Crest Nicholson Holdings Plc (Crest Nicholson) today issues a trading update in respect of the six months ended 30 April 2017, ahead of its half year results announcement on 13th June 2017.
Trading continues to be in line with expectations and the Group remains on track to deliver growth in unit sales and c. 10% in revenues for the full year to 31 October 2017.
Average Selling Prices (ASPs) have risen as the Group has delivered on its strategy of investing in high quality locations. Open market completion ASPs in the first six months, excluding PRS, were 12% higher at £418k (2016: £372k).
The change in product and location mix towards higher ASPs also results in the business naturally operating at a lower sales rate per outlet. Sales per outlet week, excluding PRS, averaged 0.81 (2016: 0.87) which is in line with the average sales rate achieved through the whole of 2016.
As expected, unit completions for the first half of the 2017 financial year at 1,064 (2016: 1,206) are lower than the comparative period in 2016, primarily due to a reduced first half weighting from the timing of PRS completions. Unit completions excluding the impact of PRS were 1,021 (2016: 1,033), broadly in line with last year.
At the end of April, forward sales for the 2017 year including year to date completions are 5% ahead of the same period last year.
Forward sales have been supported by an increase in outlet numbers which averaged 49 for the first half of 2017 (2016: 44) an increase of 11%. The second half of 2017 will see the new Division in the Midlands established and additional outlets opened across the existing Divisions.
The Group has continued its disciplined approach to land acquisitions, in what is still a benign market. In the first half of 2017, the business has more than replaced housing revenues purchasing 1,092 plots across 11 sites with a gross development value of £418m, maintaining a broad land pipeline for the future.
A further 1,196 plots across two sites were converted from the Strategic land pipeline in the period, after relevant resolutions to grant planning consent were secured. The Strategic pipeline has in turn been replenished with an additional 1,101 plots.
Stephen Stone, Chief Executive commented “Having delivered on our stretching 2016 target of £1bn sales, the business has taken the first steps to establish a new division in the Midlands, is building momentum in forward sales for the year and pursuing the disciplined expansion of the Group’s land pipeline for the future. Crest Nicholson has the solid foundations for another year of growth and remains firmly on track to meet our ambitious 2019 targets of £1.4bn sales and 4,000 units.”
There has been some public comment on leasehold sales in recent months. It is the Group’s general approach to sell houses on a freehold basis and, as a result, very few leasehold houses have been sold. We continually review the terms of ground rents for the sale of all leasehold properties and we do not believe that they constitute a material exposure for the Group.
The housing market continues to be robust across the Group’s principal operating areas. The market is underpinned by strong demand with good mortgage access and support from the Help to Buy Scheme. Moderate sales inflation should help to maintain affordability in the near term and combined with moderate build cost inflation should help underpin margins.
Addressing production capacity, clearance of planning conditions and the shortage of skilled labour continue to be the key areas of focus for the sector in terms of securing volume delivery and growth.
Against this market backdrop the Board remains confident that the business is well positioned to continue to deliver a strong operational and financial performance in the medium term.
There will be a conference call for analysts at 8.30am, hosted by Stephen Stone, Chief Executive, and Patrick Bergin, Chief Operating Officer, and Robert Allen, Finance Director. The dial-in details are:
Dial-in: +44 (0) 20 3003 2666
Title: Crest Nicholson Trading UpdatePassword: Crest Nicholson
For further information, please contact:
Crest Nicholson Holdings plc
+44 (0) 1932 580555
+44 (0) 20 7251 3801