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Crest Nicholson review of 140 sites reveals remediation work totalling £31.4m
House builder Crest Nicholson has completed a review of remediation work needed on 140 sites, leaving it with a bill of £31.4m.
The figure is more than double the £15m it estimated would be needed in March, when it said it had appointed external consultants to assess how much money it should put aside for building safety issues after finding defects at four more sites.
The Surrey-based group said today that it had extended its review to cover all the 140 sites where it still has an obligation to carry out remediation works “in order to achieve a higher level of confidence in the adequacy of the cost estimates”.
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In a trading update for the six months to 30 April 2024, the firm said that £25.5m of the charge is accounted for as “exceptional” because it relates to “changes in estimates on developments no longer part of the core strategy” that were started “prior to the change in strategy in 2019”.
Peter Truscott, chief executive at Crest Nicholson, said: “The group is now prioritising establishing a comprehensive roadmap to resolve these issues in a timely manner to allow the group to capitalise on its high-quality land portfolio and drive margin improvement in the future.”
In January, Crest Nicholson reported in its annual results that its total provision for building safety was £144.8m. Around 90 buildings were being worked on, the firm said at the time.
The total provision now stands at £145.2m.
Adjusted operating profit dropped 71.9% to £6.2m for the half year at the house builder.
This reflected “lower volume and a higher proportion of revenue from low margin sites”, the firm said, noting that the group is making “good progress in reducing low margin inventory”.
On a statutory basis, Crest Nicholson made an operating loss of £24.1m, compared to a £30.7m profit during the previous period. Its loss before tax for the half year to 30 April 2024 was £30.9m.
The house builder’s revenue for the period was down 8.9% compared to its half-year results in 2023, down to £257.5m. This was down to “the low level of reservations at the beginning of the financial year”.
Home completions were also down, dropping from 894 to 788, with affordable completions dipping 29% to 176 and open market private completions down to 435 from 532 the previous period.
This reflected “a weak order book at the start of the year and continued low levels of confidence in the housing market in the period”, the firm said. Bulk deals, however, rose to 177, up from 115.
“We have made some important operational progress in the first half of the year against our strategic priorities,” Mr Truscott said.
“The group is continuing to focus on completing its low margin sites, with FY23 and FY24 being the peak years of impact and the majority of the remainder expected to be traded through during FY25,” he added.
The FTSE 250 house builder announced in January that Mr Truscott was set to retire, after holding the top position at the firm since 2019.
Mr Truscott will be replaced by Martyn Clark as chief executive tomorrow.
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