Crest Nicholson loses three-quarters of profit to cladding repairs

For the year ended 31st October 2022, Crest Nicholson made a pre-tax profit of £32.8m (2021: £86.9m) on revenue of £913.6m (2021: £786.6m).

Home completions increased 13.6% to 2,734 (2021: 2,407).

Crest Nicholson’s final results include a charge of £105.0m for replacing combustible materials on developments following it signing the government's Building Safety Pledge in April 2022.

The pre-exceptional profit figure was £137.8m – more than £30m ahead of the previous year, but 76% of this has gone to fire safety retrofits.

Looking forward, of greater concern to chief executive Peter Truscott is the apparent inability of government to fix the planning system.

“Cost inflation started to grow with raw material price increases and labour inflation driving up the cost of construction,” he said. “The housing market has mitigated the impact of these increased costs through comparable levels of house price inflation. Trading conditions started to become tougher over the summer, culminating in significant political and economic turbulence in the UK in early autumn. A year that had started so positively for all housebuilders became increasingly challenging as we closed our year at the end of October.”

He continued: “The political volatility in the UK has also hindered the necessary change and progress we need in how we operate. The land market is highly competitive with multiple bidders for new schemes. The strong sales market of the past two years has seen outlet numbers fall across all major developers and there is not enough new land being released to replenish this capacity and help support the government's previously stated aspiration to build 300,000 homes a year. The UK's antiquated planning system needs fundamental reform if we are to build the homes we need for our growing population.

“Once sites have been identified and secured the process for obtaining planning approvals and satisfying any necessary conditions has also become increasingly inefficient. Planning teams are often under-resourced and trying to catch up after the pandemic disruption. Fresh environmental challenges emerged during the year including ground nutrient levels and water neutrality. While we are wholly committed to operating in harmony with our natural habitat and to ensure we leave a sustainable legacy on all our developments, these challenges again impact our ability to get on site and start building.”

However, he said that Crest Nicholson remained well placed to cope with whatever is thrown at it.

“Despite this uncertainty I am delighted to report another year of improved financial performance as we continue to make good progress implementing our strategy,” he said. “We have delivered revenue growth, expanded adjusted operating margins, increased return on capital employed and generated strong levels of cash throughout the year. We closed the year with net cash of £276.5m and completed a new £250m sustainability linked revolving credit facility.”

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