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Sat December 07 2019

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Crest Nicholson writes off £17m for post-Grenfell compliance

31 Oct House-builder Crest Nicholson is spending £17m this year on checking and replacing non-compliant and combustible materials on its developments around the country in the wake of new government guidance.

Crest Nicholson's new chief executive, Peter Truscott
Crest Nicholson's new chief executive, Peter Truscott

The burden of meeting tighter regulations comes amid slowing market conditions that have knocked 25% off Crest Nicholson’s profits this year.

In a trading update today the house-builder said that some of its regional businesses were suffering from “a volatile sales environment… driven largely by ongoing customer uncertainty relating to Brexit and the economic outlook in the UK”.

As a result, the year to 31st October 2019 was expected to be in the range of £120m to £130m – which is more than 25% down on the £176m pre-tax profit banked in financial 2018.

The trading statement continued: “In addition to this, the new leadership team has also considered the latest government guidance notes in respect of combustible materials, fire risk and protection and regulatory compliance on completed developments. As a result it is considered it appropriate to record an exceptional charge in the year of approximately £17m.”

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That ‘new leadership team’ is headed by chief executive Peter Truscott, who joined the business on 9th September 2019 from Galliford Try.

In his first seven weeks in the job he has conducted a strategy review and decided that Crest Nicholson needs to cut overhead costs and adopt a more selective approach to land sales

Details of the new strategy will be revealed when the full year results are published in January 2020.

Peter 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." 

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