Fire safety pledge costs dent Gleeson profit

Gleeson has reported a 2% increase in annual pre-tax profit after its bottom line was hit by having to put aside £12.9m for the fire safety developer pledge.

The housebuilder, in its results for the year to 30 June, reported pre-tax profit of £42.6m up slightly from £41.7m last year.

Underlying pre-tax profit, without the fire safety cost, would have increased 33.1% to £55.5m.

The firm’s provision for meeting costs of the fire safety developer pledge was made after a “detailed assessment” of buildings, it said.

Gleeson signed the pledge committing to fixing serious fire safety issues in blocks over 11 m in height without using government funds.

It said: “This is management’s best estimate of the life-critical fire-safety remediation costs for these buildings based on reviews and surveys completed to date. We are in the process of undertaking a programme of intrusive inspections and fire risk assessments, where permitted by the building owners.”

Gleeson increased its overall turnover 29.4% to £373.4m, while boosting its home sales by 10.4% to 2,000 hitting its five-year target to double sales.

It said a 14.7% increase in average selling price to £167,300 had “more than offset significant material and labour cost increases”, pushing its gross profit margin on home sales up from 28.5% to 29%.

Gleeson Land reported profit of £13.8m, compared to £13.7m the previous year. It said: “The supply of consented land has been adversely impacted by planning delays which are affecting both developers and land promoters alike.

“The planning process has been slowed by staff shortages in local councils and local authorities holding back on reviewing their Local Plans whilst potential changes in planning policy are uncertain. Natural England’s guidance on nutrient neutrality, together with phosphate and nitrate mitigation requirements, has also caused further delays across the industry.”