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North West landlord falls to £22m deficit after loan break costs and impairments
A North West-based housing association has fallen to an annual deficit of £21.8m after being hit by loan break costs and impairment charges.
Onward, which operates around 35,000 homes across the North West, reported loan break costs of £36.1m that were related to its former subsidiary, Contour Homes, before being amalgamated into the group.
In total, the landlord said it used £182.6m of bond proceeds to pay off loan facilities after Contour was folded into the group in April last year.
Onward, previously known as Symphony Housing Group, was formed in 2018 from the merger of five housing associations. Contour was the last of those entities to be folded into the wider group.
Onward’s post-tax deficit was £21.8m compared with a surplus of £14.6m in its previous full year.
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The association’s bottom line, in the year to the end of March 2022, was also knocked by its decision to regenerate three tower blocks in Preston.
Following a review, Onward said the value of the land and buildings had fallen from £3.6m to £0.8m, resulting in an impairment charge of £2.34m.
In addition, the landlord booked a £2.1m impairment on a major development in Runcorn after the main contractor went into liquidation.
Onward, which operates across Greater Manchester, Cheshire, Merseyside and Lancashire, is not the only landlord to have suffered in this way. Last month, Anchor revealed it had incurred £2.4m in extra costs from a contractor going bust.
Onward said its overall operating margin was also affected by the impairments as it was down slightly to 14.5%.
However, in its annual report, the association said its annual performance “held up well” considering the various challenges related to the coronavirus pandemic.
Operating costs jumped 57% to £130.4m, partly as external contractors were used to cover staff absences, Onward said.
The association’s overall turnover rose 54% to £159m, which was helped by Contour transferring over. Income from general needs social housing rent was 68% of its overall revenue.
Rent arrears – including current and former tenants – were 6.5% at year-end – a fall from 7.1% the year before.
Total borrowing facilities rose to £669m, up from £576.9m, the landlord said.
Cash at the bank was £31.9m at year-end.
Last month, Bronwen Rapley, chief executive of Onward, told Inside Housing that the association plans to build 5,000 new homes by 2030.
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