Crest Nicholson has plunged to a sizeable pre-tax loss in its latest results after allocating more than £130m extra for fire remediation works.
The housebuilding giant’s pre-tax profit plummeted from £23.1m in its previous financial year to a loss of £143.7m for the year to 31 October 2024.
It made an exceptional charge of £166.1m, including £131.7m of extra fire-safety-related remediation provision.
Crest Nicholson’s revenue fell by 6 per cent to £618.2m in the latest period while housebuilding completions were down by 7.3 per cent to 1,873.
Chief executive Martyn Clark acknowledged “a very tough and disappointing year for the business”.
He added: “Since I joined in June, we have worked with renewed vigour to make significant operational progress, revitalising our sales process, improving governance, upgrading management information to allow for better decision making, and enhancing operational rigour and cost control.
“We now have greater clarity relating to legacy issues with necessary provisions in place, notably via our updated fire remediation provision which includes all buildings known to be in scope. This affords us the transparency and understanding to define and deliver a clear future strategy for the business and ensure Crest Nicholson realises its full potential.”
Julie Palmer, partner at corporate recovery specialists Begbies Traynor, said Clark would be “feeling the pressure” in 2025.
“Despite lower-than-expected profits, an optimistic new vision is sounding some of the right chords, but operational issues need ironing out and Crest needs to demonstrate it can take advantage of the expected uptick in construction,” she added.
“Rising interest rates, increased material and employee costs and an employee skills shortage have created a long and frosty winter for construction but we may see some green shoots start to emerge as some of these factors stabilise.
“As competition for contracts begins, has Crest’s new leadership created the right environment and structure to grow? Only time will tell.”
Clark said he had carried out a comprehensive review of the business, including “obtaining both internal and external perspectives”.
“This has allowed me to identify the market opportunity and craft a strategy that will allow us to maximise that opportunity and optimise the company for sustainable growth with an appropriately scaled cost base that will enhance profitability and consistent shareholder value creation,” he added.
“I look forward to updating you in March 2025 with the findings.”
Last August, fellow housebuilder Bellway called off a planned £720m merger with Crest Nicholson.
Clark said Crest Nicholson had made “significant progress” against a pledge to assess all in-scope buildings under the government’s post-Grenfell Developer Remediation Contract by July.
“As a consequence of additional and better information, we are now in a position to account for the expected costs for known buildings within scope,” he added. “As a result, the total fire remediation provision at the 2024 year-end is £249.3m and compares with £145.2m at the 2024 half-year.”
Construction News reported last month that the housebuilder was delaying the publication of its latest accounts. At the time, it said that “significant progress” had been made in assessing its building stock for fire safety issues, and that the firm was “in a position to account for the expected costs for all 291 buildings [in need of remediation]”.
Crest Nicholson expects to complete its remediation programme in the year to 30 October 2029, which would meet the government target set in December of remediating all high-rises of dangerous cladding by the end of 2029.
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Greg Pitcher