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Crest Nicholson Holdings plc Trading Update

Crest Nicholson Holdings plc (“Crest Nicholson” or the “Company”) today issues a trading update in respect of the six months ended 30th April 2018, ahead of its half year results announcement on 12th June 2018.

Highlights

 

HY 2018 HY 2017

Change

Unit Completions 

1,251 1,064 +17.6%

Open-market ASPs* 

£439k £418k

+5.0%

Gross development value of pipeline - £m 

-short term 
-strategic
Total

         
5,872
5,960
11,832

      
5,883
5,229
11,112

      
-
+14.0%
+6.5% 

Forward Sales - Units

2,079 1,975 +5.3%
Forward Sales - £m £441.7m £415.6m +6.3%

Current trading

Crest Nicholson has delivered strong growth in revenues and housing unit numbers in the first six months of 2018. The business has maintained a keen focus on return on capital, sustaining sales volumes in a generally flat pricing environment and securing a strong contribution to volumes in the first half from PRS completions. 

The experience of generally flat pricing against a backdrop of continuing build cost inflation at 3-4% will mean that operating margins for the full year are expected to be around 18%, at the bottom end of our 18-20% guided range.

Forward sales for the 2018 year including year to date completions are 11% ahead of the same period last year. Overall, we anticipate growth in reported revenues for the year to be over 15%.

Open-market average selling prices (ASP) have increased by 5.0% to £439k (excluding PRS), primarily due to changes in product and location mix. This is expected to represent a peak level for the business. Current land investments across the business are in locations with a lower prevailing ASP, in line with our strategy.

Sales rates, as measured by Sales per Outlet Week (SPOW), reflect the change in product and location mix, with higher ASP product selling at a slower rate. For the first six months of the year, the SPOW (excluding PRS) has averaged 0.72, compared with 0.81 for the first half of 2017 and 0.77 for the whole of 2017.

Whilst most of our sales outlets have been performing well, sales at higher price points have proved to be more difficult to achieve. This in part reflects the greater interdependency of higher-value sales with transactions in the second-hand market, where activity has been more subdued and property chains have been taking longer to complete. 

Sales outlets continue to grow steadily and for the first half of 2018, averaged 52, a 6% increase on the 49 outlets in operation at 30th April 2017. This growth, along with further outlet openings in the second half of the year, will support the delivery of our forecast full-year revenues.

Half-year debt of £77.5m (2017: £34.5m) reflects our investment in the new Midlands division, which has acquired seven sites to date and will make a positive contribution this year.

 
Outlook

Housing market volumes continue to be generally robust across the Group’s principal operating areas. Strong levels of employment and low interest rates, combined with good mortgage access, continue to help many purchasers into new homes. 

Sales at higher price points will continue to be impacted by a slow second-hand market and this is likely to restrain overall price growth in the near term. As a result, margins for next year are expected to be at a similar level to this year.

The business continues to explore opportunities to address its cost base and the overall efficiency of its operations, to protect margins and address areas of production constraint in the medium term.

Crest Nicholson has a strong balance sheet, is securing land at good margins and operates a disciplined business model, generating good returns whilst also contributing to the much-needed supply of housing in the UK. 

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.

Commenting on today’s statement, Patrick Bergin, Chief Executive said: 

“The group has delivered a good sales performance in the first half of the year. The business continues to increase the number of homes built and carries positive momentum into the second half of 2018, with steady outlet growth and higher forward sales. 

Flat pricing has had a negative impact on margins, but volumes in the new build housing market continue to be robust and Crest Nicholson remains well positioned to grow volumes and deliver the homes that the UK needs, while continuing to focus on delivering strong returns for shareholders.”

 

There will be a conference call for analysts at 8.30 a.m. (GMT), hosted by Patrick Bergin, Chief Executive; and Robert Allen, Finance Director. The dial-in details are:
Dial-in: +44 (0) 20 3003 2666
Title: Crest Nicholson Trading Update
Password: Crest Nicholson

 

Notes:

* Excluding PRS 

For further information, please contact:

Crest Nicholson Holdings plc

+44 (0) 1932 580555

Patrick Bergin       

Robert Allen

RLM Finsbury

+44 (0) 20 7251 3801

Faeth Birch

James Bradley

Philip Walters

The information contained in this announcement is deemed by the Company to constitute ‘inside information’ under the Market Abuse Regulation (596/2014). Upon the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

Forward-looking statements

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 Guidance 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.


Trading Update 2018 HY

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