Crest Nicholson half-year loss puts cash and lender talks in focus

The key numbers

Crest Nicholson's half-year results show a housebuilder under clear financial pressure, with lower completions, weaker margins and higher debt pushing cash preservation to the top of management's agenda.

Revenue for the six months ended 30 April 2026 fell 20.8% to £197.6 million, while home completions declined from 739 to 584. The company moved from profit to loss on both an adjusted and statutory basis.

Metric	HY26	HY25
Revenue	£197.6 million	£249.5 million
Home completions	584	739
Adjusted gross margin	7.0%	14.2%
Adjusted operating profit or loss	£11.9 million loss	£11.9 million profit
Statutory loss or profit before tax	£35.2 million loss	£9.4 million profit
Net debt	£141.8 million	£71.5 million
Basic earnings or loss per share	10.1p loss	2.6p profit
Interim dividend per share	Nil	1.3p

The adjusted gross margin halved to 7.0%, reflecting lower housing volumes, a less favourable sales mix and further net realisable value charges. These charges reduce the value of inventory when its expected selling price, after remaining costs, falls below its recorded value.

Crest Nicholson reported an adjusted operating loss of £11.9 million, compared with a profit of the same amount last year. The statutory operating loss was wider at £26.2 million after exceptional items.

Why did performance deteriorate?

The main problem was volume. Open market completions fell to 414 from 435, bulk and private rented sector completions dropped to 63 from 107, and affordable completions declined to 107 from 197.

The open market sales rate also slipped to 0.48 homes per outlet per week, from 0.53. Although activity improved between mid-January and the end of March, consumer confidence subsequently weakened amid economic, political and geopolitical uncertainty.

Pricing was more resilient. The total weighted average selling price increased to £352,000 from £342,000 because open market homes represented a larger proportion of completions. However, the open market private average selling price eased to £414,000 from £422,000 due to the mix of properties sold.

Adjusted gross profit fell by 60.7% to £13.9 million. Crest Nicholson attributed much of this decline to lower housing volumes and margin mix, reduced land profit, increased inventory provisions on completed apartment developments and additional costs on completed sites.

Build cost inflation remains another headwind, running at around 3% to 4% on average and mainly affecting materials. Management is attempting to offset this through procurement, value engineering and tighter control of construction programmes.

The balance sheet is the central issue

Net debt rose to £141.8 million from £71.5 million a year earlier. Including amounts owed to land vendors, net debt was £209.7 million, compared with £149.3 million.

The cash flow statement underlines the challenge. Crest Nicholson recorded a £98.4 million net operating cash outflow during the half, after £69.8 million flowed out in the comparable period. Cash at the period end stood at £94.0 million.

The group has a £250 million revolving credit facility, or RCF, running to October 2029, alongside £65 million of senior loan notes. Of those notes, £50 million is due for repayment in August 2027 and £15 million in August 2029.

However, the company would have breached its interest cover covenant if it had been tested at 30 April 2026. Interest cover measures whether operating earnings are sufficient to meet financing costs.

Lenders have granted a temporary waiver while revised terms are negotiated. This waiver has been extended to 30 September 2026, but currently prevents Crest Nicholson from drawing its RCF beyond the £175 million already borrowed.

The discussions are described as well advanced, constructive and productive. Even so, an amended covenant has not yet been agreed, and the group's ability to comply with any replacement terms is not confirmed.

That creates a material uncertainty related to going concern. The directors continue to prepare the accounts on a going concern basis and believe the company can operate and meet its obligations for at least 12 months from approval of the results. But if lender amendments are not secured, the facilities could become repayable on demand and the group does not expect to have enough liquidity to repay them at the waiver's current expiry date.

In a severe but plausible downside scenario, Crest Nicholson would also need to refinance the £50 million loan notes before August 2027 if the £175 million RCF restriction remained in place.

Management's cash preservation plan

Crest Nicholson is responding by reducing land purchases, slowing new site starts and matching construction activity more closely to revised sales expectations. It is also marketing non-core land and seeking to reduce finished apartment inventory.

Land disposals are expected to generate around £40 million of revenue in FY26. Approximately £50 million of cash proceeds are contracted to settle in the second half, with around £10 million expected in FY27.

These actions should release capital, but they involve a trade-off. Slower construction and reduced land investment can protect near-term liquidity, while potentially limiting the pace at which the business can increase output when demand improves.

No interim dividend has been proposed. Given the operating cash outflow, higher debt and lender negotiations, retaining cash is understandable, although it removes near-term income for shareholders.

Project Elevate offers some operational progress

Away from the financing pressure, management reported continued progress with Project Elevate, its transformation programme.

Governance, accountability and management information have been strengthened, while Crest Nicholson is developing a new mid-premium house type range. Planning submissions are expected during FY26, with rollout anticipated in the second half of FY27.

The company also retained its 5-star Home Builders Federation customer satisfaction rating and reported improved construction quality metrics. Its fire remediation programme remains substantially on track against government targets, with the overall estimated provision considered appropriate.

Since the start of the second half, Crest Nicholson has received £3.8 million of remediation-related recoveries, taking cumulative recoveries to more than £35 million.

These operational indicators are encouraging, but management acknowledges that the financial benefits of Project Elevate will take time to emerge.

Outlook and investor takeaway

Crest Nicholson expects FY26 volumes of 1,400 to 1,500 homes and net debt of between £100 million and £120 million. Land sales revenue is forecast at around £40 million, while interest expense is expected to be £15 million.

Earnings before interest and tax, commonly called EBIT, are now expected in the lower half of the previously guided £5 million to £15 million range.

There are positives here: pricing has generally remained resilient, substantial land disposal proceeds are contracted, customer satisfaction remains strong and management is taking direct action to reduce capital intensity.

But the immediate investment case is dominated by risk. Margins have fallen sharply, the company is loss-making, operating cash flow is negative and net debt has increased. Most importantly, revised lender covenants have not yet been agreed.

The next key development is therefore not simply the housing sales rate. It is whether Crest Nicholson can complete its covenant amendment, maintain sufficient liquidity and bring year-end debt into the guided range. Until that financing uncertainty is resolved, operational improvements are likely to remain secondary for investors.