Crest Nicholson is delaying their financial results for the year to October 2024 so they can audit how appropriate their fire remediation provision is
The Crest Nicholson fire remediation numbers were originally to be published in the financial results on 21 January, but now will be published on 4 February 2025 instead.
The company has previously stated that it will take an additional four years to complete the fire-related issues in its housing.
Many housebuilders are grappling with fire remediation
After the Grenfell disaster, the Government set out plans to ensure that all high- and mid-rise buildings with hazardous cladding will have their cladding replaced.
In December last year, The Remediation Acceleration Plan was put in place with three objectives to achieve this goal by the end of 2029:
- Fix buildings faster
- Identify all buildings with unsafe cladding
- Support residents
The new targets set in the plan aim for all high-rise buildings (over 18m) having their cladding fully remediated by the end of 2029, with all buildings with unsafe cladding at the least having a date for completion by the same date.
Landlords responsible for buildings that do not meet the target in time will face penalties.
As of June 2024, just a quarter of remediation works were completed. Prosecutions related to the Grenfell case are not expected until 2027.
“Greater clarity for the business”
The statement update states: “Following a request from the Company’s auditors for additional time to complete standard procedures and audit the appropriateness of the fire remediation provision, the Company will now announce its results on 4 February 2025 and not on 21 January 2025 as previously planned.
“The Company has made significant progress and is nearing completion of its assessment of all buildings within the scope of the Self Remediation Terms and is therefore now in a position to account for the expected costs for all 291 buildings. As a result, the total fire remediation provision at the FY24 year end is expected to be approximately £245m – £255m and compares to £145m at HY24 which was in respect of c.45% of buildings within scope. This is an overall increase in the future expected cost of remediation of £120m – £130m.
“In determining the quantum of the provision, the Company has applied its experience to date and the most plausible risk scenario to ensure it accounts for its probable liabilities and maintains a prudent and responsible approach to fire safety remediation provisions. The provision does not include any third-party recoveries or contributions that could offset these costs. The remediation programme is expected to be completed during FY29, meeting the obligations of the Government’s Remediation Acceleration Plan, and is intended to be funded from the Company’s cash flow and balance sheet. In line with the trading update on 20 November 2024, the Company continues to expect adjusted profit before tax for FY24 to be at the lower end of the guidance range (£22m – £29m), subject to any final audit adjustments to the financial results.
“With expected fire remediation costs fully provided for, the Company believes this will provide greater clarity for the business going forward and allow the new management team to re-invigorate the business on firmer foundations focused on its three key priorities: optimising value from the high-quality land portfolio; building homes of exceptional quality efficiently; and delivering outstanding service to customers.”
