Bellway said its margins were squeezed by cost inflation and a softening house market in the six months to January 31 but it still delivered an 8.7% rise in pre-tax profit to £313.9mln as revenue rose 12.4% to £1.5bn.
Dig a little deeper and there is one thing missing from the results – provisions.
Persimmon and Bovis Homes take hit over poorly built homes
Persimmon PLC (LON:PSN), on the other hand, took an impairment provision of £37.8mln in its 2018 results as it deals with complaints about the quality of homes and leasehold charges attached to new properties.
The housebuilder’s bill for dealing with complaints looks set to rise after launching a customer care improvement plan, which involves allowing a buyer’s solicitor to withhold 1.5% of the total value of a home until any faults identified at the time of release are resolved.
Profits in 2018 jumped nearly 50% to a record £168.1mln as it focused on improving build quality.
However, it still took a provision of £4.8bn for the year without elaborating on what the money was for.
Housebuilders set aside provisions to remove Grenfell Tower-style cladding
Barratt Developments PLC (LON:BDEV) said in its half-year results in February that it put aside money for work undertaken to remove and replace flammable cladding in buildings after similar materials were blamed for the Grenfell Tower fire tragedy last year.
A fire at the Grenfell Tower in West London claimed the lives of 72 people in June 2017. The rapid spread of the blaze was attributed to the use of combustible panels wrapped around the building.
Barratt agreed to pay £2mln to remove Grenfell Tower-style cladding at a building in Croydon in 2018 and in February said it had undertaken a review of all of its current and legacy buildings where it has used flammable materials.
“While we are satisfied that we currently have no liability in respect of cladding, we have made a provision for the work we have undertaken to carry out to remove and replace cladding in line with our commitment to put our customers first,” it said.
The housebuilder has reviewed materials used in insulation and external facades, particularly for buildings over 18 metres high.
While it did not specify the amount set aside for dealing with fire hazards, it had £2.6mln in provisions last year.
Taylor Wimpey ground rents scandal
The group has also paid out £25.5mln of the £130mln set aside in 2017 to settle a ground rents scandal, in which thousands of homebuyers were trapped in contracts with spiralling ground rents.
Freeholders are being paid to move leaseholders with a 10-year doubling lease to an RPI-based structure. About half of homeowners will be switched to less onerous ground rent terms.