Crest Nicholson Holdings plc (Crest Nicholson) today issues its Interim Management Statement for the period from 1st May 2013 to 6th September 2013. The results for the full financial year ending 31st October 2013 are expected to be announced on Tuesday 28th January 2014.
Open-market reservation rates over the period since 1st May (excluding reservations taken under Build to Rent) have been 0.95 per Outlet Week, up 46% on the 0.65 rate for the equivalent period in 2012 and 23% on the 0.77 rate achieved in the first half of this year.
The sales environment had been improving since the start of the calendar year, supported initially by ‘Funding for Lending’ feeding through into lower mortgage rates. The introduction of the ‘Help to Buy’ scheme in the Budget has provided a further stimulus to activity.
The benefits of the increase in reservation rates in the period will primarily come through from FY2014 onwards. Forward sales for 2014 and beyond total £145m, a 92% increase on the £75m achieved this time last year. At 6th September, reservations had been secured in respect of all planned FY2013 legal completions.
Outlet numbers have continued to grow, in line with expectations, with the business operating from an average number of 46 outlets in the period (2012: 39).
Cancellation rates in the period have averaged 10.5% (2012: 15.8%) reflecting the improvement in trading conditions.
Higher levels of reservations have brought some initial pressures to bear on elements of our supply chain. As expected, we have seen some cost increases in certain building materials and also some delivery delays. As our suppliers and sub-contractors adjust to the new levels of activity, we anticipate that such pressures will abate and we remain on track to deliver our planned production outputs for 2013.
Stephen Stone, Chief Executive commented “The increased volume of reservations confirms the strong desire for home ownership that exists in this country and it is good to see that aspiration becoming a reality for many. As we celebrate our 50th anniversary, Crest Nicholson is delighted to be playing its part in increasing housing supply and is working with its partners to deliver much needed new homes.”
Land and planning
In the year to date, 18 additional sites have been purchased, with a total of 1,854 plots secured, as the business seeks broadly to replace the land that we are using in delivering our short and medium term forecasts. On our larger sites, opportunities to dual-outlet with significantly different product offerings are being pursued, improving asset utilisation and taking advantage of favourable market conditions.
At 6th September, all plots required to meet our FY2014 forecasts have been secured with almost all required planning consents already in place.
The land market remains stable and opportunities continue to be secured at or above our hurdle rates for gross margin and return on capital. We have maintained our focus on prime locations within our Southern area of operation, which have tended to perform best through the cycle.
The business continues to engage with government agencies and others in examining ways to bring forward an institutional Private Rental Sector (‘PRS’) and has now drawn down £3.5million of funding under the Government’s ‘Build to Rent’ scheme in connection with the delivery of 102 PRS units at Centenary Quay in Southampton.
On planning, the group welcomes the National Planning Practice Guidance online resource which followed the Taylor Review published in December 2012. As housing demand rises, it is important that new sites and additional phases of existing projects are able to start construction within a reasonable time frame and hence that government continues to reduce the regulatory burden on the industry. The group will continue to engage actively with government and local authorities to support and encourage a more flexible and responsive approach to planning.
The group continues to benefit from the strong equity base established through the February IPO and operates with moderate levels of borrowings, in respect of which there is sufficient headroom to meet our operational requirements.
Our excellent reservation performance in the period underpins the Board’s confidence that the business is likely to experience good trading conditions for the next few years, supported in part by government efforts to stimulate the housing market.
In due course, broader economic recovery and the rising consumer confidence and prosperity that it brings should help to sustain activity.
With a strong forward sales position, the focus of the business in the near term will be on bringing through product delivery in a cost-efficient and timely manner. Selective land acquisitions and on-going Strategic land activities are designed to ensure that new sales outlets are brought forward to increase outlet breadth.
The continuation of currently favourable market dynamics is likely to result in the volume aspirations of the group, set out at the time of our February IPO, being broadly met by the end of next year and to establish a platform for further profitable growth.
There will be a conference call for analysts at 08.00 (BST), hosted by Stephen Stone, Chief Executive, and Patrick Bergin, Finance Director. The dial-in details are:
Dial-in: +44 (0) 20 3003 2666
Title: Crest Nicholson IMS
Crest Nicholson is hosting a series of site visits on Thursday 19th September.
Presentations and materials from these visits will be made available on the Crest Nicholson website www.crestnicholson.com on the same day.
For further information please contact:
Crest Nicholson Holdings plc +44 (0) 1932 580555
+44 (0) 20 7251 3801
This release may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this release and include, but are not limited to, statements regarding the Group's intentions, beliefs or current expectations concerning, among other things, the Group's results of operations, financial position, liquidity, prospects, growth, strategies and expectations of the industry.
By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Forward-looking statements are not guarantees of future performance and the development of the markets and the industry in which the Group operates may differ materially from those described in, or suggested by, any forward-looking statements contained in this release. In addition, even if the development of the markets and the industry in which the Group operates are consistent with the forward-looking statements contained in this release, those developments may not be indicative of developments in subsequent periods. A number of factors could cause developments to differ materially from those expressed or implied by the forward-looking statements including, without limitation, general economic and business conditions, industry trends, competition, commodity prices, changes in law or regulation, changes in its business strategy, political and economic uncertainty. Save as required by the Listing and Disclosure and Transparency Rules, the Company is under no obligation to update the information contained in this release.
Past performance cannot be relied on as a guide to future performance.