REG - Crest Nicholson Hdgs - Trading Statement

Crest Nicholson HoldingsAnnouncement

16/11/2023 07:00

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RNS Number : 6186T  Crest Nicholson Holdings PLC  16 November 2023

The information contained in this announcement is deemed by the Company to
constitute inside information for the purposes of Article 7 of the Market
Abuse Regulation (EU) No. 596/2014 which forms part of domestic law in the
United Kingdom pursuant to the European Union (Withdrawal) Act 2018

Crest Nicholson Holdings plc

(the "Group" or "Crest Nicholson")

 

STREAMLINING OPERATIONS IN RESPONSE TO MARKET CONDITIONS

STRONG LAND PORTFOLIO TO SUPPORT MEDIUM-TERM GROWTH AMBITIONS

 

Crest Nicholson today provides an update on trading for the year ending 31
October 2023 and a streamlining of Group operations for FY24.

 

Financial Summary

·      Previous 10-week private Sales Per Outlet Week (SPOW) excluding
bulk of 0.39, reflecting the continued weakness in the housing market but on
an upward trend

o  Previous 10-week private SPOW including bulk of 0.80

·      FY23 Adjusted Profit Before Tax (APBT) expected to be in the
range of £45.0m to £50.0m

o  Including a £0.5m charge for restructuring activities

o  Brightwells Yard, Farnham - a zero margin scheme - has incurred circa
£11.0m of incremental build costs in FY23 (a further £7.0m in addition to
the £4.0m previously communicated). Construction activities are now in the
final stages as the site approaches its completion

·      Group's year-end net cash position at £64.9m

·      Strong strategic relationships with institutional investors
delivering 273 unit completions in FY23

·      Forward sales as at 10 November 2023 of 1,710 units and £408.5m
Gross Development Value (GDV) (11 November 2022: 2,038 units and £526.2m GDV)

·      Disciplined approach to capital allocation for FY24

o  Land activity to reduce significantly given high quality additions made
earlier this year

o  Rigorous approach to work-in-progress to align to expected sales rates

Operational Summary

·      Several high quality sites added to the portfolio in the first
half with planning approvals underway. These sites all provide excellent
prospects to support future growth

·      Build cost inflation is starting to reduce from mid-single digit
percentages and we expect this to continue into FY24

·      On track with our sustainability targets as we actively
collaborate with our supply chain and wider industry to reduce greenhouse gas
emissions and prepare for upcoming regulations

·      Good progress with our fire safety remediation programme

 

Streamlining of Group Operations

Given the deterioration in trading conditions experienced in the second half
of the year, the Group communicated in its 21 August 2023 Trading Update that
it would be reducing overheads for FY24.

Accordingly, the management team has conducted a thorough and diligent review
of all activities within the Group.

 

These changes will:

·      Reduce annualised administrative expenses by circa £3.0m in FY24

·      Moderate the pace of growth in Yorkshire - now expecting 300-350
units in 2026

·      Incorporate the newly created East Anglia division into the
existing Eastern division with revised boundaries

·      Align headcount and resources in existing divisions to the
expected level of output in FY24

·      Require a one-off £0.5m cash charge in FY23 APBT to implement

These decisions balance the need to respond to the tougher operating
environment whilst preserving the capability to deliver future growth as more
favourable economic and trading conditions return.

We will provide further detail and an update on the progress of these
initiatives at our Preliminary results in January 2024.

 

Peter Truscott, Chief Executive, commented:

'Given the challenging trading backdrop we have experienced this year, the
Group has acted decisively in streamlining its operations to align our cost
base with the operating environment. These are difficult decisions to take but
will ensure the Group is well positioned to recover strongly as more
supportive market conditions return. I would like to thank all Crest Nicholson
colleagues for their efforts this year and their professionalism in dealing
with the changes we have made.

We expect the housing market will remain challenging as we head into 2024 with
elevated interest rates remaining in place until inflation comes back down to
its target level. In addition, the absence of any Government support for first
time buyers, coupled with higher borrowing costs continues to impact
affordability.

However, there are reasons to be optimistic with year-on-year inflation now
halved and real wage growth starting to be felt in households across the UK.
We have acquired some excellent sites that are at advanced stages in the
planning process, leaving us well positioned to trade in whatever market
conditions emerge.'

 

 

For further information, please contact:

Crest Nicholson

Jenny Matthews, Head of Investor
Relations                               +44 (0)
7557 842720

Teneo

James Macey White / Giles Kernick
 
+44 (0) 20 7353 4200

The person responsible for arranging the release of this announcement on
behalf of the Company is Penny Thomas, Group Company Secretary.

16 November 2023

 

 

 

 

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