Essex-based housing association now part of Sanctuary sets aside £40m for building safety work
Essex-based housing association Swan has posted an £84m deficit for 2022/23 after making a provision of nearly £40m for building safety work.
The 11,600-home association, which was taken over by Sanctuary in a rescue deal in February following financial and regulatory difficulties, revealed the loss in its delayed financial statement.
The loss included £43.2m due to intercompany lending, and £39.9m of provisions for cladding and fire safety works identified following a review by Sanctuary last December.
The offsite developer also recognised £6.8m of impairment due to cost over-runs on several development sites, including the Essex Cordage site in Walthamstow, and on schemes at Beechwood, Purfleet and Queensway. The loss follows a £167.3m total deficit the previous year.
The group’s operating deficit, which excludes one-off items, increased from £14.7m to £50.8m year-on-year.
Swan increased its turnover by 9% from £73.7m to £80.3m. This was helped by an increase of £1.4m in shared ownership first tranche sales.
Swan over the past couple of years was involved in a long-running saga which began in December 2021 when the Regulator of Social Housing found the 11,600-home association to be non-compliant with its governance and financial viability standard after losing control of its development programme costs.
Swan later breached lending agreements relating to a £250m bond, its draft accounts also include an impairment charge of £138.6m in 2021/22 and a further £55.3m charge recognised as an adjustment in 2020/21, both relating to development schemes.
Swan, which had invested significantly in modern methods of construction, initially went into discussions with Orbit regarding a merger before talks broke down following due diligence.
In October 2022, as the loan covenant breaches emerged, it also came to light that Swan only held enough cash to last until early December, although it has since negotiated a £50m loan with Sanctuary.
Despite managing only 11,600 homes, Swan has previously claimed to have an 8,000-home development pipeline, including from its for-profit MMC developer subsidiary Swan New Homes, which trades as Nu Living.