Accounts show construction firm has not set aside money to cover potential expenses related to fire

This article is more than 2 years old

This article is more than 2 years old

Rydon, the construction company that refurbished Grenfell Tower before the fire that killed 71 people, had a 50% rise in profit last year to £19m and increased the salary of its highest-paid director by 8% to £459,000.

Its accounts show directors decided not to set aside money to cover potential losses or expenses related to the blaze, after considering the company’s position.

Rydon was the lead contractor overseeing the refurbishment of Grenfell Tower between 2014 and 2016, including the installation of cut-price cladding, which was cited among factors that allowed the fire to spread rapidly.

Ministers have said the polyethylene cladding used in the refurbishment did not comply with regulations, although Labour said this week that the government’s chief fire safety adviser approved similar material as safe for tower blocks.

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Rydon’s sales rose 3% to £280m for the year to the end of September, including a three-month period following the fire on 14 June.

The salary of the company’s highest-paid director, who was not named in the accounts, went up from £424,000 to £459,000.

The company said it had been helped by low interest rates and several government initiatives aimed at increasing housebuilding.

Accounting rules require companies to include a note highlighting the potential for any significant charges they may face in future, such as fines or payouts related to litigation.

But Rydon did not make any financial provision for costs relating to Grenfell, despite lawyers for the victims’ families saying they are considering legal action against the local government body that owned Grenfell Tower and the companies involved in the application of the external insulation system.

A government-backed inquiry in December said this cladding system appeared to have accelerated the spread of the fire.

In its accounts, Rydon said “given the limited nature of the work commissioned, the approvals received in relation to it and the inter-relationship with work undertaken by other parties, no provision has been made in the accounts for any matters arising from these tragic events”.

In December, lawyers said social housing landlords that have been forced to remove dangerous cladding from housing blocks could sue the companies responsible if they can prove the work did not comply with regulations.

The Guardian has contacted Rydon for comment.