61HI Swan Housing 48

TIDM61HI

RNS Number : 9587O

Swan Housing Capital

07 October 2019

RNS - Update on development, sales & cladding

7(th) October 2019

Development

Overall our development and regeneration programme is on track to deliver our Corporate Strategy ambition of delivering 10,000 new homes by 2027. As noted in our Annual Report and Financial Statements for the year ending 31 March 2019 two development schemes, which were expected to be completed last financial year, were delayed. The impact on revenue was GBP40m, however, both schemes remain on track to be completed this financial year. Details of these schemes are set out below:

   -      360 Barking (Cambridge Road) 

o 96 shared ownership homes where the first tranche has all been sold by Swan Housing Association Ltd

o 195 private sale homes which have all been sold by Swan New Homes Ltd

o Completion expected this month

   -      The Paragon (Peachy House) 

o 105 shared ownership units of which the first tranche of 82 properties has been sold by Swan Housing Association Ltd

o First two blocks handed over in September 2019, with remaining block due to be handed over in November

All other projects remain on track.

Sales

Strong sales performance has reduced Swan Group's exposure in the event of a slow-down in the UK Housing Market. Swan Group aims to sell all open market sale and the first tranche of shared ownership properties prior to the completion of a development and has been successful in achieving this since becoming involved in sales over a decade ago. As noted above 23 shared ownership homes remain to be sold at 'The Paragon' development by Swan Housing Association Ltd. With the level of demand experienced to date it is anticipated that the majority of homes will be sold before the development completes. In terms of further sales exposure 10 homes from a total of 205 remain to be sold on our Blackwall Reach development by Swan New Homes Ltd. It is anticipated that these will be sold before the development completes in January 2020. All other development schemes are at an early stage and the sales and marketing process has yet to commence.

Swan Group manages its risk to sales exposure through preselling units, having the ability to pause development schemes by managing construction in-house, as well as having the ability to change the tenure mix depending on market conditions.

Fire safety update

Following the Grenfell Fire in 2017, Swan Group has followed the guidance issued by MHCLG in respect of 'high rise' properties and has identified 2 developments where the cladding material included limited amounts of Aluminium Composite Material ("ACM") cladding. These developments are Fairfield Road, where the freehold is owned by Swan Housing Association Ltd, and Streamlight, where the freehold to blocks within the development are owned by either Swan Housing Association Ltd or Swan New Homes Ltd. Both developments are in Tower Hamlets.

Based on estimates by contractors, a provision of GBP3.2m was established in 2018. During 2019 firmer cost estimates have been obtained, a settlement agreement has been agreed with the contractor on one of the developments and grant funding on GBP1.9m has been secured from the social sector ACM cladding remediation fund. The balance of the provision was GBP3.4m in the 2018/19 Financial Statements.

The government has announced a private sector ACM cladding remediation fund and an application is being made for further grant funding. Given the level of grant funding available and the options open to Swan Group to recover the cost of works undertaken to replace the cladding it is anticipated that final costs will be managed to a more favourable position than is currently reflected in the Financial Statements.

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October 07, 2019 03:26 ET (07:26 GMT)

Grafico Azioni Swan Housing 48 (LSE:61HI)
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