Crest Nicholson (CRST), Diversified Energy (DEC), Ashmore (ASHM) and Bakkavor (BAKK)
Crest Nicholson (CRST) has slashed its profit guidance due to additional post-Grenfell cladding costs and has revealed "an exceptional charge" relating to a separate fire damage legal claim. Its share price sank 6 per cent in early trading.
In an update ahead of its results for the year to 31 October, the housebuilder said that as well as the additional £11mn in cladding costs at Brightwells Yard, Farnham, which it announced in November, "further additional costs have been identified which will impact FY23" as the result of "a comprehensive review of the costs associated with the work required on this project as well as our other legacy sites". The previously stated £11mn cost for Brightwells Yard was already higher than the £4mn it had initially put aside for the works.
The company now expects an adjusted pre-tax profit of £41mn, an 18 per cent slump from the top of the £45mn to £50mn guidance range it gave in November because of the rising cladding costs. As of its last set of results, Crest had put aside a total of £139mn for cladding fixes.
Meanwhile, the company also revealed "an exceptional charge of £13mn (which is not cash in FY23) in respect of a legal claim that it has recently received relating to a low rise apartment scheme built by the Group which was damaged by fire in 2021". Crest will publish its results on 23 January. ML
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Investec: Diversified Energy dividend at risk without asset sales
According Investec analyst Alex Smith, US oil and gas producer Diversified Energy (DEC) has one of the top dividend yields on the London Stock Exchange, at over 20 per cent, but its balance sheet is starting to creak. He said the payout would have to come down without further asset sales. “Currently, the company does not have the liquidity beyond 12 months to maintain its current dividend,” Smith said, estimating the company’s annual dividend at $174mn (£137mn).
Earlier this month the company announced an asset sale that would bring in $200mn, although was more a complex spin off transaction than standard divestment. Diversified shares fell 5 per cent on Monday morning. AH
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Private equity firm takes 20 per cent stake in Bakkavor
Bakkavor (BAKK) shares rose by over 6 per cent in early trading after the freshly prepared food manufacturer revealed that hedge fund Baupost had sold its remaining 20.1 per cent stake in the company to private equity firm LongRange. Founded in 2019, LongRange has over $1.7bn (£1.3bn) in assets under management.
Baupost’s nominated representative and non-executive director Patrick Cook will step down from the board as a result, and Bob Berlin will rejoin the board as LongRange’s representative. Bakkavor will release a full year trading update on Thursday. CA
