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Taylor Wimpey sets aside £30mln to replace flammable cladding after Grenfell Tower tragedy

Published: 03:41 31 Jul 2018 EDT

Grenfell Tower
A fire at the Grenfell Tower in London killed 72 people last June

Taylor Wimpey PLC (LON:TW.) reported a 1.2% drop in first-half profits as it set aside £30mln to replace flammable cladding in some of its buildings following the Grenfell Tower tragedy.

The housebuilder carried out a review of all its legacy and current buildings containing aluminium composite material cladding after a fire at Grenfell Tower in London claimed 72 lives last year.  

The company said while the buildings met regulations at the time construction was formally approved, it has decided to replace the cladding because it believes “it is morally right, not because it is legally required”. 

The fire at Grenfell Tower is understood to have spread from a fourth floor flat when a uPVC window melted, exposing combustible cladding that was used for insulation in the building. US industrial giant Arconic made the cladding for Grenfell Tower but has denied that its panels were responsible for spreading the fire.

Profits dip as house completions fall 

Taylor Wimpey reported pre-tax profit before exceptional items of £331mln for the for the six months ended July 1, down from £335mln a year ago, as the number of house completions fell.

Including items, pre-tax profit rose by 46.8% to £301mln from £205mln last year, reflecting a decline in exceptional charges.

READ: Taylor Wimpey to whack up the divi as it signals confidence in growth prospects

While the company made a £30mln provision for replacing cladding in the period, last year’s results included a £130mln charge related to leasehold property matters and doubling ground rents.

The number of homes completed came to 6,497, excluding joint ventures, down from 6,648 in the year-ago period.  However, the average selling price for UK private homes rose to £295,000 from £287,000.

At the end of the period, the UK order book stood at 9,241 homes at a value of £2.18bn, excluding joint ventures, compared to 8,741 homes valued at £2.11bn last year.

Customer demand still strong despite Brexit uncertainty

Taylor Wimpey said customer demand was supported by low borrowing costs, a competitive mortgage market and the government’s Help to Buy scheme.

“Despite some wider uncertainty in the UK economy and the ongoing Brexit negotiations, we have seen no material impact on customers' ability or desire to purchase a new home with Taylor Wimpey in 2018,” the company said.

The group recommended an interim dividend of 2.44p, up from 2.30p the previous year, as it increased its net cash to £525.1mln from £429.0mln.

It repeated its commitment to pay a special dividend of £350mln, or 10.7p per share, from 2019, subject to shareholder approval.

Chief executive Pete Redfern said the company remains on track to meet its expectations for 2018. 

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