By Aby Jose Koilparambil
(Reuters) -British housebuilder Crest Nicholson said on Tuesday it had identified a “severe but plausible” scenario under which it might breach its loan terms as soon as April, with potential implications for its status as a going concern.
The group said that while it maintains “good relationships and a regular dialogue with all its lenders” and is confident that an amendment to its covenants would be secured if necessary, “this is not guaranteed and therefore this represents a material uncertainty related to going concern”.
Shares in the FTSE 250 builder fell as much as 5.5% to 165.50 pence in morning trade, before paring losses to trade down 1.8% by 1027 GMT.
Investec analyst Aynsley Lammin said that the firm flagging up the material risk around going concern is an “incremental risk” the market was not expecting.
He said however that it appeared manageable given that it is based on a ‘severe but plausible’ downside scenario.
The company had delayed the publication of its annual results by two weeks due to audit-related issues.
Despite the current issues, the Surrey-headquartered builder projected an at least 25% jump in its 2025 fiscal year earnings, expecting market conditions to stabilise in the second half of 2025, underpinned by pent-up demand for homes.
Crest Nicholson’s concerns over debt repayment come as hopes for a recovery in the beleaguered British housing sector have waned due to the slowing pace of interest rate cuts.
For the 2024 fiscal year ended Oct. 31, the builder’s adjusted pre-tax profit plunged 53% to 22.4 million pounds ($27.8 million), slightly below analysts’ estimates of 22.8 million pounds, according to LSEG data.
It said year-end charges related to this stood at 249.3 million pounds, within its previously guided range.
($1 = 0.8053 pounds)
(Reporting by Aby Jose Koilparambil and Chandini Monappa in Bengaluru; Editing by Subhranshu Sahu and Jan Harvey)
