Crest Nicholson to take £17m hit on fire compliance
Crest Nicholson has downgraded its profit forecast for 2019 amid a “volatile” sales environment, as it estimated the cost of making sure it was up to date with the latest government guidance on fire protection measures in its completed developments at £17m.
The housebuilder said it expected to make a pre-tax profit of £120m-£130m in its 2019 financial year, compared to a pre-tax profit in 2018 of £176m.
It blamed a “volatile sales environment” for some of its regional businesses in the second half of this financial year, driven by Brexit uncertainty, particularly in London.
Meanwhile, it added that it has considered the latest government guidance in respect of combustible materials, fire risk and protection and regulatory compliance on completed developments and has set aside £17m as an exceptional charge.
The news came after a full strategic review conducted under new chief executive Peter Truscott, who joined the business in September.
The company added that pre-tax profit excluding exceptional charges in the 2020 financial year was expected to be in the range of £110m-£120m as it expected consumer confidence and open market sales rates to continue to be subdued. Nonetheless it forecast “strong profit growth” after that in the 2021 financial year.
Truscott said: “Crest Nicholson is a great business, which builds high quality homes and communities for our customers and is well placed to deliver for shareholders. The Company’s high-quality land portfolio with a strong South-East presence offers significant opportunity to generate value for shareholders and we have identified a number of opportunities that will enable us to strengthen shareholder returns over the medium term.
“We are taking decisive action to ensure the business moves further and faster to make the most of the opportunities in front of it. While current market conditions remain uncertain, the prospects for Crest Nicholson over the medium term remain highly attractive.”