Crest Nicholson Holdings plc (LON:CRST) today issued a trading update in respect of the six months ended 30th April 2019, ahead of its half year results announcement on 11th June 2019.
Highlights
· Sales per outlet week (“SPOW”) of 0.78 has proven resilient (HY18: 0.78)
· Total sales value achieved to date and forward sold for FY19 including land and commercial of £792m, up 4.2% (HY18: £760m)
· Good progress on increased partnership sales and JV opportunities
· Net debt and land creditors reduced by £40.9m
· Earnings and dividend guidance remain unchanged
Current trading
During the period, Crest Nicholson has made good progress on its revised strategy of focusing on shareholder returns by pausing growth during this period of heightened uncertainty, prioritising cashflow and dividends, and unlocking value in the land portfolio through partnerships and joint venture (“JV”) opportunities.
Overall, SPOW rates of 0.78 have proven resilient (HY18: 0.78) and we have unlocked value from our land bank through progress with our strategy to develop a number of our larger sites through joint ventures and partnerships. This includes completion of a new £229m JV with the Sovereign Housing Group to deliver circa 910 homes at Harry Stoke, Bristol, over future years.
Whilst residential sales achieved to date and forward sold for FY19 at £715m are 4.0% below FY18 (£745m), the total sales achieved and forward sold turnover for FY19 including commercial and land sales/JV’s at £792m are up 4.2% on last year (HY18: £760m), demonstrating the benefits of our revised strategy.
Our total residential forward sales at £500.5m are 11.0% ahead of the same period last year (HY18: £450.8m*).
We enter the second half of the year with increased site coverage, operating from an average of 58 outlets, 11.5% higher than last year (HY18: 52).
Build cost inflation during FY19 is expected to lie within the range of 3-4%.
Lower half-year net debt of £68.2m (HY18: £78.5m) and lower land creditors of £192.6m (HY18: £223.2m) represent a £40.9m reduction on last half year, reflecting our increased focus on releasing cash through pausing growth and expanding our partnerships and JVs.
Outlook
Strong levels of employment and low interest rates, combined with good mortgage access and the Government Help to Buy scheme, continue to support many purchasers into new homes and together set a robust environment for the housing market. This is supplemented by the increased funding from Homes England to Registered Providers to increase the supply of intermediate homes beyond traditional affordable housing.
Despite the wider positive macro-economic backdrop, as previously noted, with the ongoing political turbulence the demand outlook in the short term remains uncertain. However, our earnings guidance and outlook for the full year remains unchanged.
Commenting on today’s statement, Chris Tinker, Crest Nicholson Holdings plc Interim Chief Executive said:
“The group has made good progress in implementing its strategy in the first half of the year. Improved forward sales in residential, commercial and land, and increased outlet breadth, provide a good platform as we enter into the second half of 2019.
We welcome the Government’s increased grant funding and focus on delivering a broader tenure mix. As a consequence, we will continue to grow our partnerships with Registered Providers who are playing an increasingly important role in the diversification of tenures. This strategy trades an element of margin for reduced risk and improved cash flows. Overall, we remain confident in our ability to deliver returns in line with Board expectations.
We maintain a strong balance sheet and operate a disciplined business model, generating good returns on our chosen investments. We have reduced debt in the half year and expect to be cash positive by the end of the year after paying ordinary dividends of 33 pence per share.”
