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Catalyst increased fire safety spend by 1,800% in the year
London-based association Catalyst has seen its fire safety spending explode from £800,000 to £15.8m in the past year following new fire safety guidance from central government, its annual accounts reveal.
In its 2019/20 annual report, the 34,000-home landlord’s spending on fire safety measures soared by 1,875%, causing it to miss its social housing operating margin and put pressure on its general operating margin.
The G15 landlord said the sharp increase was due to a major programme to remediate Grenfell-style aluminium composite material cladding from all its buildings that stand at 18m, as well spending on temporary fire safety measures such as waking watches, the costs of which have not been passed onto customers.
Catalyst said its performance against its “high business performance corporate objective” has been impacted by “increasing need to invest in fire safety measures for our properties, an additional £4m was spent above the amount originally budgeted”.
The housing association said that after 22 successive advice notes from the central government on fire safety, “hopefully the goalposts have now stopped moving”.
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It added: “The level of investment necessary to implement the emerging standards is substantial and will only be very partially covered by government grant.
“We have reviewed our financial capacity to fund our new homes programme and have scaled this back somewhat over the next three or four years to accommodate the much higher spend on fire safety modifications to existing buildings.”
The organisation identified “evolving fire safety guidance” as a potential risk to the business going forward.
Surplus before tax rose from £30m to £82m but Catalyst noted that this is due to its merger with Aldwyck, which was completed in the year, and said its adjusted surplus grew by less to just £40m.
Turnover at the landlord also rose significantly from £286m to £63m and Catalyst increased its liquidity by issuing £100m in retained bonds and signing £125m of new facilities.
Ian McDermott, chief executive of Catalyst, said: “This has been a year of integration and consolidation. Since Aldwyck joined Catalyst in May 2019, we have made a strong start in delivering on the promise, and promises, of a union between two like-minded and complementary organisations. We approach the year ahead and beyond with ambition and confidence.”
