Build problems plunge Crest Nicholson to a £31m loss

The house builder confirmed £15m of legacy contract problems in March at four jobs completed by its now closed Regeneration division.

But a wider review of jobs across the whole company has unearthed further problems resulting in the provision being increased to £31.4m.

That has sent the company into the red with results for the half year to April 2024 showing a pre-tax loss of £30.9m from a pre-tax profit of £28.4m last time on turnover down to £257.5m from £282.7m.

The company said: “The Group has undertaken a comprehensive review, supported by external consultants, on the Group’s completed sites. Initially work focused on four sites that were completed prior to 2019 when the Group closed its Regeneration division.

“Subsequently, in order to achieve a higher level of confidence in the adequacy of the cost estimates, the review was extended to cover all c.140 sites that the Group has completed but maintains an obligation to carry out remediation or maintenance prior to adoption by the relevant local authority or management company.

“The review of completed site costs has now concluded resulting in a one-off charge of £31.4m.”

Crest Nicholson has also set aside £145.2m historic building fire safety costs and during the half year recorded a further charge of £8.9m related to build costs inflation and scope of work required and recovered £4.4m from third parties.

Looking forward the firm said “key priorities are to address legacy site issues, continue improving operational efficiency, achieve a five-star customer rating, make significant progress in building safety remediation, and convert land to implementable planning consent.

“This will position Crest strongly to capture growth when the market returns.”

Chief executive Peter Truscott is retiring and stepping down from the board tomorrow when he will be replaced by Martyn Clark who joined the firm earlier this year from Persimmon.

Truscott said: “Going forward the Group will benefit from its high-quality, higher margin land portfolio, and with an increased commitment to operational efficiency and control, is well-positioned to capture growth opportunities as market conditions improve.”