REG - Crest Nicholson Hdgs - Building Safety Pledge

Crest Nicholson HoldingsAnnouncement

05/04/2022 07:00

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RNS Number : 2276H  Crest Nicholson Holdings PLC  05 April 2022

This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) No. 596/2014 as it forms part of domestic law
by virtue of the European Union (Withdrawal) Act 2018.

 

Crest Nicholson Holdings plc

 (the 'Group' or 'Crest Nicholson')

 

INTENTION TO SIGN THE BUILDING SAFETY PLEDGE

Crest Nicholson Holdings plc today announces the following update in respect
of its responsibilities in safeguarding legacy buildings with possible
combustible materials risk.

Action taken to date

Since the Grenfell Tragedy in 2017, and the subsequent review of building
design and the construction methods and materials used, the Group has acted
swiftly to identify and remedy any legacy buildings where it has a
constructive or legal obligation to do so. The Group recognises the
significant distress caused to residents and as such has always sought to
engage constructively with residents, building owners, Government and other
affected stakeholders.

Accordingly, the Group has cumulatively recorded £47.8m of net charges in
respect of these obligations since the year ended 31 October 2019. In
addition, it is contributing to the Residential Property Developer Tax (RPDT),
effective from 1 April 2022, to support the remediation programme of all
affected buildings taller than 18 metres in the United Kingdom.

Remediating Buildings 11 to 18 metres tall

In January 2022 the Secretary of State for the Department for Levelling Up,
Housing and Communities (DLUHC) announced the Government's intention to widen
and lengthen the definition of legal obligation on developers to fund the
remediation of affected buildings between 11 and 18 metres high. Failing to
agree to these new guidelines would carry further consequences, implemented by
DLUHC, that would impact the Group's ability to operate and trade normally
within the housing market. These restrictions will be enacted in law through
proposed amendments to the Building Safety Bill which is currently passing
through Parliament.

Since January 2022, the Group has engaged in intensive dialogue with DLUHC,
coordinated by the Home Builders Federation (HBF) acting on behalf of its
members, to reach a solution that is acceptable to both parties and is in the
best interests of all stakeholders. These discussions culminated in DLUHC
giving developers a deadline of 5 April 2022 to sign a Building Safety Pledge
which commits signatories to these new remediation guidelines.

The Board of Crest Nicholson today announces that it has confirmed to DLUHC
its intention to sign the Building Safety Pledge, which it believes is in the
best interests of the Group, taking further steps to support those living in
affected buildings. . As a result of making these new commitments the Group
will need to record a further exceptional charge in its financial statements.
This is a complex and judgemental area, and the Group will continue to work at
speed to refine its latest estimate of these costs. As such the Board consider
that a charge in the range of £80m to £120m currently represents its best
estimate of this further liability.

The Group is also considering whether any further regulatory approvals are
required in respect of this proposed charge and will provide any update on
this and the exact amount to be recognised as soon as it is appropriate to do
so.

Resilient Financial Position

In January 2020 Crest Nicholson announced an updated strategy to improve
financial performance and strengthen its financial position. This turnaround
has been successfully implemented, and at 31 October 2021, the Group had a
strong balance sheet with net cash of £252.8m. The cash outflows required to
remediate the affected buildings will occur over several years. Given the
Group's well capitalised financial position and strong current trading
performance, the Board does not consider this to present a risk to current or
future operations and looks forward to providing an update on progress against
its strategy at the half year results announcement on 14 June 2022.

 

For further information, please contact:

 Crest Nicholson
 Jenny Matthews, Head of Investor Relations  +44 (0) 7557 842720
 Tulchan Communications
 James Macey White / Giles Kernick           +44 (0) 20 7353 4200

 

The person responsible for arranging the release of this announcement on
behalf of the Company is Kevin Maguire, General Counsel and Company Secretary.

 

 5 April 2022

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