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Taylor Wimpey sets aside £125m to fix fire safety issues

2 Mar 21 House-builder Taylor Wimpey is allocating £125m to fix fire safety issues in apartment buildings that it has constructed in the last 20 years.

Announcing his company’s annual results, Taylor Wimpey chief executive Pete Redfern said: “Doing the right thing for our customers is a key priority for the group.”

He said: “Today we are announcing our intention to support building owners and leaseholders with fire safety investment to ensure their apartment buildings are safe and meet current EWS1 (External Wall Fire Review) requirements. This applies to Taylor Wimpey apartment buildings constructed over the last 20 years, including apartment buildings below 18 metres. We are making an additional £125m provision, to be booked in 2021, to cover this cost.

“This is a complex and exceptional situation, but Taylor Wimpey is focused on doing the right thing for its customers. The board has determined that we will fund and oversee the improvement works of apartment buildings in our ownership, regardless of eligibility for the UK government Building Safety Fund, to make them safe and mortgageable by achieving EWS1 certification.”

He continued: “If Taylor Wimpey no longer owns the building and it is not eligible for the Building Safety Fund, or similar support that may be announced in the future, where a freeholder produces a fair and proportionate plan for fire safety improvement works following EWS1 assessment, we will contribute funding to bring those buildings up to the standards required by current RICS EWS1 guidance. Whilst the legal responsibility continues to rest with the building owner, we will also provide advice and other assistance where appropriate.”

Other house-builders are also making similar provisions. Persimmon has set aside £75m, for example, having identified 26 tall buildings that may need to be reclad. [See our previous report here.]

In normal years, that £125m would be a relatively small proportion of Taylor Wimpey’s annual profits, but 2020 was not a normal year. Due to the Covid-19 pandemic, sites were shut for much of the spring and some into summer.  When they reopened, it was under new site operating conditions.

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Taylor Wimpey’s revenues were therefore down 36% to £2,790m (2019: £4,341m) for the year to 31st December 2020. Pre-tax profit was down 68% to £264.4m (2019: £835.9m). Total UK home completions (including joint ventures) decreased by 38% to 9,609 units in 2020 (2019: 15,719).

Operating profit margin for the year was down to 10.8% (2019: 19.6%).

The results include £12.1m spent on restructuring the business to reduce overheads, which is expected to yield savings of £16m a year. These changes include the removal of a tier of operational management and a rationalisation of the London operating structure to focus on less expensive housing.

However, business is now sufficiently back to normal for Taylow Wimpey to resume dividend payments to its shareholders.

Chief executive Pete Redfern said: “Operating performance has bounced back strongly in the second half of 2020, with build capacity returning to near normal levels and strong sales. We are confident in the medium term performance of the housing market and therefore accelerated our land purchases from May 2020 as high-quality land became available at attractive rates. We are now focusing on driving efficiencies across the business, the roll out of our new house type range and implementing our ambitious new environmental strategy.

“The UK housing market has been resilient and continues to reinforce our confidence in our outlook. We are a cash generative business with a strong balance sheet, and we are pleased to announce today that we will reinstate our ordinary dividend in line with our aim of providing a reliable income stream to our shareholders.”

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