Bellway has set aside £30.5m to resolve a structural building safety problem at a 12-year-old London block of flats and said it is investigating whether similar problems exist with other buildings.
In the company’s preliminary results for the year to July 31, it set aside £49.6m for “security improvements to legacy buildings”. Bellway had total exceptional costs of £99.6m, including finance costs, but these were offset by a sum of £50m recovered in relation to “various sites”.
The costs include a £30.5m provision to address structural defects relating to an “isolated design issue identified with the reinforced concrete framework of an apartment scheme built 12 years ago in Greenwich, London”.
The report from group finance director Keith Adey said: “We intend to seek recoveries from the entities involved in the development of the Greenwich apartment project but, given the complexity of this process, we are not yet have recognized as an asset.”
Adey adds: “The group is currently carrying out a review of other buildings built by, or on behalf of, Bellway where the same third parties responsible for the framework design of the Greenwich development have been involved.
“To date, no other similar design problems have been identified with reinforced concrete frames.”
Bellway signed the developer’s government repair contract earlier this year, to pay for building safety solutions for legacy issues identified following the Grenfell Tower fire in 2017. The total amount that the company has set aside for legacy buildings in England, Scotland and Wales since 2013 is £613.3m, of which £508.2m remained at the end of July.
The company expects to spend between £60m and £80m on building security issues in the current financial year.
In the year to the end of July, Bellway’s statutory pre-tax profit rose 58.8% from £304.2m to £483m. However, this was due to the company writing off £346m for legacy building security costs in the previous financial year.
Bellway’s underlying pre-tax profit fell 18.1% to £532.6m from £650.4m in 2022. The company, which in August warned of reduced profitssaid the figures were “in line with our expectations”.
Last year’s turnover was £3.4 billion, down 3.7% on the previous figure of £3.53 billion.
The company noted that housing demand “continues to be affected by mortgage affordability limitations”, with bookings lower than the previous year.
Adey said the company had continued with a hiring freeze and that the closure of two operating divisions was expected to result in an overall 5% reduction in staff.
But chairman John Tutte said the company had delivered a “resilient performance” despite difficult trading conditions.
Bellway said the “long-term fundamentals of the UK housebuilding industry remain attractive”. He added that “the group’s balance sheet and operational strengths, combined with the depth of our land bank, provide an excellent platform for Bellway to take advantage of future growth opportunities as they arise.”
Group chief executive Jason Honeyman commented: “The depth of our land bank and strong balance sheet provide continued strategic flexibility and scope for outlet growth in the year ahead. Despite market challenges in the short term, Bellway remains very well positioned to take advantage of future growth opportunities and to continue to create long-term value for all of our stakeholders.”
