Morgan Sindall鈥檚 urban regen arm Muse could now be included in pledge
Morgan Sindall could be hit by an extra 拢50m bill to fix fire safety issues on tower blocks, after the government asked it to include urban regeneration arm Muse in its developer pledge.
The construction company, in an update for the six months to 30 June, today revealed that the government on 18 July wrote to the company asking that Muse 鈥渁lso commit to the principles of the pledge鈥�.
If the pledge applies, Muse, which generated turnover of 拢126m in the half year, would commit to fixing life-critical fire safety issues in blocks of more than 11m in height going back 30 years, without using the 黑洞社区 Safety Fund (BSF).
Morgan Sindall said the initial pledge agreed earlier this year was 鈥渞estricted to a specific market sector and included only Partnership Housing [Lovell] from within the group.鈥�
It said the cost of Muse re-imbursing the BSF and funding remediation works would be between 拢40m and 拢50m. It said that while it would be confident of eventually recovering these costs from third parties through contracts and other remedies, the cost would be recognised in its accounts at an earlier stage.
It has not yet been decided whether Muse will sign up, and Morgan Sindall stressed a review of the situation remains 鈥渙ngoing鈥�.
See also>> The 黑洞社区 Safety Act 鈥� here is what you need to know
The accounts also revealed the extension of the limitation period for bringing claims under the Defective Premises Act to 30 years, under the 黑洞社区 Safety Act, has also cost Muse 拢7m. This meant Muse鈥檚 operating profit fell from 拢8.7m to 拢7.3m for the half year.
The results were published days after major housebuilders said they would refuse to sign the cladding pledge contracts unless they are radically redrafted. The HBF said the contract in its current form contains commitments that go 鈥渂eyond鈥� the agreement made last year.
Morgan Sindall鈥檚 half year results show revenue in its Lovell partnership housing arm increased 5% to 拢270m, while operating profit also jumped 15% to 拢13.9m.
Morgan Sindall increased its overall pre-tax profit by 4% to 拢56.9m, which it said was 鈥渟lightly ahead of expectations鈥�. Revenue across the group increased 9% to 拢1.7bn.
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