Contractor says money set aside in event it needs to carry out repair work
Willmott Dixon said a provision of more than 拢6m to carry out possible repair work on cladding following the Grenfell Tower fire three years ago dragged profit down by 18% last year.
In accounts filed at Companies House, the firm said pre-tax profit slumped from 拢35.5m to 拢29.2m on turnover down 6% to 拢1.2bn.
The firm said it had made a provision of 拢6.2m 鈥渇or potential cladding related issues on completed contracts鈥�.
It added: 鈥淲hilst we hope that some or all of this provision may not be required, our preference is for prudence at this stage. Had it not been for this new provision, underlying profit before tax was 拢37.5m.鈥�
Turnover at its biggest business, construction, which is working on a 拢60m job to build a new club facility for the All England Tennis Club at Wimbledon, fell 拢100m to 拢1.1bn, but its interiors arm saw income up 19% to 拢149m helped by work at London South Bank University and the Civic Hall music and arts venue in Wolverhampton.
The firm, which also revealed it has won two contracts to build residential buildings at the 2022 Commonwealth Games village for Lendlease and Birmingham City Council, said its cash in hand and at the bank had improved 拢2.6m to 拢93.1m at the year end, adding that its strengthened financial position was 鈥渆ssential against the backcloth of covid-19 uncertainty鈥�.
Along with other major contractors, Willmott Dixon has furloughed hundreds of staff 鈥� in April it said 400 had volunteered to be furloughed joining a similar number who had already been put on the government鈥檚 job retention scheme 鈥� and in the accounts, chief executive Rick Willmott said it had to 鈥渃onsider every measure to preserve the long-term prospects for jobs and for the company鈥�.
In separate comments, Willmott warned that reduced output levels on sites, caused by social distancing measures and getting hold of materials, would hit deadlines and budgets
He added: 鈥淚 think we need to be realistic that output reductions linked to social distancing measures, coupled with a possible lag in the supply of some materials from overseas, will inevitably have a continued impact on project prices and programme timings in the short to medium term.鈥�
In his chief executive鈥檚 report, Willmott also flagged concerns about the increasing unwillingness of banks to lend money to the sector. 鈥淏anks have never had less appetite to provide capital to the industry in general.鈥�
He added that a number of regional contractors had not heeded warnings about the challenges facing construction. 鈥淭hey have failed to adapt to market change, not responded to evident headwinds and as a result no longer exist.鈥�
The firm鈥檚 forward order book stands at more than 拢1bn although Willmott admitted some jobs will be delayed or postponed because of covid-19.
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