Housebuilder says cost of work at sites in Yorkshire will be up to £7.1m
Gleeson says it is looking at booking more than £10m of exceptional items including over £7m to carry out repairs at completed developments that will take four years to complete.
In a trading update this morning, the housebuilder said it will be forced to wear restructuring costs of up to £3.1m as part of its Project Transform initiative, introduced last summer by chief executive Graham Prothero to improve the performance of its housing division.
But it is also booking a cost of between £5.2m and £7.1m for remedial works on completed developments which Gleeson said were mainly in Yorkshire.
It said: “Our new management teams have identified issues on previously completed legacy developments, mainly in Yorkshire, which require rectification in order to achieve adoption of the roads (and other statutory services) by the relevant Local Authorities.”
It said that its Yorkshire East region was being rolled into Yorkshire South and West to create one region for the county from the July, adding the move will save £900,000 of costs.
Gleeson said certain sites in the Midlands would be moved into the enlarged region as well and added the move “will improve the efficiency of those regions, refocus our investment into higher return land opportunities and generate annualised regional overhead savings”.
Prothero admitted having to carry out legacy repairs was “frustrating” but said: “I am pleased with the determination of our new management teams to identify and rectify legacy issues which now allows Gleeson Homes to look forward with confidence.”
He added: “It is too early to forecast the degree to which the crisis in the Middle East will impact customer confidence, mortgage affordability and build cost inflation over the coming months. We have recently seen some softening in footfall and reservations, and limited increases in the cost of some materials. This, together with ongoing challenges with planning and site viability, prompts even higher than usual caution in how we manage the business, including land investment decisions, into the next financial year.
“However, following the successful implementation of Project Transform, which has driven a greater focus on operational effectiveness and efficiency, the business as a whole is now in a much stronger position to manage through this period of uncertainty and capitalise on the significant opportunities we see ahead when the market returns to growth.”
In the update, Gleeson said net reservation rates for the 11 weeks to 24 April were 0.88 per site per week compared to 0.86 for the same period last time.
The firm will release its annual results for the year to June on 15 September.
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