(Alliance News) - Crest Nicholson Holdings PLC on Tuesday warned it could face a GBP15 million charge after uncovering defects in some legacy projects.
Shares in Crest Nicholson fell 8.0% to 205.99 pence each in London on Tuesday morning.
The Surrey, England-based housebuilder said the issues related to four sites that were completed prior to 2019 when the group closed its regeneration and London divisions.
Crest Nicholson said these sites will require remediation over the next three years at an estimated cost of up to GBP15 million.
As a result, the company has appointed third party consultants to provide greater assurance on the adequacy of current provisions around these and other sites completed prior to 2019.
Crest Nicholson said a further update will be provided alongside interim results in June.
Analysts at Peel Hunt noted this "clearly raises the prospects of the GBP15 million increasing".
Updating on current trading, Crest Nicholson said it achieved reservations in line with expectations between November 1 and March 15.
Sales per outlet per week were 0.44, in the period, based on 46 outlets, with reduced activity before Christmas and a stronger performance from mid-January.
The SPOW rate for the last eight weeks to March 15 improved to 0.52, the firm said.
Sale prices achieved have been in line with expectations and cancellations remained at normalised levels. Build activity in the sector continued to operate at a lower level which is now resulting in lower labour costs in some areas. Overall build cost inflation has largely stabilised and at a level lower than prior year.
Crest Nicholson highlighted the planning system continues to be challenging but believes its strong land portfolio places it in a favourable position to mitigate planning delays.
Completions for the financial year ending October 31 are expected in the range of 1,800 to 2,000 homes, with completions weighted around 35% to 65% in favour of the second half of the year.
Sales prices are expected to remain stable in the financial year.
Net debt at the end of February is tracking lower than expected as a result of lower build and land spend and this trend is expected to continue in the remainder of the financial year, the company said.
By Jeremy Cutler, Alliance News reporter
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Crest Nicholson (CRST)