Downing Construction reports £8.5m loss after cladding provision

Downing Construction has announced a pre-tax loss of £8.5m, as it attempts to recoup money paid to a client for defective cladding.

The Liverpool-based firm also revealed it suffered a 65 per cent fall in turnover, from £83.4m to £28.8m, in its latest financial year, which ended in March 2022.

The group set aside £18.5m for a claim by developer Unite Students for damages made against it and its subsidiary, George Downing Construction.

The provision – which increased by £8m compared with the previous year – covers an agreed out-of-court settlement for cladding defects on student accommodation in Manchester, as well as associated legal costs.

In January, the High Court ruled that the collapsed subcontractor European Sheeting Ltd (ESL) was liable for the defects, and ordered it to reimburse George Downing Construction. However, the subcontractor is now in liquidation.

In its accounts, Downing said that since ESL “was held entirely responsible for the defects”, George Downing was “pursuing the subcontractor’s insurance for recompense”.

Following the settlement, Downing group’s shareholder, George Maxwell Downing, injected £6.5m of cash into the company.

The group also increased its provision for possible remediation work required on completed contracts by £2.5m to reach £9.8m.

In the year to March 2022, the firm began three new contracts, including a co-living scheme and a 45-storey residential tower at Manchester’s First Street.

The directors stated that the future prospects of the Downing group were “satisfactory”. The firm’s joint chief executive, Sally O’Brien, wrote in the strategic report that it had a “very healthy pipeline of contracts programmed over the next five years”.