Crest Nicholson recladding bill jumps to £23m

Aaron Morby 2 years ago

House builder Crest Nicholson has upped the expected cost of replacing defective cladding on its properties to £23m.

Truscott says standardisation of homes is helping to offset supplychain pressures
Truscott says standardisation of homes is helping to offset supplychain pressures

This morning the firm said that it had reassessed costs and timing of works needed, resulting in an increase of £10.3m in its existing provision.

Around half of this rise was down to forecast revisions on previously assessed buildings, and half on newly-identified buildings requiring fire-related remedial works.

Crest Nicholson spent £1.9m during the six months to April across several buildings requiring further investigative costs, including balcony and cladding related works.

It now expects to spend £15.5m of the cash within one year, and the balance within two to five years.

Crest Nicholson said it was also seeking to recover costs incurred from third parties and had raised £2.4m in settlements of claims against architects and subcontractors.

The cladding retrofit provisions were taken in otherwise upbeat results for the first half of the year.

Revenue in the period increased to £324m from £240m, with home completions increasing to 1,017 from 775 in the same period a year ago.

Pre-tax profit returned to more normal levels of £36m after the height of the pandemic loss of £51m previously.

Peter Truscott chief executive said: “We have exceeded our own first-half profit expectations and continue to make excellent progress in strengthening the balance sheet, closing the period with £130m of net cash versus £93m of net debt this time last year.”

He added: “During the first half, there have been some labour and material shortages that have impacted build times.

“At the start of the second half this disruption started to become more acute and we are now seeing increases in lead times for product deliveries to site and a limited number of significant price increases in certain product categories where there is greatest scarcity of supply.

“We expect these pressures to normalise in the medium term. However, it is possible that in the short term we will see further supply pressures start to emerge.

“The additional costs attached to sourcing some materials have generally been offset by savings brought about by the standardisation of our product and specifications across the business.”

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