Crest Nicholson has plunged to an annual loss following a drop in housing completions due to the coronavirus pandemic.
The FTSE 250 firm said that despite a ‘good trading performance’ since the spring lockdown, it finished just 2,247 homes in the year to October 31, a decline of 22 per cent.
It recorded a £10.7million post-tax loss compared to an £82.5million profit the year before, and saw its revenues plummet by over £400million to £677.9million. Shares in Crest Nicholson ended trading 1.05 per cent higher at 309.4p.
Crest Nicholson recorded a £10.7million post-tax loss compared to an £82.5million profit the year before, making it the third year in a row the Group’s profits have fallen
A shutdown of all the company’s sites happened on April 9 with only a gradual reopening taking place from May 18. The closure cost it heavily, and after posting a half-year loss in June, the business announced it was laying off around 130 people.
Aside from the pandemic, Crest said that uncertainty related to Brexit and the 2019 General Election affected its sales, as well as the previously high cost of stamp duty.
To try and revive the weak housing market, Chancellor Rishi Sunak introduced a stamp duty holiday in July, under which nobody pays the tax on a residential property worth less than £500,000.
Thanks to a boom in demand, Crest upgraded its annual adjusted profit expectations to £35million to £45million. It surpassed those forecasts, registering £45.9million in total.
Its chief executive Peter Truscott warned though that the ‘impact of Covid-19 has clearly had a defining impact on this year’s financial performance.’
‘We had to make some difficult decisions during this year, but because we acted swiftly, we have ensured the Group enters 2021 in strong shape and will remain resilient to whatever challenges this year brings.’
In July, Chancellor Rishi Sunak introduced a stamp duty holiday, under which nobody pays the tax on a residential property worth less than £500,000 to try and revive the housing market
The business said gross profit margins will remain affected this year, though it still anticipates ‘strong profit growth and cash flow generation.’
It cancelled its dividend payout to shareholders and claimed millions in furlough money to keep its staff’s salaries flowing, but has subsequently repaid £2.5million to the government for furlough cash this year.
‘We have made strong progress on all elements of our strategy, delivered profit ahead of our revised guidance and strengthened the balance sheet as we promised.’
Average house prices grew to a record high of £253,374 in December, according to Halifax
There are concerns that the housing market could be damaged if the government decides not to extend the stamp duty holiday beyond March 31. In addition, help-to-buy loans are being limited to first-time buyers from April.
The stamp duty holiday was initially brought in for six months, and HM Treasury has said it has no plans to prolong it. A debate is due to take place in Parliament on the subject next Monday.
Data from HM Revenue & Customs showed that the number of housing transactions climbed 31.5 per cent last month on a year-on-year basis, and by 13.1 per cent in 2020.
Average house prices also grew to a record high of £253,374 in December, according to Halifax, a six per cent rise on the same time in 2019.