The year-on-year reduction reflects timing fluctuations across the year.

Sales income for the period totalled £43.1 million (2024/25: £88.2 million), while the sales margin was 0.9% (2024/25: 5.4%). This has been impacted primarily by lower volumes in the private sale market, where demand has softened amid wider economic uncertainty. Shared ownership sales continue to outperform private sales and form the majority of our 2024/25 sales programme. The reduced margin reflects recent cost inflation along with increased sales and marketing expenditure in what remains a challenging sales market.  Positively, as noted above, we have managed supply during this period and stock levels remain in line with the prior year.

In September, we broke ground on our flagship Boddingtons Brewery regeneration project in Manchester, with Councillor Bev Craig, Leader of Manchester City Council, and Andy Burnham, Mayor of Greater Manchester, marking the launch of this £109 million mixed‑tenure development which will deliver 505 homes - 60% being affordable - as part of a major city centre regeneration effort.

As a Homes England Strategic Partner, Clarion received £26 million in funding through the Affordable Homes Programme bridge scheme to help continue the delivery of our development pipeline. This positions us to play our part in supporting the Government's ambition to increase the supply of new homes. Our pipeline now stands at 21,902 homes, up from 20,532 at the same point last year. The pace at which we deliver these homes will be managed to ensure we retain a strong financial profile, taking into account future grant programmes and market conditions.

Sustainability

Clarion continues to embed sustainability across its operations, with significant progress having been made during the quarter.

We published our annual Making a Difference report, showcasing our ESG performance and reaffirming our long-term commitment to social impact. The report highlights how our Sustainable Homes Programme continues to expand, with over 75% of our homes now EPC C or above. In the last year, Clarion has invested £22 million in improving energy efficiency through measures such as air source heat pumps, upgraded boilers and insulation. This is estimated to have reduced carbon emissions by over 3,000 tonnes and saved residents nearly £1 million on energy bills.

We also published our first 'Allocation and Impact Report' during the quarter. This report details how we have used the funds raised in our 2024 bond issue for sustainable projects as set out in our Sustainable Housing Finance Framework.

In July, our development arm Latimer published its latest Sustainability Report and Sustainable Development Roadmap 2025-2030, setting out a clear plan to embed sustainability in every new home we build. Key achievements to date include 98.8% of construction waste being diverted from landfill, 64.4% of homes completed with fossil fuel-free heating, and an average biodiversity net gain of 43.1% on planning-approved sites.

Supporting our residents and communities

Having crossed the landmark of £1 billion of social value delivered since 2016, Clarion Futures sustained its momentum in supporting residents with meaningful interventions across employment, training and inclusion.

During the quarter, 638 people were supported into work (2024/25: 793), and 3,068 residents accessed training or skills development programmes (2024/25: 2,412). We helped 37 individuals to set up their own business (2024/25: 35), reinforcing our commitment to fostering entrepreneurship and self‑reliance in our communities. Our money guidance and financial inclusion services recorded 6,346 interventions (2024/25: 7,288), helping residents manage finances and sustain their tenancies. Over the same period, £477,423 in grant funding was awarded to community projects (2024/25: £297,423), enabling a wide range of local initiatives to flourish.

In September, Clarion held its William Sutton Prize awards ceremony, where the winners of our innovation contest - relaunched with a £125,000 prize fund to mark the Group's 125th anniversary - were formally announced, highlighting fresh, transformative ideas for social housing communities. One example is the project AdaptiveHeat by Eyesea Green Limited, which uses a mix of low temperature air source heat pumps, infrared ceiling panels and AI powered controls to cut energy use by over 40% in hard to retrofit homes.

Clarion Futures also doubled the funding available through the Making a Difference Fund - our small grants programme designed to support resident-led community activities - from £50,000 to £100,000. This increase followed strong demand and a high volume of high-quality applications, enabling us to support even more projects that bring people together and strengthen social connection, such as gardening groups and community arts clubs.

ENDS

For more information, please contact:

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

Olly Clitheroe, Communications Manager, Clarion Housing Group - 07858089815 / [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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