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House builder sees profit hit by £164m fire safety costs
Housebuilding giant Redrow has booked an exceptional charge of £164m to deal with fire safety issues, which has caused its annual profit to drop by a fifth.
The FTSE-250 firm reported a statutory pre-tax profit of £246m in the year to 3 July 2022, compared with £314m the year before.
Redrow was among the developers that signed the government’s building safety pledge in April, which commits the builder to fixing issues at all residential blocks taller 11 metres that it was involved in over the past 30 years.
The pledge was initiated by former housing secretary Michael Gove. As of last month, 49 firms had signed up.
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“An additional £164m legacy fire safety provision was created and charged to cost of sales in April in respect of the buildings the group has agreed to remediate solely as a result of signing the voluntary building safety pledge,” Redrow said in its full-year results announcement on Wednesday.
In total, the developer has set aside £200m to cover the costs, which also includes £10m in non-exceptional charges.
Fellow house builder Crest Nicholson reported a half-year loss of £52m in June as it set aside £105m to fix buildings with fire safety defects.
Redrow also said in today’s announcement that it “expects the works to take a number of years to complete”.
In May last year, the organisation told Inside Housing that it had set aside £20m to fix building safety issues post-Grenfell.
Despite the hit to its bottom line, Redrow reported that its revenue rose 10% to £2.14bn in its most recent year, which was back to pre-pandemic levels. On an underlying basis, pre-tax profit jumped 31% to £410m.
However, Richard Akers, chair of Redrow, said that due to inflation and higher interest rates, “the buoyant housing market has moderated recently and demand has returned to historically average levels”.
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