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Willmott Dixon earmarks £10m for cladding costs
National construction firm Willmott Dixon has set aside more than £10m to fix problematic cladding, in what it hopes will “draw a line” under financial uncertainty caused by potential remediation works.
The firm, which is involved in a number of social housing projects, said “evolving and increasingly complex issues of cladding and fire protection” have had a material impact on its finances, with its pre-tax profits falling by 11.6% to £22.8m in the year to 31 December 2020.
Colin Enticknap, chair of Willmott Dixon, said the decision to increase its provision was driven by a “natural desire to ‘draw a line’ under the financial uncertainty”.
He added: “The adjusted figure, which stood at £10.3m, on 31 December 2020, now reflects our view on the group’s liability net of insurance recoveries to settle all claims.”
The 2020 £10.3m provision figure for cladding remediation represents an increase on the £6.2m figure set aside in the group’s 2019 accounts.
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Willmott Dixon follows in the steps of several other major house builders and contractors that have set aside dedicated funding for cladding costs.
Inside Housing analysis last month found that the country’s largest developers have set aside nearly £500m since the Grenfell Tower fire.
Mr Enticknap said that 2020 “essentially saw our business stand still”, but that given the circumstances the firm looks back with “a huge sense of pride and some relief”.
He added: “Our people responded to the unprecedented demands suddenly placed upon them by COVID-19, all alongside the ‘normal’ challenge of running a business of out scale and complexity during a period of continuing Brexit uncertainty and evolving (and politically escalating) cladding regulations.”
Although the group said it expects the £10.3m to cover all cladding costs it noted that “potential legislative changes following the Grenfell Tower tragedy” remain a principle risk.
Earlier this year, it was announced that WPHV, a housing subsidiary linked to Willmott Dixon, was put into administration after the parent company said that it had made the decision to integrate its future residential activity into Willmott Dixon Construction, another one of its arms. In its last accounts for the year up to 31 December 2019, it had set aside a £5.8m provision for potential cladding-related issues on completed contracts.
Willmott Dixon has been approached for a response.
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