Bellway books £30m for structural issue at London block

In the company’s preliminary results for the year to 31 July, it set aside £49.6m for “legacy building-safety improvements”. Bellway had total exceptional costs of £99.6m, including finance costs, but these were countered by a £50m sum recovered in relation to “several sites”.

The costs include a £30.5m provision to address structural defects relating to an “isolated design issue identified with the reinforced-concrete frame of an apartment scheme built 12 years ago in Greenwich, London”.

The report from group finance director Keith Adey says: “We intend to seek recoveries from the entities involved in the development of the Greenwich apartment scheme, however, given the complexity of this process, these have not yet been recognised as an asset.”

Adey adds: “The group is carrying out a review of other buildings constructed by, or on behalf of, Bellway, where the same third parties responsible for the design of the frame in the Greenwich development have been involved.

“To date, no other similar design issues with reinforced-concrete frames have been identified.”

Bellway signed the government’s developer remediation contract earlier this year, to pay for building-safety fixes for legacy issues identified in the wake of the 2017 Grenfell Tower blaze. The total amount that the firm 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 anticipates spending between £60m and £80m on building-safety issues in the current financial year.

In the year to the end of July, Bellway’s statutory pre-tax profit rose by 58.8 per cent, from £304.2m to £483m. However, this was due to the company writing off £346m for legacy building-safety costs in its previous financial year.

Bellway’s underlying pre-tax profit fell by 18.1 per cent to £532.6m, from £650.4m in 2022. The firm, which in August warned of reduced profits, said the figures were “in line with our expectations”.

Turnover for the past financial year was £3.4bn, down 3.7 per cent from the previous figure of £3.53bn.

The company noted that demand for housing “continues to be affected by mortgage-affordability constraints”, with reservations down on the previous year.

Adey said the company had continued its freeze on recruitment and that the closure of two operating divisions was expected to lead to an overall reduction in staff headcount of 5 per cent.

But chair John Tutte said the firm had delivered a “resilient performance” despite challenging 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 capitalise on future growth opportunities when they arise”.

Group chief executive Jason Honeyman commented: “The depth of our land bank and robust balance sheet provide ongoing strategic flexibility and scope for outlet growth in the year ahead. Notwithstanding the near-term market challenges, Bellway remains very well-placed to capitalise on future growth opportunities and to continue creating long-term value for all our stakeholders.”

Source: Construction News