Crest Nicholson falls to loss as pandemic bites

Crest Nicholson fell to a £13.5m pre-tax loss, down from a more-than-£100m profit, in its last financial year.

The housebuilder said this morning that it suffered the £13.5m pre-tax loss in its financial year ended 31 October 2020. This was down from £103m in its previous financial year. Its revenue decreased from £1.1bn in 2019 to £678m in 2020.

It put the results down to Brexit uncertainty and a decrease in operations during the first lockdown, categorising £59.4m of the total loss as exceptional. The group said that, despite construction activities being permitted, the supply chain was “increasingly unable” to service its needs, and customer levels began to dwindle.

However, since restrictions were eased in May, it has started to recover, with pent-up demand helping to boost forward sales to 2,435 units at 14 January 2021, compared to 2,346 units in 2020. Because of this, the accounts stated: “We are confident that Crest Nicholson is well-positioned to navigate the current uncertainty caused by COVID-19. The organisational improvements we made across the business in 2020 have created a more efficient and effective operating platform, now overseen by a highly experienced new management team.”

Restructuring activity in the year was said to account for £7.5m of the exceptional losses, with £5m in severance-related costs, following the 130 redundancies it made in June. Due to the disruptive effect of COVID-19 on consumer confidence, the group reassessed future house prices, and predicted sales reductions of 7.5 per cent for residential units and 32 per cent for commercial buildings, resulting in a loss of £43.2m. Of this, £33.9m related to current developments, while £9.3m related to work that will not be completed – at its mixed-use Greenhithe site near Dartford, Kent.

It also recorded a charge of £7.6m due to expected credit losses on a residential joint venture with real estate firm Your Lifespace at Bonner Road in Bethnal Green, east London.

Stripping out its exceptional charges, the firm said its adjusted pre-tax profit was £45.9m, down from £121.1m the previous year.

Crest Nicholson chief executive Peter Truscott said: “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.”

The group said it has a strong cash position, due in part to cancelling its full-year dividend from 2019 worth £56m that had been due to be paid in April 2020. It is set to restore its dividend at its half year results in 2021.

It also confirmed it repaid the £2.5m it received in furlough cash by 14 December. This payment will show up in its next full-year results for the year ending 31 October 2021.

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