Crest Nicholson has further reduced its profit forecasts after uncovering new project and legal costs.
In a trading update published on 15 January, the homebuilding giant said it expected to post a pre-tax profit of £41m for the year to 31 October 2023. The forecast is down from the £50m figure predicted in August, which was itself a reduction on the initial estimate of £74m. On top of this slide in profit, the firm said that it expected to register an exceptional charge of £13m because of a legal claim related to fire damage.
Crest said in November that its costs had soared by £11m on a mixed-use project to revamp Farnham town centre in Hampshire. The troubled scheme includes 230 apartments, as well as shops and other facilities.
“The group has subsequently conducted a comprehensive review of the costs associated with the work required on this project as well as our other legacy sites,” stated today’s announcement. “Consequently, further additional costs have been identified.”
The homebuilder added that it had received a legal claim “relating to a low-rise apartment scheme built by the group, which was damaged by fire in 2021”. It said it was “addressing this claim diligently and efficiently” and would give further details in the preliminary results announcement later this month. Crest warned in November that it expected the housing market to “remain challenging” at the start of 2024.
But it said: “The recent reduction in mortgage rates has provided a more constructive backdrop for house buyers and the wider housing market. Although it is too early to gauge customer behaviour, we have been encouraged by an increase in customer interest levels and inquiries this calendar year.”
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